I suggest that the agency minimize this patchwork effect by making the final rules apply to all

claims “pending on or after” the effective date.

COMMENT VI: Deemed Exhaustion Procedure

I commend the agency’s effort to set out a procedure for deemed denied claims for those claimants
needing to by-pass claims administrators who are committing serious procedural violations. However,
some additional clarification is necessary.

a)

b)

c)

Clarifying De Novo Review - The regulation indicates that a deemed exhausted claim will be
decided by the court “without the exercise of discretion by an appropriate fiduciary.” The
agency should clarify that the court “shall not defer to the decision in any way but shall apply de
novo review to all questions whether factual or interpretive.” I believe that this added language
is needed because some courts applying de novo review will still defer to the claims
administrators’ factual determinations. This variant of de novo review should not be applied
where the claim lands in court due to the fault of the claims administrator. I believe this small
change will help to carry out what the agency is intending with its regulation.

Supplementing the Record Before the Tribunal - Where a claim is accepted for review by the
court, it is important to remember that the procedural irregularities may have prevented the
claimant from including his best evidence in the record. The agency should add some language
to the regulation providing that a claimant can supplement the record under this scenario. While
some courts applying de novo review might permit this, many would not. Without this addition,
a deemed exhausted plaintiff may be worse off than he was before.

Supplementing the Record Re-filed on Remand — Likewise, the regulations should provide
for supplementation of the record on remand. As | understand it, where the court determines
that the violation the claimant complained of was de minimis, the claim is remanded to the plan
as if it were an appeal. However, a claim that is re-filed with the claims administrator may not
have been fully developed and the claimant should be given an opportunity to supplement the
record so that the claims administrator has enough evidence on which to decide the merits of the
claim. The claims administrator’s notice to the claimant should therefore include notice of the
right to submit additional information before the claim is re-reviewed.

Please feel free to contact me should DOL need any further information or input on
these very important matters.



Given this quandary about who truly makes disability decisions, the agency needs to
clarify that independence and impartiality applies to everyone who decides claims or appeals,
approves or signs off on those decisions, or renders any opinion that is relied upon in the
decision-making process, i.e. anyone who is consulted in the process is considered to be
“involved” and is subject to the same standard of objectivity.

COMMENT IV: Explaining Why the Administrator Does not Agree with Other Payers of
Disability Benefits

Perhaps the most astounding practice by claims administrators is to entirely discount a favorable
Social Security decision in disability benefit denials. The claims administrators doggedly pursue Social
Security benefits on behalf of the ERISA claimants, since most ERISA disability benefits are reduced
by the amount of these benefits. In many cases plans hire representatives to advocate for claimants
before the Social Security Administration, which advocacy entails taking that the position that the
claimant is disabled in a way that more severe than almost any LTD plan would require. Once the
money-saving Social Security award is obtained (and the plan has perhaps recouped the benefits), the
LTD claim is then denied and the plan does an about face on the disability question. (This
inconsistency was described and criticized in Metropolitan Life v. Glenn, although the decision does
not appear to have changed claims practices very much.)

The explanation for rejecting or ignoring the favorable Social Security decision, if one is
attempted, is often boilerplate and goes something like, “/w/e realize that you obtained a favorable
ruling from the Social Security Administration. The SSA’s decision is not binding on us. The difference
between our decision and SSA’s may be driven by the regulations that govern the Social Security
system.” There is no explanation that is pertinent to the specific claim at hand. If the proposed
regulation intends to render such an explanation insufficient to satisfy the rule, the agency should
clarify this by including language as follows: (A) A discussion of the decision, that is pertinent to the
specific claim or appeal under consideration, .. .”

To require this level of analysis from plan is to require nothing more than a “deliberate,
principled reasoning process,” which a plan fiduciary is already obligated to provide. Glenn v. MetLife,
461 F.3d 660, 666 (6th Cir. 2006) aff'd sub nom. Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 128 S. Ct.
2343, 171 L. Ed. 2d 299 (2008).

COMMENT V: Effective Date of the Final Regulations

The previous revision of the ERISA claims regulations applied to new claims filed on or after
January 1, 2002. Since then there have been cases decided on the “old regs” and other on the “new
regs.” Insurers and plans have applied one set of standards to some claims and another set to others.
This is not ideal. It leads to confusion in the case law and unfairness, especially where the regulations
could be seen as clarifications instead of amendments. For example, see Abram v. Cargill, 395 F.3d.
882 (Cu Cir. 2005) as compared to Midgett Washington Group Int'l LTD Plan, 561 F.3d 887, 894-96
(8th Cir. 2009).


THE MURRAY LAW FIRM, P.A.
2655 LeJeune Road PH1-D
Coral Gables, FL 33134
Telephone: 305-779-4818
Facsimile: 305-779-4819
Email: john@johnpmurray.com

Website: www.johnpmurray.com
January 19, 2016

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

Dear Secretary Borzi:

Ihave been representing claimants in ERISA benefit matters both in the internal appeal process
and in litigation for the past seventeen years. The majority of my clients are seeking to reverse denials
of disability claims. Most of these matters involve full and fair review in some form. Over the years
disability claims administrators have become more adept and aggressive in denying claims and
upholding the denial of benefits in the appeal process. The requirements of full and fair review need to
be revitalized to prevent further erosion of claimants’ rights to disability benefits and to prevent the
promised disability benefits from becoming illusory.

When Congress enacted ERISA, Congress created a strict fiduciary standard for those
individuals and entities involved in the administration or management of employee benefit plans or
their assets, a standard that requires those persons or entities to make decisions solely in the interests of
the plan’s participants and their beneficiaries. Over time this has not what has occurred. ERISA is a
shield for those involved in administrating these benefits and insulating them from unfair conduct,
while a sword at the same time against the claimant.

COMMENT I: What Time Limits Should Apply to the Claimant’s Right to Respond to New
Evidence or Rationales?

A common problem with ERISA disability benefit claims is that a claims administrator
reviewing an appeal can come up with new support to deny a claim and then close the process to the
claimant by refusing to offer an opportunity to respond. It is the claimant who has the greatest interest
in the speedy resolution of the appeal, since it is the claimant who is going without benefits, and often
times enduring significant financial hardship. Moreover, the number of claimants who will realistically
be able to participate in what the plan administrators predict will be an endless process is limited by the
out-of-pocket costs of doing so by the claimant.

a) Right to Respond -. A very common scenario occurs where the insurer denies the appeal based
on quotes from a medical report created by a well seasoned player in the industry as well as a
report of a vocational consultant who opines that the claimant can work at some jobs and can


earn a small fraction of the former wages. The claimant is informed that the opportunity to
appeal has been exhausted and the matter is ripe for suit. However, when the final claim is
produced, claimant discovers that the insurer’s medical review contains falsehoods and
inaccuracies and it is clear the reviewer was not supplied with critical information about some
of the conditions. Additionally, the medical reviewer claims to have spoken with treating
doctors, who agreed that he was capable of working. The claim file also reveals that the
vocational consultant was not applying the proper wage threshold to her claim; her plan says
that she is disabled if she is unable to earn more than 60% of her former wage. She writes to the
insurer explaining that her doctor denies any such conversation with the company’s reviewer
and explains that the reviewer missed key facts. She adds that the jobs they think she can
perform don’t pay very much. The insurer explains that the appeal process is closed. Faced with
the distortions and falsehoods that a judge might accept as true under the abuse of discretion
standard of review, and the possibility that the lengthy litigation process would only result in a
remand back to the plan that would elongate the process further, she settles with the insurer for
30 cents on the dollar.

There is nothing special about this fact pattern; it is so common as to be generic. This is
how a meritorious claim can be whittled down through sandbagging. Although there is
supposedly a right to judicial review, that right is entirely undermined where the claims
administrator refuses to entertain any rebuttals and the claimant is facing a lawsuit that is based
on a record entirely engineered by the claims administrator. The opportunity to respond to new
evidence or rationales before the final decision is crucial.

b) Timing - The claimant needs sufficient time to counter reports and rationales that the claims
administrator has generated on appeal. Claims administrators often employ different types of
consultants. In order to effectively rebut these reports, a claimant must sometimes find her own
experts. Sometimes these professionals are busy. Even the claimant’s own physicians are busy
and may not be immediately available to formulate a response. For this reason, I believe that a
claimant should be provided at least 90 days. This is fair, given that the plans usually take at
least this long to make their determinations on appeal. If the claimant does not need this
amount of time, he should be able to submit his response and expect a final determination
within the period of time left over by the claims administrator.

COMMENT II: Should a Plan be Required to Notify The Claimant of an Internal Limitations
Period?

a) Notification of the Internal Limitations Period - First, full and fair review should
minimize the possibility that ERISA claims will be buried for reasons that have nothing to do
with their merit. Notification of the plan’s time limits for filing suit protects the claimant from
the loss of benefits because of a mere technicality. This is a particular hazard to the
unrepresented claimant in this regard. ERISA contemplates a process that claimants can
participate in without legal representation.


b) Reasonable Limitations Period - The agency should intervene and set a standard for
reasonableness, keeping in mind the goal of minimizing the number of claims that are lost due
to technicalities. The agency has created other minimum time limits, so the agency is well
versed in this type of rule.

Of course, it would be beyond the imagination of any claimant that the internal
limitations period could run before he had completed an appeal process, but there is still
confusion around this absurd possibility. Accordingly, I am recommending 2 fixes.

First, the limitations period should not be able to run before the appeal process is
complete.

Second, an internal limitations period that is shorter than 3 years after the final appeal
denial should be deemed to violate full and fair review.

COMMENT III: Ensuring Independence and Impartiality of Persons Involved with Making the
Decision.

I am pleased that the agency is interested in addressing the widespread problem of
ERISA disability benefit plans’ use of conflicted employees or consultants. However, the
regulation could use some refinement in the form of greater specificity.

a) Independence and Impartiality of All Agents in All Fields - The regulation needs to
make clear that contractors, agents, outside vendors, and their employees are all covered by
the regulation. The disability plans do not directly employ or hire many of the people on
whom they rely to deny claims, but all of the people and entities and individuals need to be
free of bias or conflict.

A typical example is a disability claim in which surveillance is used against the
claimant. The claims administrator will have a contract with a surveillance company who
will hire an investigator. Another individual, perhaps, will write the report describing the
video. This video and report may be sent to yet another vendor who will contract with a
medical reviewer to opine on what the surveillance shows. This process is fraught with bias
and conflict.

b) Clarification of “involved.” - The agency needs to make clear that what it means to be
“involved with making the decision.” Insurers and plans regularly take the position that medical
and other experts they rely upon are not making the decisions but are simply rendering opinions
within their expertise so that claims handlers or other committees, who are the delegated
decision-makers, can make the decisions. The industry makes this assertion in affidavits and
depositions too numerous to count. In my experience, however, these assertions are
disingenuous. A medical or vocational expert will make or break the claim, and the claims
handler often adopts these opinions without question. This comes out in depositions of the
claims handlers. In addition, because of how disability departments are structured there is often
a supervisor, who may not make a decision, but may give final approval to that decision. Does
this supervisor fall under the regulation? I would expect and argument that she does not.