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December 7, 2017

Via E-Mail: e-ORI(a)DOL.sov and

U.S. Mail

Office ofRegulations 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

RINNo.: 1210-AB39

Regulation: 29 C.F.R. §2560.503

Dear Deputy Assistant Secretary Hauser:

I am writing 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 over 20 years. 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 ofserious illness or injury and the loss ofwork income. Timely receipt of LTD benefits is

often the only thing that stands between my clients and losing their homes because they are

unable to pay the mortgage or other financial catastrophes. Indeed, I have had clients who have

died while their administrative claims were pending.

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 ofthe final rules governing disability claims, the concerns raised by the industry are not 

new. Rather, these objections appear to be simply re-argument ofthe merits ofthe 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.

Nevertheless, I will address the insurance industry’s primary objection.
EBSA

December 7, 2017 

Page 2

Costs Will Not Increase

The industry claims ifthe 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.

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 ofincreasing 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 ofrules applying to ERISA disability plans that became effective in 2002.

In fact, the Department can rely upon information supplied by its own Bureau ofLabor 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 ofLabor 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 ofstatutory bans on discretionary language clauses in disability policies 

by some states. Notably, during the time period ofthe 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.
EBSA

December 7, 2017

Page 2

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.dm.

Nonetheless, during this period LTD participation increased.

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

eth D. Perez, Esq

BDP/nc