THE MARTIN LAW GROUP, LLC 

ERISA CASE LAWYERS 

2117 Jack Warner Pkwy Suite 1 

Tuscaloosa, AL 35401 

January 15, 2016 

Employee Benefits Security Administration 

Office of Regulations and Interpretations 

Employee Benefits Security Administration 

Room M-5655 

U.S. Department of Labor 

200 Constitution A venue NW 

Washington DC 2021 0 

RE: Claim Procedure Regulation for Plans Providing Disability Benefits 

RAN#1210-AB39 

Regulation 29 C.F.R. §2560.503-1 

Dear Assistant Secretary Borzi: 

P.O. Box 20087 

Tuscaloosa AL, 35402 

Tel: (205) 343-1771 

Fax: (205) 343-1781 

MLG@erisacase.com 

www.ensacase.com 

I have reviewed the Federal Register, Volume 80, Number 222 and the proposed 

regulation changes. A period of comment has been allowed, and so I am presenting this letter to 

comment on the proposed regulation which is applicable to disability benefit plans. 

First of all, I would like to make it clear that I am in a position to understand some of the 

existing unfairness and the need for changes in the regulation. I have handled claims under the 

Employee Retirement Income Security Act of 1974 (ERISA) since 1992. My practice has 

focused on that area since 2000. There is a dearth of attorneys representing claimants. In 2007 I 

opened my own firm focused on ERISA benefit claims and litigation. I have presented seminars 

on ERISA and in fact organized a seminar on ERISA litigation in conjunction with defense 

attorneys and a federal judge in Alabama. I have written articles on the subject, which have been 

published in the Alabama Lawyer and the Alabama Addendum. I principally assist clients that 

reside in the states of Alabam and Mississippi, although I have handled cases for claimants out to 

California and up to New York and many states in between. 

In my practice I have found that claimants are taken by surprise by the gross unfairness 

that can occur in connection with long term disability claims and the reluctance of courts to 

remedy the unfairness. I believe that changes in the proposed regulations would require courts to 

give deference to the interpretation of the Department of Labor as to the ERISA statute and 

appropriately follow the guidance provided in the regulations. While every unfairness under the 

ERISA statute is not addressed by the proposed regulations, I do believe that the Department of 

I\( t, 
Employee Benefits Security Administration 

January 14, 2016 

Page 2 of7 

Labor has addressed some key issues. There are a few other issues that are of concern in my 

opinion. The issues I am most concerned about are as follows: 

1. Limitation of action provisions in plan documents; 

2. The right of claimants to review and respond to new information before a final decision; 

3. Deemed exhaustion; and 

4. Venue selection plan provisions. 

I. The Limitation of Action Provision 

One of the underlying themes for ERISA is that there is to be a more uniform approach 

across the states as to the handling of employee benefits. While that has been accomplished in 

some respects, that is far from the case when it comes to limitation of action provisions and 

statutes of limitations. The best approach probably would be to have an actual statute of 

limitation in the ERISA statute, but that is beyond the scope of matters here. At the very least, 

the regulation should take a step toward a more uniform approach in the handling of a limitation 

of action provision in the plan document. 

The United States Supreme Court has noted in the case Heimeshoff v. Hartford Life & 

Accid. Ins Co., 134 U.S. 604 (2013) that such limitation of action terms are enforceable. The 

problem is that under certain factual scenarios they are confusing and difficult to interpret 

consistently. This is unfair to claimants. 

For example in a case that I have recently filed (and which has since settled) called 

Bowman v. Life Insurance Company ofNorth America case 7:15-cv-01834, in the United States 

District Court of the Northern District of Alabama (Western Division), the plan stated that no 

action could be brought more than three years after the time satisfactory proof of loss was 

required to be furnished. There is no definition of "satisfactory proof of loss" in the plan and so 

it left it to the subjective determination of LINA as to when satisfactory proof of loss occurred. 

Further, it is difficult to ascertain whether "the time for the loss for which claim is made" 

referred to a month to month claim or the initial claim. These matters are detailed in the 

complaint which was filed and is a public record on PACER. 

The problem is that Mr. Bowman was disabled going back to August 2011 and proof of 

loss was shortly provided after that time frame. However, knowing when it was "satisfactory" to 

LINA is difficult. The claim was paid initially, so apparently it was satisfactory in some 

respects. It was paid into 2014. However, it was later denied without evidence of improvement 

or change in Mr. Bowman's condition. The denial in essence conveyed that LINA should never 

have paid the claim. Arguably then, the limitation of action provision meant that suit had to be 

filed prior to sometime in the fall of 2014. The problem is that Mr. Bowman's claim was on 

appeal and was still being considered by LINA at that time, as it had been paid and then denied 

and then paid again and denied again. The claim was not finally decided until July of 2015. So 
Employee Benefits Security Administration 

January 14, 2016 

Page 3 of7 

there was a question as to whether the limitation of action provision barred Mr. Bowman's claim 

while it was under review. Was he required to file a lawsuit during LINA's review in 2014 and 

thus violate the 11th Circuit's requirement of exhaustion of "administrative remedies"? What if 

the claim was paid into 2015, would he be required to file suit in 2014 while the claim was paid? 

Such limitation provisions are nonsense. You can't know where you stand. 

To make matters more frustrating, repeated requests were made on LINA to provide the 

date it considered the limitation of action provision would bar the claim. LINA refused and 

claimed that this would be providing legal advice to Mr. Bowman. Accordingly, I asked for 

LINA to provide the date that "satisfactory proof of loss" was last furnished. LINA likewise 

refused to do that and claimed that this too would be legal advice. Again, all these matters are 

detailed in the lawsuit and are a matter of public record. 

In order to meet the Heimeshoffrequirement, suit was filed by October 19, 2015, shortly 

after the claim record was received. The claim record was requested immediately after the claim 

was denied, but unfortunately LINA took until October 8, 2015 to produce the claim file, thus 

necessitating a very fast review of a claim record of over 2,200 pages and then preparation of a 

lawsuit. Claimants should not be placed in this posture. The unfairness of this is noteworthy in 

that courts in many cases have strictly construed the limitation of action language to bar a 

claimant's lawsuit when it would not be able to literally do so if the claim was paid past the date 

established. 

The problem always arises when a claim is paid for some time and then terminated. For 

example, if a claimant is on claim for ten years and then the insurer decides to terminate benefits, 

how does one interpret the limitation of action provision that relates back six or seven years 

earlier? Claims can't be barred before there is a breach. The Supreme Court's remedy of filing 

suit "as soon as reasonably practicable" gives no assurance to a claimant, as no one knows what 

is "as soon as reasonably practicable". That is patently unfair and seems to assume that counsel 

can be located, retained, and the claim file received within a short amount of time. Given 

counsel does not know what a court will believe is "reasonable", it may be hard to find a willing 

attorney. Such terms are contrary to the spirit or intent of ERISA. 

Accordingly, in my view it should be required of the claims administrator or plan 

administrator to state exactly when the limitation of action provision will bar the claim in any 

given case and that interpretation should be consistently applied to all claims. It would be 

appropriate to simply require the state law statute of limitation to be applicable, notwithstanding 

that that it will vary from state to state. At least it would be somewhat logical and rational to run 

the limitation of action provision from the date the claim was last denied as an ordinary breach of 

contract claim. A lack of a consistent interpretation of the limitation of action provision in a plan 

document is by definition the lack of a full and fair review (i.e. it runs at a certain time in some 

instances and as soon as reasonably practicable in other instances). 

One court has required notice of the date of the expiration of limitations of action 

provision. Most courts, including those in the 11th and 5th Circuit, have not. To my knowledge 

only one court has done so. Kienstra v. Carpenters' Health & Welfare Trust Fund of St. Louis, 
Employee Benefits Security Administration 

January 14, 2016 

Page 4 of7 

No. 4:12CV53 HEA, 2014 WL 562557, at *4 (E.D. Mo. Feb. 13, 2014), affd sub nom. MunroKienstra v. Carpenters' Health & Welfare Trust Fund of St. Louis, 790 F.3d 799 (8th Cir. 

2015)("[a] description of the plan's review procedures and the time limits applicable to such 

procedures, including a statement of the claimant's right to bring a civil action under section 

502(a) of [ERISA] following an adverse benefit determination on review." This is only one 

court, but at least the unfairness is recognized. The DOL should amend the regulation to remove 

any doubt and establish fairness requirements on this. 

I have reviewed comments of others who represent claimants, and I agree with comments 

that the claims administrator must notify the claimant of the date of the expiration of any plan 

based limitations period. There should be at least a one-year period after the completion of the 

plan's appeals process in which a claimant can file suit. In particular, I agree with the following 

proposal: 

29 C.F.R. 2560.503-1 (j)(6)(7),(8) [proposed regulation- bold is added recommended changes.] 

In the case of an adverse benefit decision with respect to disability benefits- (i) A 

discussion of the decision, including, to the extent that the plan did not follow or agree 

with the views presented by the claimant to the plan of health care professionals treating 

a claimant or the decisions presented by the claimant to the plan of other payers of 

benefits who granted a claimant's similar claims (including disability benefit 

determinations by the Social Security Administration), the basis for disagreeing with their 

views or decisions; and (ii) Either the specific internal rules, guidelines, protocols, 

standards or other similar criteria of the plan relied upon in making the adverse 

determination or, alternatively, a statement that such rules, guidelines, protocols, 

standards or other similar criteria of the plan do not exist. 

(7) In the case of an adverse benefit determination on review with respect to a claim 

for disability benefits, a statement of the date by which a claimant must bring suit 

under 502(a) of the Act. However, where the plan includes its own contractual 

limitations period, the contractual limitations period will not be reasonable unless: 

a. it begins to run no earlier than the date of the claimant's receipt of the 

final benefit determination on review including any voluntary appeals that 

are taken; 

b. it expires no earlier than 1 year after the date of the claimant's receipt 

of the final benefit determination on review including any voluntary appeals 

that are taken; 

c. the administrator provides notice to the claimant of the date that the 

contractual limitations period will run; and 

d. the contractual limitations period will not abridge any existing state 

limitations period that provides for a period longer than one year. 
Employee Benefits Security Administration 

January 14, 2016 

Page 5 of7 

(8) In the case of an adverse benefit determination on review with respect to a claim for 

disability benefits, the notification shall be provided in a culturally and linguistically 

appropriate manner (as described in paragraph (p) of this section). 

II. The Right to Comment on New Evidence Considered in Connection With a Final 

Appeal Decision. 

In nearly every long term disability benefit lawsuit that our firm files there is an issue as 

to new evidence or new reasoning or rationales being utilized in connection with the final 

decision. As a routine matter our firm usually sends a demand to the insurance company or 

claims administrator, submitting further information to rebut the new information considered. 

Almost uniformly the insurer or claims administrator will refuse to consider the information. 

Some return the same to our office. In fact, in litigation the routine argument asserted in 

opposition to our request for the court to consider the new information is that the "administrative 

record" is closed and was closed with the final decision. That of course is unfair, and, in my 

opinion, a denial of procedural due process rights. No court would permit this advantage for one 

side in a case in litigation. But the unfairness is carried through into litigation by permitting this 

when compiling the record. 

Courts have called this "sandbagging", but the remedy for this is usually insufficient. At 

best, a remand is often required for the participant to be required to go back through the claim 

process to again present the information that should have been considered when presented. The 

insured is the one who has been without benefits for an extended period of time, so it is very 

difficult to see how this is fair. If the insured has already attempted to present the information to 

the insurer or claims administrator, should a "second bite at the apple" be allowed? Again, 

courts do not permit a "second bite" to either side in other litigation. Why is it allowed under 

ERISA? 

My view is that no new rationales or evidence or reasons to deny the claim should be 

permitted to be generated by the insurer in connection with an appeal. If the process is to truly 

be considered "administrative" then all reasons as to the claim denial should be asserted. Then 

the claimant should be allowed to comment and rebut those reasons. The insurer should merely 

be in the position of reviewing the record as it exists at that point in time. If the insurer or claims 

administrator believes there is additional information that should be considered, my view is that 

the appropriate approach here is for the insurer to pay the claim up to that point and then assert 

that there appears to be other reasons that have been overlooked and the insurer can then conduct 

another review. The insurer should send the case back for initial review and then explain why it 

may change its position if it is denied. An appeal on those reasons would be allowed. 

The proposed changes to the regulation are a legitimate and good first step in the 

direction of making the process more fair. I still remain concerned over there being an endless 

appeal if the claims administrator or plan administrator decides to continue to "purchase" more 

peer review opinions every time a rebuttal is submitted. 
Employee Benefits Security Administration 

January 14, 2016 

Page 6 of7 

I have seen suggestions from others who work in this field on the claimant's side 

regarding some changes to the language of the proposed regulation which I think are reasonable. 

I am in agreement with this until further steps toward fairness can be taken. 

2560.503-1(h)(4)(ii) [proposed regulations new language indicated by holding] 

(ii) Provide that, before the plan can issue an adverse benefit determination on review on 

a disability benefit claim, the plan administrator shall provide the claimant, free of 

charge, with any new or additional evidence or rationale considered, relied upon, or 

generated by the plan (or at the direction of the plan) in connection with the claim; such 

evidence must be provided as soon as possible and sufficiently in advance of the date on 

which the notice of adverse benefit determination on review is required to be provided 

under paragraph (i) of this section to give the claimant a reasonable opportunity to 

respond prior to that date. Such new evidence or rationale must be provided to 

claimant before the decision on appeal is issued and the claimant must be afforded 

up to 60 days to respond. The time to render a determination on review will be 

suspended while the claimant responds to the new evidence or rationale. After 

receiving the claimant's response to the new evidence or rationale or notification 

that the claimant will not be providing any response, the plan will have whatever 

time was left on the original appeal resolution time period or 30 days, whichever is 

greater, in which to issue its final decision. 

I still believe that requiring a complete initial decision is a better approach, but I can 

agree with this. 

III. Deemed Exhaustion and Failure to Exercise Discretion 

When there are significant defects in providing a full and fair review, the claimant should 

be entitled to file suit, and a de novo review conducted by the court. Presently many courts have 

resorted to merely remanding the entire case back to the claims administrator or insurer let it "get 

it right". This is unfair to the claimant, as it requires the claimant to go through an extended 

ordeal. In effect, this disregards the timeframes in which decisions were due to be made. 

The time frames are critical to most claimants. Many are in need of the benefit to survive. 

In essence, if a remand is the only recourse, there is no reason for an insurer or claims 

administrator to make a solid, timely decision in the first place. If there is a problem, it will 

receive a remand. The only downside to that "gamesmanship" would be if the court ordered 

payment of attorney's fees. Courts have been slow to award attorney's fees in such 

circumstances and it only benefits the attorney usually. 

Accordingly, the proposed regulation change as to deemed exhaustion and which reflects 

that there was no discretion exercised is much more appropriate. It is a step in the right direction. 

That provides the incentive necessary to get a timely decision right in the first place rather than 

sandbagging or refusing to honor the claims procedure regulation to force the claimant's hand to 

file suit. We have seen this occur in the case Ronnell Oliver v. AIG filed in the Southern District 
Employee Benefits Security Administration 

January 14, 2016 

Page 7 of7 

of Mississippi. Procedural violations asserted in a lawsuit caused a remand back to the plan 

administrator or claims administrator to correct. This does not correct the delay in receipt of 

benefits. In practice it merely allows more time to deny the claim again. 

IV. Venue Clause Provisions 

There is one other area of unfairness and that is the assertion of venue provisions in plan 

documents. I believe the DOL has taken a very solid position on this in its amicus briefs, but 

courts continue to enforce plans allowing as much. Accordingly, claimants in Alabama can be 

forced to litigate in Missouri, or even Alaska, which causes an undue burden and expense upon 

the claimant. The claimant's residence on the date they were last covered under the plan should 

be the first choice or preference for venue. The requirement to force a claimant to litigate out of 

state should be a denial of a full and fair review. 

V. Conclusion 

There are many other issues concerning unfairness, but I appreciate the DOL's focus on 

rectifying the unfairness as it relates to the above issues. Thank you very much for the 

opportunity to comment and thank you very much for the good steps taken toward more fairness 

in connection with the claim process for long term disability claimants. 

DPM/re 

"ery Sincerely, 

David P. Martin, Esq. 

david@erisacase.com