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fe Avenue
lis, IN 46220,

| am grateful that the DOL has undertaken to clarify the consequences that will
result when the plan does not comply with the procedural requirements of the
regulations. | submit that the standard of judicial review that will apply requires
clarification because there is a potential conflict between language in the preamble and
the proposed regulation. The preamble says: “in those situations when the minor errors
exception does not apply, the proposal clarifies that the reviewing tribunal should not
give special deference to the plan's decision, but rather should review the dispute de
novo.” The underscored language clearly contemplates that a court should exercise de
novo review. However, the regulation itself says: “if a claimant chooses to pursue
remedies under section 502(a) of ERISA under such circumstances, the claim or appeal
is deemed denied on review without the exercise of discretion by an appropriate
fiduciary.” 29 C.F.R. §2560.503-1(1)(2)(i) [proposed regulation]. | anticipate that plans
will argue that this underscored language does not go far enough to require a court to
exercise de novo review. For example, this language could mean simply that the plan
did not make a decision and another plan review would be ordered rather than de novo
judicial review. To avoid a potential ambiguity on this point, | suggest the following
amendment to the proposed regulation (added language is bolded and underlined):

29 C.F.R. 2560.503-1(I)(2)(i) [proposed regulation}

if a claimant chooses to pursue remedies under section 502(a) of ERISA under
such circumstances, the claim or appeal is deemed denied on review without the
exercise of discretion by an appropriate fiduciary, and the reviewing tribunal
should not give special deference to the plan's decision, but rather shall
review the dispute de novo.

Additionally, for the same reasons as described above with regard to the
appropriate standard of judicial review, it would be beneficial to specify the standard of
judicial review is de novo when the court does not remand. | suggest the following
amendment (added language is bolded and underlined, deleted language shown by
strikeout):

29 C.F.R. 2560-503-1(1)(2)(ii) [proposed regulation]

If a court rejects the claimant's request for immediate review under paragraph
(1)(2)(i) of this section on the basis that the plan met the standards for the
exception under this paragraph ()(2)(ii), the claim shall be considered as re-filed
on appeal upon the plan's receipt of the decision of the court. Within a
reasonable time ten (10) days after the receipt of the decision, the plan shall
provide the claimant with notice of the resubmission_and notify the claimant of
the right to supplement the appeal if she chooses. If the court accepts the
claimant’s request for immediate review, the court will retain jurisdiction
and decide the case applying de novo review.

Lam also concerned about the lack of a concrete deadline for plans to issue
determinations on appeals. | am currently briefing this issue in a case wherein the
insurer issued the determination on the appeal more than 30 days after the 90 day
deadline. The current regulations seem clear that the decision on the appeal must be
issued within 45 days unless special circumstances warrant an extension of 45 days but
a final decision is mandated by the 90" day. | appreciate the clarity of the current



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O’RYAN

LAW FIRM

55) 778-5055
'} 255-1000
(317) 255-1006

1901 Broad Ripple Avenue
indianapolis, IN 46220

(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).

| greatly appreciate all of the efforts on the part of the DOL to strengthen and
clarify the rights of plan participants who have been denied disability benefits.

Bridget O’Rya



oy

4

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O’RYAN

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29

practical matter, plans frequently delegate the selection of experts to third-party vendors
who, in turn, employ the experts.

Second, clarification is needed concerning which individuals are “involved.”
Claims administrators often protest that physicians, or other consulting experts, are not
“involved in making the decision” but merely supply information (such as an opinion on
physical restrictions and limitations) that is considered by the claims adjudicator. Under
this logic, plans may argue that consulting experts are not affected by the impartiality
regulation.

Finally, the proposed regulation should make clear that not only claims
adjudicators and consulting physicians must be impartial. Vocational experts and
accountants are also frequently used in the claims process and should be included in the
scope of the impartiality requirement.

In light of these concerns, | suggest that the proposed regulation language be
amended as follows (added language is bolded and underlined):

.F.R. §2560.503-1(b)(7) [proposed regulation]

In the case of a plan providing disability benefits, the plan and its agents,
contractors, or vendors (such as any entities who supply consulting
experts to plans) must ensure that all claims and appeals for disability benefits
are adjudicated in a manner designed to ensure the independence and
impartiality of the persons involved in making the decision or who are consulted
in the process of making the decision. Accordingly, decisions regarding hiring,
compensation, termination, promotion, or other similar matters with respect to
any individual, (such as a claims adjudicator, vocational expert accounting
expert, or medical expert) must not be made based upon the likelihood that the
individual will support the denial of benefits.

Comments on Technical Matters in the Proposed Regulations

Indianapo!

Deemed Exhaustion Drafting Issue

This regulation should be edited to clarify that the deemed exhausted provision
applies to both claims and appeals, not just “claims.” Presumably, if there is a violation
of the regulations, the claimant can seek review regardless of whether the claim is in the
“claim” or the “appeal” stage. | suggest the following clarifying language (added
language is bolded and underlined):

29 C.F.R. §2560.503-1(I)(2)(i) [proposed regulation]

In the case of a claim for disability benefits, if the plan fails to strictly adhere to all
the requirements of this section with respect to a claim or appeal,

Deemed Exhaustion of Claims and Appeals Processes



Die
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e

regulation in part because it has become routine for insurers to surpass the 90" day
without any explanation. Regardless, it provides my client with great comfort to know
that the determination on the appeal must be received on the 90" day or the claimant is
allowed to pursue a lawsuit in federal court. This is significant for our clients, not only by
providing a concrete deadline, but it is one of the few ways we are able to argue that that
my clients are subject to de novo review rather than the more oppressive arbitrary and
capricious standard of review. The current state of law provides that if the insurance
company or plan administrator fails to issue a decision on the appeal by the 90" day, the
claim is deemed exhausted and the claim is subject to de novo review. This can make a
significant impact on the outcome of the case and encourages plan administrators to
stick to the regulatory deadlines. | therefore am not in favor of providing the plans with
excuses and arguments that most likely will lead to unmitigated delays in issuing appeal
determinations and substantial litigation over whether the plan’s failure to issue a timely
decision on the appeal was de minimis and non-prejudicial to the claimant. These
arguments do not protect the plan participants, do not provide concrete deadlines for an
appeal determination and are very likely to result in substantial litigation. | would request
that the DOL eliminate section (ii) of the promulgated regulations and thereby provide
more certainty in the appeals process by providing concrete deadlines and avoid
substantial litigation over whether the plan administrator's violations of the regulations
were de minimis.

Comment on Notice for Applicable Statute of Limitations

The DOL has invited comment in the statute of limitations issues that have
developed since the Supreme Court's decision in Heimeshoff v. Hartford Life & Accid.
Ins Co., 134 U.S, 604 (2013). | agree that this is a crucial area for regulation as the
Heimeshoff decision has created confusion and much litigation. The DOL can assist by
creating standards for what is a reasonable plan-based limitations provision in the same
way that the DOL used its regulatory power to create timing deadlines for the claims
process in prior versions of the regulations. Since Heimeshoff left open the possibility
that an internal limitations period could run before the appeals process is complete (even
where exhaustion is mandatory), the DOL is in a good position to clarify that such an
approach would violate full and fair review required by 29 U.S.C. §1133. Additionally,
because contractual limitations periods are plan terms, the claimant should receive
notice about the limitations period from the plan just as is the case with other plan terms.
As the DOL aptly points out in the preamble to these proposed regulations, plan
administrators are in a better position to know the date of the expiration of the limitations
period and should not be hiding the bail from claimants if the plan administrator is
functioning as a true fiduciary.

One court has interpreted the existing regulations to require notice of the
expiration of a limitations period. Kienstra v. Carpenters' Health & Welfare Trust Fund of
St. Louis, No. 4:12CV53 HEA, 2014 WL 562557, at *4 (E.D. Mo. Feb. 13, 2014), affd
sub nom. Munro-Kienstra 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.” 29 C.F.R. § 2560.503-1(g)(iv)). This is a minority perspective. Here, the
DOL should do more than interpret its own rules; it should re-write them to remove any
ambiguity.



a January 19, 2016

ae
a. By Email and regular Mail: Office of Regulations and Interpretations,
5 Employee Benefits Security Administration
O RYAN Room M-5655

LAW FIRM U.S. Dept. of Labor
200 Constitution Avenue NW
Washington D.C. 20210

Re: Claims Procedure Regulations for Plans Providing Disability Benefits
RIN No.: 1210-AB39
Regulation: 29 C.F.R. §2560.503-1

Dear Assistant Secretary Borzi:

lam an attorney in indianapolis, Indiana, and for approximately fifteen years |
have been representing claimants in ERISA-governed disability claims both in the
appeal process and in litigation. Prior to this, | worked for an administrative agency, was
in-house counsel to a large insurance company and also was employed at an insurance
defense firm. | point this out because at the time | began taking on disability benefit
claims governed by ERISA, | had significant experience in administrative law, insurance
law and civil litigation. | was absolutely astounded at the gross inequity for
claimants/plaintiffs who had disability benefits subject to ERISA jurisprudence. The law
has been horribly tilted in favor of the insurance companies and plan administrators.
The claimants have lost their constitutional right to a jury trial, their cases are decided on
summary judgment thereby eliminating their right to any trial, they are allowed little
discovery, and they are mostly subjected to an abuse of discretion standard which has
been interpreted by the 7" Circuit on occasion to require the plaintiff to establish that the
defendant was “downright unreasonable.” With this as the backdrop, | am very grateful
and relieved to see the DOL tilting the playing field a little more in favor of the claimants,
which makes sense given that Congress passed ERISA to protect plan participants and
beneficiaries.

Comment on Timing of Right to Respond to New Evidence or Rationales

| appreciate the DOL’s efforts to improve the process for claimants who are

ambushed with new rationales or evidence during review on appeal. | commend this
effort, since sandbagging has been a persistent problem in the ERISA appeals process
and some courts have not appreciated how prejudicial this is to claimants. | have had
numerous cases wherein new evidence is not disclosed to my office or my client until the
final denial letter has been issued effectively closing the door on any possibility for my
client to rebut or respond to the newly developed evidence by the insurer or claims
administrator. In fact, it is not uncommon for the initial denial letter to be paltry in
comparison to the final denial letter. | recently litigated a case with Standard Insurance
wherein the initial denial letter was only 5 pages and the final denial letter, on the appeal,
was 25 pages. This practice certainly thwarts the claimants’ rights to a full and fair
review of their claim. It is especially egregious because the courts do not allow the

° claimants to submit additional evidence during litigation or to conduct discovery

regarding the question of whether the claimant is disabled. The proposed change offers



O’RYAN

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| recommend an amendment to the regulations governing the manner and
content of notification of benefit determinations on review. 29 C.F.R. §2560.503-1(j)
[proposed regulation]. The amended language should require the claims administrator
to notify the claimant of the date of the expiration of any plan based limitations period
and should include a definition of what is a reasonable limitations period. Such an
alteration takes care of the different courts’ views on when claims “accrue” in that it
makes clear that no limitations period can start before the internal claim and appeals
process is complete. It also makes clear that there will be at least a one-year period
after the completion of the plan’s appeals process in which a claimant can file suit. The
justification for this rule is that it would cut down on litigation devoted to the threshold
issue of the running of the limitations period. In addition, it may well lead to a
standardization of internal limitations periods that would be salutary for both claimants
and plan administrators.

Accordingly, | propose amending the proposed regulation by adding a section as
follows and renumbering accordingly (added language is indicated by bolding and
underlining):

29 C.F.R. 2560.503-1 (j)(6) [proposed regulation]

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.



some assurance that a claimant can contribute his or her relevant evidence to the record
that the court will review. Where the claimant, as plaintiff, has the burden of proof on
most issues, this only makes sense. In most litigation contexts, the party with the burden
of proof is given the last word. Here, giving the last word to the claimant during the
claims appeal process is, in effect, giving claimant the right of rebuttal in litigation.

There is, however, a countervailing concern that while this extra opportunity to
submit proof to the plan exists, claimants will be extending their time without benefit
payments. This is a problem that already exists and could be exacerbated. Plans have
protested that giving the claimant the last word will make the internal appeals processes
go on forever. To the contrary, my clients’ greatest wish is to expedite the claims
process in order to obtain their benefits as quickly as possible. More and more of my
clients are facing foreclosure, losing their vehicles and lagging behind on their bills
because of the delay in the payment of the disability benefits. My clients want to
conclude the appeal process as quickly as possible as long as they are able to receive a
full and fair review of their claim.

The following suggestion places reasonable limits on both claimants and plan
administrators and responds to the concern that claimants will have to wait too long for
determinations on review. While claimants will want to make fast work of their responses
because they are usually without income during this process, the type of evidence they
often need to respond may require hiring another physician, psychologist, or vocational
consultant. These professionals are not always readily available for quick turn-arounds
and, depending on the new information such experts are responding to, they may need
weeks to evaluate the new information. For this reason, claimants should have at least
60 days to respond to new evidence or rationales provided by the plan on appeal.
Moreover, the period for the decision on review to be completed should be tolled during
this 60-day period. When the claimant has responded, the plan administrator should be
allowed whatever time was left under the existing regulations or 30 days, whichever is
longer, to issue its determination on review. This rule should apply whether the new
information is a new “rationale” or new “evidence.”

Accordingly, | suggest the following amendment to the proposed regulation (new
language indicated by bolding and underlining):

2560.503-1(h)(4)(ii) [proposed regulations]

(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



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O’RYAN

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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.

Independence and Impartiality - Avoiding Conflicts of Interest

The proposed regulation regarding the impartiality of claims personnel is
essential and | am grateful for the DOL's effort to minimize the effect that biased
individuals have on the claims and appeals process. In fact, in one of our most recent
cases, Maiden v. Aetna Life ins. Co., et al., 2016 WL 81489 (N.D. Ind. Jan. 16, 2016),
the court specifically commented on the lack of objectivity of the two record reviewing
physicians hired by Aetna and noted:

In response, Aetna provided Maiden's file to two
“independent” consultants. (See DE 27-3 at 87-92, 95-99.) |
put quotations marks around the word “independent” because
one might reasonably wonder just how independent the
reviewers—Dr. Malcolm McPhee and Dr. Leonard Schnur—
really are. Their bread has been buttered by Aetna before;
each of them has been hired by Aetna multiple times to
conduct these kinds of disability reviews. See, e.g., Pearson-
Rhoads v. Aetna Life Ins. Co., 2011 WL 5116633, at *9 (E.D.
Penn. Oct. 28, 2011); Flatt v. Aetna Life Ins. Co., 2015 WL
§944365, at *10-11 (W.D. Tenn. Oct. 13, 2015); see also
Aschermann v. Aetna Life Ins. Co., 2011 WL 6888840, at *10
(S.D. Ind. Dec. 30, 2011); Barrett v. Aetna Life Ins. Co., 2012
WL 25775085, at *3 (W.D. Ky. July 3, 2012); Wiggin v. Aetna
Life Ins. Co., 2013 WL 6198181, at *6 (D. Maine Nov. 27,
2013); Hulst v. Aetna Life Ins. Co., 2014 WL 4594528, at *7
n. 4 (E.D. Ky. Sept. 15, 2014); Rall v. Aetna Life Ins. Co., 565
Fed. App'x 753, 756 (10th Cir. 2014); Hammonds v. Aetna
Life Ins. Co., 2015 WL 1299515, at *8 (S.D. Ohio Mar. 23,
2015); Carrier v. Aetna Life Ins. Co., 2015 WL 4511620, at
*7 (C.D. Cal. July 24, 2015); Jalowiec v. Aetna Life Ins. Co.,
2015 WL 9294269, at *10 (D. Minn. Dec. 21, 2015).

| have reviewed thousands of disability claim files and see the same record
reviewing physicians over and over contending that my clients are not impaired, and
able to work, contrary to the reports of the treating physicians. | have seen statistics
showing that these same physicians oftentimes are paid hundreds of thousands of
dollars per year to review more than 1,000 claims for one insurance company. As the
DOL is aware, disability claims are mostly denied on the basis of reports manufactured
by record reviewing physicians. Without impartiality, the claims process is greatly
tainted by the record reviewing physicians’ interest in maintaining their contract with the
insurance company. Accordingly, the DOL’s efforts to insure impartiality in the claims
process is greatly needed in this area, more than any other area.

First, the proposed regulation should make clear that impartiality is ensured,
even where the plan itself is not directly responsible for hiring or compensating the
individuals involved in deciding a claim. This clarification is necessary because, as a

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