Comment on a proposed regulation

Re: Claims Procedure Regulations for Plans Providing Disability Benefits

RIN No.: 1210-AB39

Regulation: 29 C.F.R. §2560.503-1

To: Phillis C. Borzi,

 Assistant Secretary Employee Benefits Security Administration

Dear Assistant Secretary Borzi:

 I represent claimants in ERISA benefit matters and have done so for more 

than 10 years. Most of my clients are disability claimants; some claims also 

involve life insurance waiver premium benefits; occasionally, we have a straight 

life insurance claim. My partner and I have represented hundreds of claimants all 

over the country in administrative appeals and in litigation.

I. Independence/ Impartiality

 The proposed regulation is very much a step in the right direction regarding 

the need for independence and impartiality of claims adjudicators and medical 

experts, but it is not enough. What this regulation fails to recognize, at least in 

regards to medical experts, is that most insurers and third-party administrators 

obtain medical experts from outside services and the services, in my experience, 

commonly use their internal quality assurance or quality review processes to alter 

or change doctor’s opinions. That is, the so called independent medical experts 

are provided information and sent a set of questions; they answer the questions; 

the service which provides them reformats the questions and the answers - - and 

frequently changes the answers. To insure independence of such medical 

experts, it is necessary not only that the administrative record include the final 

report that is attributed to the medical expert, but also that the administrative 

record include the questions presented, any templates, and all communications 

between the service (or directly by the insurer) and the medical expert, including 

drafts of reports, so that true independence can be assessed. Frankly, on those 

rare occasions (because in litigation ERISA cases rarely allow comprehensive 

discovery) that I have been allowed to “drill in” to the background of medical 

reports I have found that they have been rewritten by services. The problem is 
compounded by the plan/insurers/third-party administrations claim that since 

they never saw the communications between the services and the doctor, and 

that they do not have possession, custody, or control over those documents, they 

therefore cannot include them in the administrative record. Generally, these 

facts come to light only when there is robust discovery - - which will never happen 

in ERISA cases. I have learned most of these facts because we also represent 

plaintiffs in insurance bad faith case where realistic discovery is permitted.

 Therefore, to strengthen the new regulation regarding independence and 

impartiality, the regulation should also require that to insure independence and 

impartiality of medical experts, all communications sent to or from the medical 

expert, from whatever source, on the claim, and all drafts of the report must be 

obtained and included in the claim file and that when applicable, the contract 

between the insurer or third-party administrator and the service and the contract 

between the service (or insurer) and the doctor also be included in the claim

file. Otherwise, the medical expert report is presumed to be not independent and 

should be accorded no weight.

2. Social Security Administration, etc. Decisions

 The requirement in the proposed regulations that adverse benefit 

determinations in disability benefit claims will have to include the basis for 

disagreeing with any disability determinations by the Social Security 

Administration, is also a definite step in the right direction. Even in circuit courts 

which the standard requires consideration of Social Security determinations, such 

as the Ninth Circuit, court routinely disregard inconsistent SSA 

determinations. For example, in one of my recent cases, Barnett v. Southern 

California Edison Long Term Disability Plan, 2015 U.S. at Lexis 21179 (9th Cir. Dec 

7, 2015), a panel of the Ninth Circuit gave short shrift to my argument that the 

plan administrator gave no weight to a contrary SSA determination (although you 

cannot ascertain this from the decision), neither the denial letter or the appeal 

denial letter ever mentioned the contrary SSA decision; the defendant argued 

that because two of seven reviewing doctors listed the SSA information in their 

medical reviews - - without addressing it - - that that was sufficient. Clearly that 

was not. This proposed regulation obviously would have to avoid such unfair 

practices in the future.
3. Internal Rules

 The proposed change in regulations regarding addressing specific internal 

rules guidelines, protocols, etc., is a step in the right direction, but is not strong 

enough. The reality is that almost invariably insurers and third-party 

administrators claim in rendering decisions on disability appeals that they do not 

rely upon rules, guidelines, protocols or standards. There is a inherent tension 

between consistent adjudication of claims and not having rules, guidelines and 

protocols or standards upon which an insurer relies upon. These insurers and 

third-party administrators have numerous people making determinations, often 

in different parts of the country. There is simply no way they are not utilizing 

rules, guidelines, protocols or standards, but disclosing them. The rule should 

that all rules, guidelines, protocols, standards, or other similar criteria utilized by 

the claim administrators to train, supervise or evaluate personnel making benefit 

decisions must be disclosed with the claim file or it will be presumed that the 

decision was not made consistent with other claim decisions. I realize that 

insurers and third-party administrators claim that these are confidential business 

records and it would prejudice them to disclose them publically. That is simply 

not true: UNUM widely discloses its claims standards because it was ordered to 

do so by numerous state departments of insurance: Reliance Standard has 

disclosed its claim standards to me; Standard never discloses its claim standards 

in ERISA cases, but does so in bad faith cases. The reality is that all of these 

insurance companies and third-party administrators have standards and criteria; 

of the major carriers, few routinely disclose them. All should be obligated to 

disclose them.

4. Reviewing New Evidence

 The proposed regulation regarding granting claimants the right to review 

and respond to new evidence or rationales developed by the plan during the 

pendency of the appeal is also very much needed. It is not uncommon in my 

experience for the rationales and the reasons to change from denial letter to 

appeal denial letter without any explanation. A classic example of this in one of 

my cases, Boxell v. The Plan for Group Insurance of Verizon Communications, Inc., 

51 F. Supp. 3d759, 776 (N.D. 2014) in which the court concluded that in the 

course of its communications regarding its claims decision and its claims 

processing, the claims administrator not only “moved the target” it actually “hid 
the target”, deliberately obscuring its standards, rationale, and reasons. In my 

experience, this is simply not unusual and deprives claimants of a full and fair 

appeal.

 One of the concerns that I have about commenting on appeal medical 

reviews is that the regulation should also impose reasonable timelines on the 

plan. Here is what we frequently encounter: We submit appeals; 45 days pass 

and the plan exercises its right to an extension without giving any explanation; 45 

days more passes and the plan provides its appeal medical review for comment - -

obviously intending by doing so to “restart the clock” for its final decision. This 

sequence happens all the time in our claims, especially with certain insurance 

carriers. In order to avoid this state of affairs, the regulation should provide that 

the decision maker must solicit and obtain the medical report on appeal within 45 

days of receiving the appeal, which time can be extended by a tolling agreement 

with the claimant; otherwise, any medical review on appeal may not be 

considered in the decision making process and it will be presumed that there is no 

medical grounds to deny the claim.

 Here is an example of the problem from a current case:

1. By letter dated August 26, 2014, plan terminated Claimant’s 

LTD benefits.

2. By letter dated January 5, 2015, we timely appealed the August 

26, 2014 termination of LTD benefits.

3. By letter dated January 8, 2015, plan acknowledged receipt of 

claimant’s appeal.

4. By letter dated January 27, 2015, we supplemented the appeal 

with additional medical records.

5. By letter dated February 18, 2015, plan informed us that it may 

need an additional 45 days to render its decision on claimant’s 

appeal from the termination of LTD benefits, but it did not 

notify us of any additional time needed.
6. By letter dated March 19, 2015, we submitted updated medical 

evidence.

7. By letter dated April 8, 2015, we asked that plan make its 

decision on the appeal or at least provide a projected decision 

date.

8. By letter dated April 15, 2015, plan notified us that it was 

awaiting clarification of a medical review.

9. By letter dated May 22, 2015, we wrote that plan had had 

claimant’s appeal for 117 days, well in excess of the maximum 

90 day time to decide the appeal; that plan commonly fails to 

timely decide appeals and timely decide appeals and thus 

violates the Regulations. We asked plan to decide the appeal 

by June 5, 2015.

10. On June 5, 2015, plan provided us with a peer review report to 

which it asked claimant’s physician to respond, giving until 

July 3, 2015, to do so.

11. By letter dated June 15, 2015, we responded to the peer 

review. 

12. By letter dated June 24, 2015, we sent claimant’s physician’s 

response to Plan.

13. By letter dated July 6, 2015, we requested a status update of 

claimant’s appeal. 

14. Plan responded on July 7, 2015, that it was reviewing 

claimant’s physician response.

15. By letter dated July 14, 2015, we requested a decision in 

claimant’s appeal, as plan had had the appeal for 190 days.
16. By letter dated July 22, 2015, plan asked for records from the 

another physician who was referenced in claimant’s doctor’s 

June 24, 2015, submission.

17. By letter dated July 23, 2015, we provided the requested 

records and we asked why the records were being requested a 

month after Plan received claimant’s doctor’s response. We 

gave plan until July 30, 2015, to decide the appeal.

18. As we were preparing to file suit, we received a letter dated 

August 11, 2015, from plan’s representative, which 

represented that plan wanted claimant to submit to an IME on 

August 19,2015, with an IME doctor who is an admitted liar 

and a fraud, having been disciplined by the California Workers’ 

Compensation Board for fraudulent billing, so we refused and 

filed suit nine months after the appeal was submitted.

 As a practical matter to avoid such circumstances, regulations have to 

protect against the claims decision maker “gaming” the system in such a fashion.

 Thank you for your consideration of my comments.

Very Truly Yours,

/s/ Robert J. Rosati 

Robert J. Rosati

ERISA Law Group

6485 N. Palm Ave., Ste. 105

Fresno , California 93704

T: (559) 478-4119, ext. 225

F: (559) 478-5939

E: robert@erisalg.com