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December 7, 2017 

Via E-Mail: e-ORI@DOL.gov and 

U.S. Mail

Office of Regulations and Interpretations 

Employee Benefits Security Administration 

Room M-5655 

U.S. Dept, of Labor 

200 Constitution Avenue NW 

Washington D.C. 20210 

Re: Re-Examination of Claims Procedure Regulations for Plans Providing Disability 

 Benefits 

 RIN No.: 1210-AB39 

Regulation: 29 C.F.R. §2560.503 

Dear Deputy Assistant Secretary Hauser: 

This letter is being sent to request that the Department does not modify or further delay 

the final disability claims regulations (Final Regulation on Claims Procedure for Plans Providing 

Disability Benefits, 81 Fed. Reg. 92316 (Dec. 19, 2016)) that are now scheduled to go into effect 

on April 1, 2018. 

I have represented long-term disability (“LTD”) claimants for almost a decade, and 

worked in this field for several years before going to law school. I have helped hundreds of LTD 

claimants receive disability benefits – both through the administrative claim process and, when 

necessary, litigation. My clients are individuals who have suffered the double blow of serious 

illness or injury, as well as the loss of income. Oftentimes my client is the breadwinner for their 

family, and the erroneous denial of their LTD benefits causes extreme financial hardship. Denial 

of LTD benefits results in bankruptcy, losing their homes, pulling children out of school, and the 

inability to pay for the medical care they so desperately need.

LTD claimants often have difficulty obtaining representation in the administrative claim 

process and lack the resources necessary to gather the evidence necessary to contest a claim 

denial. The Department needs to make sure the Secretary’s claim review regulation protects the 

interests of disabled workers. While I appreciate the opportunity to comment on the 

Department’s re-examination of the costs of the final rules governing disability claims, the 

concerns raised by the industry are not new. Rather, these objections appear to be simply reargument of the merits of the final rules. Where those rules are based on policy choices that 

have been made by Congress, by this Department, and by the federal courts interpreting ERISA, 

another argument about the merits is unnecessary. 

Nonetheless, I will address the insurance industry’s primary objection: The industry 

claims if the final rules go into effect there will be an increase in costs that will increase LTD 

premiums resulting in fewer employees being covered by group LTD plans. This assertion is not 

grounded in fact, but rather a thinly veiled threat designed to scare the Department into inaction. 
EBSA 

December 7, 2017 

Page 2 

This costs argument was made in various industry comments to the proposed rules before 

final adoption. The Department concluded that costs would not outweigh the benefits. The 

current cry of increasing costs is an argument that has already been considered and rejected. 

An agency is not required to “conduct a formal cost-benefit analysis in which each advantage 

and disadvantage is assigned a monetary value.” Michigan v. Environmental Protection Agency, 

135 S. Ct. 1699, 2711 (2015). 

Nonetheless, the Department has asked for data addressing whether costs increased in 

response to the last set of rules applying to ERISA disability plans that became effective in 2002. 

In fact, the Department can rely upon information supplied by its own Bureau of Labor Statistics. 

https://www.bls.gov/opub/btn/volume-4/disabilitv-insurance-plans.htm. The data shows that 

access and participation in employer-based disability insurance has increased, not decreased, 

between 1999 and 2014. This increase occurred despite that employment in the service industry 

has increased, an industry in which employees are the least likely to have access to employerbased disability coverage. This increase also occurred despite the 2000 disability claims 

regulations and a series of court decisions addressing conflicted decision-making, deemed 

exhaustion, the need to discuss and explain adverse benefits decisions, and a participant’s right to 

respond to new evidence. The Department should therefore be suspicious of any data supplied by 

the industry now that suggests employers would abandon disability coverage due to the costs of 

codifying these principles. The Bureau of Labor Statistics study also demonstrates that the cost 

of disability insurance is extremely modest. Thus, even if costs did increase, the increase would 

be so small that it is unlikely to make any difference in coverage. 

The Department has also asked for data about whether disability premiums increased in 

response to the adoption of statutory bans on discretionary language clauses in disability policies 

by some states. Notably, during the time period of the BLS study, many states enacted 

discretionary clause bans. This includes but is not limited to: Arkansas Admin. Code 054.00.101-

4 (2013); Cal. Ins. Code §10110.6 (2012); Colo. Rev. Stat. §16-3-1116 (2008); 50 III. Admin. 

Codes 2001.3 (2005); Md. Code ann. Ins. §12-211; Mich. Admin. Codes. R. 500.2201-2202 

(2007); R.I. Gen. Law §§ 27-18-79; Tex. Admin. Code §3.1202-1203; Tex. Ins. Code 

§1701.062, §1701.002 (2011); WAC §284-96-012 (2009). Notwithstanding these statutory 

developments, access and participation in disability plans increased according to the BLS data. 

Also, during the period covered by the BLS document, two major insurers with 

significant market share, UNUM and CIGNA, were examined by the state insurance regulators 

for poor claims handling practices. UNUM and CIGNA had to pay fines and consented to 

Regulatory Settlement Agreements that raised the standards for their LTD claims administration. 

http://www.maine.gov/pfr/insurance/publications_reports/exam_rpts/2004/unum_multistate/unu

m_multistate.html; 

http://www.maine.gov/pfr/insurance/publications_reports/exam_rpts/2009/pdf/cigna_mcreport_2

009.pdf; https://www.insurance.ca.gov/0400-news/0100-press_releases/2013/release044-13.cfm. 

Nonetheless, during this period LTD participation increased. 

 
EBSA 

December 7, 2017 

Page 2 

Given the above, there is no factual basis to support the industry’s claim that modest 

changes to the Secretary’s claim review regulation would result in cost increases or less coverage 

for California workers. I ask that you remember that you work for the people of California, not 

the insurance industry, and put their best interest first in this situation. 

Very truly yours, 

 

 

Mitchell O. Hefter, Esq.