Federal Register / Vol. 82, No. 196 / Thursday, October 12, 2017 / Proposed Rules 47409 

relief with respect to unsigned section 

754 election statements, especially 

where returns have been filed 

electronically. In order to ease the 

burden on partnerships seeking to make 

a valid section 754 election and to 

eliminate the need to seek 9100 relief, 

the Treasury Department and the IRS 

are proposing to amend the current 

regulation to remove the signature 

requirement in § 1.754–1(b)(1). The 

amended regulation will provide that a 

taxpayer making a section 754 election 

must file a statement with its return 

that: (i) Sets forth the name and address 

of the partnership making the section 

754 election, and (ii) contains a 

declaration that the partnership elects 

under section 754 to apply the 

provisions of section 734(b) and section 

743(b). 

Proposed Applicability Date 

The amendments to this regulation 

are proposed to apply to taxable years 

ending on or after the date of 

publication of the Treasury decision 

adopting these rules as a final regulation 

in the Federal Register. Taxpayers, 

however, may rely on this proposed 

regulation for periods preceding the 

proposed applicability date. 

Accordingly, partnerships that filed a 

timely partnership return containing an 

otherwise valid section 754 election 

statement, but for the missing signature 

of a partner on the statement, will not 

need to seek 9100 relief in such cases. 

Special Analyses 

Certain IRS regulations, including this 

one, are exempt from the requirements 

of Executive Order 12866, as 

supplemented and reaffirmed by 

Executive Order 13563. Therefore, a 

regulatory impact assessment is not 

required. It is hereby certified that this 

regulation, if adopted, would not have 

a significant economic impact on a 

substantial number of small entities 

under the Regulatory Flexibility Act (5 

U.S.C. chapter 6). This certification is 

based on the fact that this regulation 

reduces the information currently 

required to be collected in making an 

election to adjust the basis of 

partnership property and thereby 

reduces burden on small entities. 

Pursuant to section 7805(f) of the Code, 

this regulation has been submitted to 

the Chief Counsel for Advocacy of the 

Small Business Administration for 

comment on its impact on small 

businesses. 

Comments and Requests for a Public 

Hearing 

Before this proposed regulation is 

adopted as a final regulation, 

consideration will be given to any 

comments that are submitted timely to 

the IRS as prescribed in this preamble 

under the ADDRESSES heading. The 

Treasury Department and the IRS 

request comments on all aspects of the 

proposed regulation. All comments will 

be available at www.regulations.gov or 

upon request. A public hearing will be 

scheduled if requested in writing by any 

person that timely submits written 

comments. If a public hearing is 

scheduled, notice of the date, time, and 

place for the public hearing will be 

published in the Federal Register. 

Drafting Information 

The principal author of this regulation 

is Meghan M. Howard of the Office of 

the Associate Chief Counsel 

(Passthroughs and Special Industries). 

However, other personnel from the 

Treasury Department and the IRS 

participated in their development. 

List of Subjects in 26 CFR Part 1 

Income taxes, Reporting and 

recordkeeping requirements. 

Proposed Amendment to the 

Regulations 

Accordingly, 26 CFR part 1 is 

proposed to be amended as follows: 

PART 1—INCOME TAXES 

■ Paragraph 1. The authority citation 

for part 1 continues to read in part as 

follows: 

Authority: 26 U.S.C. 7805 * * * 

Section 1.754–1 also issued under 26 

U.S.C. 754. 

■ Par 2. Section 1.754–1 is amended by 

revising the fourth sentence of 

paragraph (b)(1) and adding new 

paragraph (d) to read as follows: 

§ 1.754–1 Time and manner of making 

election to adjust basis of partnership 

property. 

* * * * * 

(b) * * * 

(1) * * * The statement required by 

this paragraph (b)(1) must set forth the 

name and address of the partnership 

making the election, and contain a 

declaration that the partnership elects 

under section 754 to apply the 

provisions of section 734(b) and section 

743(b). * * * 

* * * * * 

(d) Applicability date. The fourth 

sentence of paragraph (b)(1) of this 

section applies to taxable years ending 

on or after the date these regulations are 

published as final regulations in the 

Federal Register. Taxpayers may, 

however, rely on the fourth sentence of 

paragraph (b)(1) of this section for 

periods prior to the date these 

regulations are published as final 

regulations in the Federal Register. 

Kirsten Wielobob, 

Deputy Commissioner for Services and 

Enforcement. 

[FR Doc. 2017–22080 Filed 10–11–17; 8:45 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF LABOR 

Employee Benefits Security 

Administration 

29 CFR Part 2560 

RIN 1210–AB39 

Claims Procedure for Plans Providing 

Disability Benefits; Extension of 

Applicability Date 

AGENCY: Employee Benefits Security 

Administration, Department of Labor. 

ACTION: Proposed rule. 

SUMMARY: The Department of Labor 

proposes to delay for ninety (90) days— 

through April 1, 2018—the applicability 

of the Final Rule amending the claims 

procedure requirements applicable to 

ERISA-covered employee benefit plans 

that provide disability benefits. The 

Final Rule was published in the Federal 

Register on December 19, 2016, and 

became effective on January 18, 2017. 

The Final Rule currently is scheduled to 

apply to claims for disability benefits 

under ERISA-covered employee benefit 

plans that are filed on or after January 

1, 2018. Following publication of the 

Final Rule, various stakeholders and 

members of Congress asserted that it 

will drive up disability benefit plan 

costs, cause an increase in litigation, 

and in so doing impair workers’ access 

to disability insurance benefits. 

Pursuant to Executive Order 13777, the 

Department of Labor has concluded that 

it is appropriate to give the public an 

additional opportunity to submit 

comments and data concerning 

potential impacts of the Final Rule. The 

Department of Labor will carefully 

consider the submitted comments and 

data as part of its effort to examine 

regulatory alternatives that meet its 

objectives of ensuring the full and fair 

review of disability benefit claims while 

not imposing unnecessary costs and 

adverse consequences. The Department 

of Labor accordingly seeks public 

comment on a proposed 90-day delay of 

the applicability of the Final Rule in 

order to solicit additional public input 

and examine regulatory alternatives. If 

this proposal is finalized, the 

amendments made on December 19, 


asabaliauskas on DSKBBXCHB2PROD with PROPOSALS
47410 Federal Register / Vol. 82, No. 196 / Thursday, October 12, 2017 / Proposed Rules 

2016, would become applicable to 

claims for disability benefits that are 

filed after April 1, 2018, rather than 

January 1, 2018. 

DATES: Comments on the proposal to 

extend the applicability date for 90 days 

must be submitted to the Department on 

or before October 27, 2017. Comments 

providing data and otherwise germane 

to the examination of the merits of 

rescinding, modifying, or retaining the 

rule must be submitted to the 

Department on or before December 11, 

2017. 

FOR FURTHER INFORMATION CONTACT: 

Frances P. Steen, Office of Regulations 

and Interpretations, Employee Benefits 

Security Administration, (202) 693– 

8500. This is not a toll free number. 

ADDRESSES: You may submit written 

comments, identified by RIN 1210– 

AB39, by one of the following methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Email: e-ORI@dol.gov. Include RIN 

1210–AB39 in the subject line of the 

message. 

• Mail: Office of Regulations and 

Interpretations, Employee Benefits 

Security Administration, Room N–5655, 

U.S. Department of Labor, 200 

Constitution Avenue NW., Washington, 

DC 20210, Attention: Claims Procedure 

for Plans Providing Disability Benefits 

Examination. 

Instructions: All submissions received 

must include the agency name and RIN 

for this rulemaking. Persons submitting 

comments electronically are encouraged 

to submit only by one electronic method 

and not to submit paper copies. 

Comments will be available to the 

public, without charge, online at http:// 

www.regulations.gov and http://

www.dol.gov/ebsa and at the Public 

Disclosure Room, Employee Benefits 

Security Administration, Suite N–1513, 

200 Constitution Avenue NW., 

Washington, DC 20210. 

Warning: Do not include any 

personally identifiable or confidential 

business information that you do not 

want publicly disclosed. Comments are 

public records and are posted on the 

Internet as received, and can be 

retrieved by most internet search 

engines. 

SUPPLEMENTARY INFORMATION: Section 

503 of the Employee Retirement Income 

Security Act of 1974, as amended 

(‘‘ERISA’’), requires that every employee 

benefit plan shall establish and 

maintain reasonable procedures 

governing the filing of benefit claims, 

notification of benefit determinations, 

and appeal of adverse benefit 

determinations. In accordance with its 

authority under ERISA section 503, and 

its general regulatory authority under 

ERISA section 505, the Department of 

Labor (‘‘Department’’) long ago 

established regulations setting forth 

minimum requirements for employee 

benefit plan procedures pertaining to 

claims for benefits by participants and 

beneficiaries. 29 CFR § 2560.503–1. 

On December 19, 2016, the 

Department published a final regulation 

(‘‘Final Rule’’) amending the existing 

claims procedure regulation; the Final 

Rule revised the claims procedure rules 

for ERISA-covered employee benefit 

plans that provide disability benefits. 

The Final Rule was made effective 

January 18, 2017, but the Department 

delayed its applicability until January 1, 

2018, in order to provide adequate time 

for disability benefit plans and their 

affected service providers to adjust to it, 

as well as for consumers and others to 

understand the changes made. 

The Final Rule requires that plans, 

plan fiduciaries, and insurance 

providers comply with certain 

requirements when dealing with 

disability benefit claimants. In 

summary, the Final Rule includes the 

following requirements for the 

processing of claims and appeals for 

disability benefits: 

• Disclosure Requirements. Benefit 

denial notices must contain a more 

complete discussion of why the plan 

denied a claim and the standards it used 

in making the decision. For example, 

notices must include a discussion of the 

basis for disagreeing with a disability 

determination made by the Social 

Security Administration (‘‘SSA’’) if 

presented by the claimant in support of 

his or her claim. 

• Claim File and Internal Protocols. 

Benefit denial notices must include a 

statement that the claimant is entitled to 

receive, upon request, the entire claim 

file and other relevant documents. 

Currently, this statement is required 

only in notices denying benefits on 

appeal. Benefit denial notices also must 

include the internal rules, guidelines, 

protocols, standards, or other similar 

criteria of the plan that were used in 

denying a claim, or a statement that 

none were used. Currently, denial 

notices are not required to include these 

internal rules, guidelines, protocols, or 

standards; instead denial notices may 

include a statement that such rules, 

guidelines, protocols, or standards were 

used in denying the claim and that a 

copy will be provided to the claimant 

upon request. 

• Review and Respond to New 

Information. Plans may not deny 

benefits on appeal based on new or 

additional evidence or rationales that 

were not included when the benefit was 

denied at the claims stage, unless the 

claimant is given notice and a fair 

opportunity to respond. 

• Conflicts of Interest. Plans must 

ensure that disability benefit claims and 

appeals are adjudicated in a manner 

designed to ensure the independence 

and impartiality of the persons involved 

in making the decision. For example, a 

claims adjudicator or medical or 

vocational expert could not be hired, 

promoted, terminated, or compensated 

based on the likelihood of the person 

denying benefit claims. 

• Deemed Exhaustion. If a plan does 

not adhere to all claims processing 

rules, the claimant is deemed to have 

exhausted the administrative remedies 

available under the plan, unless the 

violation was the result of a minor error 

and other conditions are met. If the 

claimant is deemed to have exhausted 

the administrative remedies available 

under the plan, the claim or appeal is 

deemed denied on review without the 

exercise of discretion by a fiduciary and 

the claimant may immediately pursue 

his or her claim in court. A plan also 

must treat a claim as re-filed on appeal 

upon the plan’s receipt of a court’s 

decision rejecting the claimant’s request 

for review. 

• Coverage Rescissions. Rescissions 

of coverage, including retroactive 

terminations due to alleged 

misrepresentation of fact (e.g., errors in 

the application for coverage) must be 

treated as adverse benefit 

determinations, thereby triggering the 

plan’s appeals procedures. Rescissions 

for non-payment of premiums are not 

covered by this provision. 

• Communication Requirements in 

Non-English Languages. Benefit denial 

notices have to be provided in a nonEnglish language in certain situations, 

using essentially the standard 

applicable to group health benefit 

notices under the Affordable Care Act 

(‘‘ACA’’). Specifically, if a disability 

claimant’s address is in a county where 

10 percent or more of the population is 

literate only in the same non-English 

language, benefit denial notices must 

include a prominent statement in the 

relevant non-English language about the 

availability of language services. In such 

cases, plans also would be required to 

provide oral language services in the 

relevant non-English language and 

provide written notices in the nonEnglish language upon request. 

When it adopted the Final Rule, the 

Department published a regulatory 

impact analysis (‘‘RIA’’) to support its 

conclusion that changes to the existing 

rules were necessary to ensure that 

disability claimants receive a full and 


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Federal Register / Vol. 82, No. 196 / Thursday, October 12, 2017 / Proposed Rules 47411 

1Some of the stakeholders also asserted a 

comment that was previously provided with respect 

to the 2015 NPRM, specifically that the Department 

exceeded its authority and acted contrary to 

Congressional intent by applying certain ACA 

protections to disability benefit claims, arguing that 

if Congress had wanted these protections to apply 

to disability benefit claims, it would have expressly 

extended the claims and appeals rules in section 

2719 of the Public Health Service Act to plans that 

provide disability benefits. The Department did not 

take the position that the ACA compelled the 

changes in the Final Rule. Rather, because disability 

claims commonly involve medical considerations, 

the Department was of the view that disability 

benefit claimants should receive procedural 

protections similar to those that apply to group 

health plans, and thus it made sense to model the 

Final Rule on the procedural protections and 

consumer safeguards that Congress established for 

group health care claimants under the ACA. 

2Letter from Governor Dirk Kempthorne, 

President & Chief Executive Officer, American 

Council of Life Insurers, to The Honorable 

Alexander Acosta, Secretary, U.S. Department of 

Labor, ‘‘Department of Labor Disability Claims 

Regulation,’’ (July 17, 2017) (on file with the 

Employee Benefits Security Administration, U.S. 

Department of Labor). 

3Letter from American Benefits Council, 

American Council of Life Insurers, America’s 

Health Insurance Plans, Cigna, The ERISA Industry 

Committee, Financial Services Roundtable, Sun Life 

Financial, Unum Group, Inc., to Gary Cohn, 

Director, National Economic Council, The White 

House, Andrew P. Bremberg, Director, Domestic 

Policy Council, The White House, Edward C. 

Hugler, Acting Secretary, U.S. Department of Labor, 

‘‘Department of Labor Disability Claims 

Regulation,’’ (Mar. 14, 2017) (on file with the 

Employee Benefits Security Administration, U.S. 

Department of Labor). 

4Letter from Governor Dirk Kempthorne, supra, 

note 2. 

5 Id. 

6Letter from David P. Roe, M.D., Member of 

Congress (and 27 other Members of Congress), to R. 

Alexander Acosta, Secretary, U.S. Department of 

Labor, ‘‘Immediate Action Needed on Disability 

Claims Regulation,’’ (July 28, 2017) (on file with the 

Employee Benefits Security Administration, U.S. 

Department of Labor). 

7Email from Michael Kreps, Principal, Groom 

Law Group, to John J. Canary and Jeffrey J. Turner, 

Office of Regulations and Interpretations, Employee 

Benefits Security Administration (July 13, 2017) (on 

file with the Employee Benefits Security 

Administration, U.S. Department of Labor). 8 Id. 

9See, e.g., Letter from Matthew Eyles, Executive 

Vice President, Policy and Regulatory Affairs, 

America’s Health Insurance Plans, to The 

Honorable R. Alexander Acosta, Secretary of Labor, 

U.S. Department of Labor (May 10, 2017) (on file 

with the Employee Benefits Security 

Administration, U.S. Department of Labor). See also 

Letter from David P. Roe, M.D., Member of Congress 

(and 27 other Members of Congress), to R. 

Alexander Acosta, Secretary, U.S. Department of 

Labor, ‘‘Immediate Action Needed on Disability 

Claims Regulation,’’ (July 28, 2017) (on file with the 

Employee Benefits Security Administration, U.S. 

Department of Labor). 

fair review of their claims. The 

Department found at that time that the 

Final Rule would change the claims 

review process for ERISA-covered 

disability plans by expanding due 

process rights. The analysis concluded 

that: (1) The Final Rule would help 

alleviate the hardship to many 

individuals when they are unable to 

work after becoming disabled and their 

claims are unfairly denied; and (2) 

greater consistency in the handling of 

disability benefit claims and appeals, 

and improved access to information 

about the manner in which claims and 

appeals are adjudicated, would lead to 

efficiency gains in the system, both in 

terms of the allocation of spending at a 

macro-economic level as well as 

operational efficiencies among 

individual plans. 

On the cost side, the RIA concluded 

that the amendments would have 

modest costs, since many of the 

amendments clarified provisions of the 

claims procedure regulation or required 

the provision of information to 

claimants that adjudicators should 

already possess. Although the 

Department requested data when it first 

proposed amendments to the claims 

procedure regulation in April 2015 

(‘‘2015 NPRM’’), the comment letters 

received generally did not contain 

alternative cost and benefits estimates or 

data that the Department could use to 

estimate costs and benefits for the Final 

Rule. However, the Department 

quantified the costs associated with two 

specific provisions in the Final Rule for 

which it had sufficient data: The 

requirements to provide (1) additional 

information to claimants in the appeals 

process; and (2) information in a nonEnglish language. The RIA 

acknowledged that the Department did 

not have sufficient data to quantify the 

benefits associated with the Final Rule. 

After the Department published the 

Final Rule, certain stakeholders asserted 

in writing that the Final Rule will drive 

up disability benefit plan costs, cause an 

increase in litigation, and thus impair 

workers’ access to disability insurance 

protections.1 In support of these 

assertions, the stakeholders say that the 

right to review and respond to new 

information or rationales unnecessarily 

‘‘complicates the processing of 

disability benefits by imposing new 

steps and evidentiary burdens in the 

adjudication of claims,’’ and that some 

of the new disclosure requirements 

‘‘forc[e] plans to consider disability 

standards and definitions different from 

those in the plan.’’ 2 In addition, the 

stakeholders say that the new deemed 

exhaustion provision ‘‘explicitly tilts 

the balance in court cases against plans 

and insurers’’ and ‘‘creates perverse 

incentives for plaintiff’s attorneys to 

side-step established procedures and 

clog the courts for resolution of benefit 

claims.’’ 3 The stakeholders argue that 

these provisions (and others) 

collectively ‘‘will delay any final 

decision for the claimant and will 

significantly increase the administrative 

burdens on employers and disability 

insurance carriers, hurting the very 

employee the rule was purporting to 

help.’’ 4 Moreover, according to the 

stakeholders, these new provisions (and 

others) are unnecessary in any event 

because ‘‘there are already existing 

robust consumer protections applicable 

and available to disability claimants that 

have worked for well over a decade.’’ 5

Members of Congress also presented 

these same or similar concerns in 

writing to the Secretary of Labor.6

A confidential survey of carriers 

covering approximately 18 million 

participants in group long term 

disability plans (which reflects 

approximately 45% of the group longterm disability insurance market), 

conducted by the stakeholders 

estimated that the Final Rule would 

cause average premium increases of 5– 

8% in 2018 (when the Final Rule is 

scheduled to take effect) for several 

survey participants.7 The stakeholders 

argue that the demand for disability 

insurance is highly sensitive to price 

changes, such that even minor price 

increases can result in take-up rate 

reductions. For example, they reported 

that when the State of Vermont 

mandated mental health parity several 

years ago, there was an approximately 

20% increase in premiums, which 

resulted in a 20% decrease of covered 

employees.8 Thus, they conclude that 

the cost increases caused by the Final 

Rule will result in employers reducing 

and/or eliminating disability income 

benefits, and that some individuals may 

elect to drop or forego coverage, with 

the result being that fewer people will 

have adequate income protection in the 

event of disability. The stakeholders 

further assert that loss of access not only 

may be adverse to individual workers 

and their families, but also potentially 

adverse to federal and state public 

assistance programs more generally.9

The stakeholders acknowledge that 

the Final Rule’s RIA addressed the 

limited data sources that were publicly 

available at that time, and that the 

Department’s ability to fully quantify 

and evaluate costs and benefits was 

accordingly constrained. But the 

stakeholders say that such data could be 

developed by the industry and provided 

to the Department, and have promised 

to work with the Department to obtain 

this data. They explain that collecting 

the relevant data is a complex process 

that will take time and involve an 

expenditure of resources. For example, 

because each carrier’s data is 

proprietary and contains sensitive 


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47412 Federal Register / Vol. 82, No. 196 / Thursday, October 12, 2017 / Proposed Rules 

10 82 FR 12285 (March 1, 2017). 

11The Department notes that several provisions 

in the Final Rule essentially conform the express 

text of certain parts of the Final Rule to various 

federal court decisions on full and fair review 

requirements in the 2000 Final Rule. E.g., Saffon v. 

Wells Fargo & Co. Long Term Disability Plan, 522 

F.3d 863, 871–872 (9th Cir. 2008) (finding that a full 

and fair review requires a plan administrator to 

disclose the reasons for denial in the administrative 

process); 75 FR at 43333 n.7. The proposed delay 

of the applicability date in this document does not 

modify or otherwise delay the application of any 

such controlling judicial precedents. 

12See, e.g., Comment Letter #115 (American 

Benefits Council) (asserting generally that the 2015 

NPRM ‘‘is likely to impose a host of additional costs 

on plans—none of which appear to have been 

considered by the Department as part of its 

economic analysis.’’); see also Comment Letter #114 

(American Council of Life Insurers) (asserting that 

it ‘‘does not believe that the Department has 

properly quantified or qualified the benefits 

associated with the proposed regulations or 

provided a sufficient cost analysis associated with 

the proposed regulatory requirements.’’). 

13See, e.g., Montour v. Hartford Life and Accident 

Ins. Co., 588 F.3d 623, 637 (9th Cir. 2009) 

(‘‘[F]ailure to explain why it reached a different 

conclusion than the SSA is yet another factor to 

consider in reviewing the administrator’s decision 

for abuse of discretion, particularly where, as here, 

a plan administrator operating with a conflict of 

interest requires a claimant to apply and then 

benefits financially from the SSA’s disability 

finding.’’); Brown v. Hartford Life Ins. Co., 301 F. 

App’x 772, 776 (10th Cir. 2008) (insurer’s 

discussion was ‘‘conclusory’’ and ‘‘provided no 

specific discussion of how the rationale for the 

SSA’s decision, or the evidence the SSA 

considered, differed from its own policy criteria or 

the medical documentation it considered’’). 

14 In November of 2000, the Department 

published a final rule substantially reforming the 

standards governing the timeframes and disclosure 

requirements for ERISA benefit claims and appeals, 

including disability benefits. 65 FR 70246 (Nov. 21, 

2000). 

business information, an independent 

third party must collect it in a manner 

that protects this information. This may 

include, among other things, negotiating 

specific non-disclosure, security, and 

data retention agreements. They further 

observe that such a process must also be 

carefully designed to ensure that there 

are no violations of relevant federal or 

state laws, such as antitrust laws. The 

stakeholders also assert that each 

carrier’s existing information technology 

systems may collect and report data in 

different ways, so, to be usable, the data 

must be aggregated into standardized 

data sets, anonymized to ensure that no 

data point can be attributed to a single 

carrier, and reviewed and analyzed to 

ensure accuracy and reliability (as 

required for a regulatory impact 

analysis). The stakeholders made a 

commitment to provide this data and 

asked the Department to delay the Final 

Rule’s applicability date. 

On February 24, 2017, after the Final 

Rule amending the disability claims 

procedure was published and became 

effective, the President issued Executive 

Order 13777 (‘‘E.O. 13777’’), entitled 

Enforcing the Regulatory Reform 

Agenda.10 E.O. 13777 is intended to 

reduce the regulatory burdens agencies 

place on the American people, and 

directs federal agencies to undertake 

specified activities to accomplish that 

objective. As a first step, E.O. 13777 

requires the designation of a Regulatory 

Reform Officer and the establishment of 

a Regulatory Reform Task Force within 

each federal agency covered by the 

Order. The Task Forces were directed to 

evaluate existing regulations and make 

recommendations regarding those that 

can be repealed, replaced, or modified 

to make them less burdensome. E.O. 

13777 also requires that Task Forces 

seek input from entities significantly 

affected by regulations, including state, 

local and tribal governments, small 

businesses, consumers, nongovernmental organizations, and trade 

associations. 

In light of the foregoing, the 

Department has concluded that it is 

appropriate to seek additional public 

input regarding the regulatory impact 

analysis in the Final Rule. If additional 

reliable data and information is 

submitted, the Department will be able 

to consider whether it supports 

regulatory alternatives other than those 

adopted in the Final Rule. The 

Department is unable to complete a 

notice and comment and reexamination 

process by January 1, 2018, particularly 

given the complex data collection and 

sanitation process required here, as 

described by the stakeholders. 

Extending the applicability date past 

January 1, 2018, would allow the 

Department to complete this public 

solicitation process and examine 

regulatory alternatives. The Department 

consequently seeks public input on a 

proposed 90-day delay.11 For reasons 

discussed below, the Department 

believes 90 days is a reasonable period 

during which to review public input 

and take an appropriate course of 

action. 

As indicated above, a primary 

concern of the stakeholders is that the 

Final Rule will unnecessarily increase 

the cost of coverage and discourage the 

uptake and utilization of disability 

coverage. While a number of the 

commenters on the 2015 NPRM 

forecasted increased regulatory and 

compliance costs as a whole, few, if any, 

of them offered itemized cost estimates 

on a provision-by-provision basis.12 The 

Department recognizes that access to 

disability benefits depends in part on 

affordability, which is affected by 

regulatory burdens. Accordingly (as 

opposed to generalized predictions of 

cost increases or aggregate cost 

estimates of the Final Rule in its 

entirety), the Department solicits costs 

estimates on each of the provisions 

contained in that rule. Itemized cost 

estimates of this type would enhance 

the Department’s ability to assess costs 

and benefits of regulatory alternatives 

and to select approaches that maximize 

net benefits. 

The Department also seeks data on the 

price elasticity of demand for disability 

insurance coverage. Many stakeholders, 

for example, discuss price sensitivity in 

this market and predict possibly 

significant reductions in access to 

coverage unless the Final Rule is revised 

or repealed (i.e., that the price elasticity 

of demand in this market is relatively 

elastic). Evidence of this elasticity 

would be very helpful to the 

Department. For example, a number of 

states (some very recently) have banned 

discretionary clauses in insurance 

policies, which may have resulted in 

increased administrative costs. In those 

cases, is there data showing reduced 

demand (in terms of dropped coverage 

or reduced uptake) following the 

implementation of the bans? Another 

example is the Final Rule’s requirement 

to discuss the basis for disagreeing with 

a disability determination made by the 

SSA. Is there data showing a 

detrimental impact on coverage in 

jurisdictions where courts 13 have 

endorsed such an explanation? Another 

possible example is the changes to the 

claims procedure requirements made in 

2000.14 Is there data showing a 

detrimental impact on coverage after 

those revisions were made? This is not 

an exhaustive list of potentially relevant 

situations or questions; instead, it is 

intended to provide insight into issues 

the Department intends to consider and 

as to which comments will be helpful. 

The Department also seeks comments 

on any matter germane to this 

examination, including the merits of 

rescinding, modifying, or retaining the 

Final Rule. Upon completion of this 

public solicitation process and review, 

the Department may decide to allow all 

or part of the Final Rule to take effect 

as written, propose a further extension, 

withdraw the Final Rule, or propose 

amendments to the Final Rule. The 

Department requests comments on each 

of these possible outcomes. 

Comments on whether to extend the 

applicability date for 90 days must be 

submitted to the Department within 15 

days. If the 90-day period is insufficient, 

please specify a sufficient period of time 

and explain why longer than 90 days is 

needed. Comments providing data or 

otherwise germane to the examination 


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Federal Register / Vol. 82, No. 196 / Thursday, October 12, 2017 / Proposed Rules 47413 

15 81 FR 92316, 92339 (Dec. 19, 2016). 

of the merits of rescinding, modifying, 

or retaining the rule must be submitted 

to the Department within 60 days. If 60 

days is not enough time to provide 

input on the broader examination, 

including responding to the various data 

requests throughout this document, 

commenters are encouraged to notify 

the Department within the 15-day 

period, and to explain why 60 days is 

not enough time and specify how much 

time is needed. This will give the 

Department an opportunity to consider 

whether to extend the 60-day comment 

period in conjunction with a decision 

on whether and how long to delay the 

applicability date. 

Regulatory Impact Analysis 

The Department proposes to delay the 

applicability date of the Final Rule for 

90 days—through April 1, 2018. During 

the delay, the Department will review 

the Final Rule to determine whether it 

is unnecessary, ineffective, or imposes 

costs that exceed benefits in 

conformance with E.O. 13777. As part of 

this process, the Department also will 

review data submitted on the issues 

raised on the RIA in the Final Rule to 

determine whether such new 

information and data support changes to 

the Final Rule. 

The delay is necessary to avoid the 

applicability date of the Final Rule 

occurring before the Department 

completes its review, which would 

necessarily require those regulated by 

the Final Rule to prepare for and begin 

complying on January 1, 2018 while the 

Department is still reviewing the rule. 

That would unnecessarily and unwisely 

disrupt the disability insurance market 

and produce frictional costs that are not 

offset by commensurate benefits. The 

tradeoff is that the changes in the Final 

Rule will be delayed. 

1. Executive Order 12866 Statement 

This proposed extension of the 

applicability date of the Final Rule is a 

significant regulatory action within the 

meaning of section 3(f)(4) of Executive 

Order 12866, because it raises novel 

legal or policy issues arising out of legal 

mandates, the President’s priorities, or 

the principles set forth in the Executive 

Order. Therefore, the Department has 

considered the costs and benefits of the 

proposed extension, and the Office of 

Management and Budget (‘‘OMB’’) has 

reviewed and approved the proposed 

applicability date extension. 

The Department’s regulatory impact 

analysis of the Final Rule estimated that 

benefits derived by workers seeking 

disability benefits justify compliance 

costs.15 The 90-day delay of the 

applicability date would delay these 

estimated costs and benefits by 90 days. 

Data limitations prevented the 

Department from quantifying benefits 

the Final Rule would provide to workers 

and their family members participating 

in ERISA-covered disability insurance 

plans. The RIA for the Final Rule 

includes a qualitative analysis of the 

benefits. The Department estimated at 

that time that as a result of the rule: 

• Some participants would receive 

payment for benefits they were entitled 

to that were improperly denied by the 

plan; 

• There would be greater certainty 

and consistency in the handling of 

disability benefit claims and appeals, 

and improved access to information 

about the manner in which claims and 

appeals are adjudicated; 

• Fairness and accuracy would 

increase in the claims adjudication 

process. 

The Department estimated that the 

requirements of the Final Rule would 

have modest costs. The Department 

quantified the costs associated with two 

provisions of the Final Rule for which 

it had sufficient data: The requirements 

to provide: (1) Providing additional 

information to claimants in the appeals 

process ($14.5 million annually); and (2) 

providing information in a non-English 

language ($1.3 million annually). 

Stakeholders have raised concerns 

that the Department underestimated the 

costs of the Final Rule and maintain that 

if the Department had properly 

estimated costs, it would have found 

that the costs exceed the Final Rule’s 

benefits. Specifically, stakeholders 

assert that: (1) Requiring benefit denial 

notices include a discussion of the basis 

for disagreeing with a disability 

determination made by the SSA will 

increase costs because SSA’s 

definitions, policies, and procedures 

may be different from those of private 

disability plans; (2) providing that the 

claimant is deemed to have exhausted 

the administrative remedies available 

under the plan if plans do not adhere to 

all claims processing rules, unless the 

violation was the result of a minor error 

and other specified conditions are met, 

will result in increased litigation and 

administrative costs; and (3) prohibiting 

plans from denying benefits on appeal 

based on new or additional evidence or 

rationales that were not included when 

the benefit was denied at the claims 

stage, unless the claimant is provided 

notice and an opportunity to respond to 

the new or additional information or 

rationales, will lead to protracted 

exchanges between plans and claimants 

that will cause delays and lead to higher 

costs. Stakeholders also argue that 

participants in disability plans are very 

sensitive to price increases and predict 

that the cost increases associated with 

the Final Rule will cause some 

individuals to elect to drop or forego 

coverage, meaning that fewer people 

will have adequate income protection in 

the event of disability. 

During the proposed 90-day 

applicability date delay, the Department 

intends to assess the impacts of the 

Final Rule. In order for the assessment 

to be as robust as possible, the 

Department is hereby requesting data 

that would help it quantify the 

payments for plan benefits that plan 

participants would receive and any cost 

increases or reductions in access to 

coverage that could result if the delayed 

provisions of the Final Rule take effect. 

Specifically, the Department requests 

data that it could use to assess: (1) The 

number of disability claims that are 

filed and denial rates for such claims, 

including rates separately for claimants 

who were previously approved under 

the Social Security Disability Insurance 

Program (SSDI) and statistics on reasons 

for denial; (2) how often plans rely on 

new or additional evidence or rationales 

during the claims review process and 

the volume of the material that comprise 

such additional evidence or rationales; 

(3) the price elasticity of demand for 

disability insurance coverage; (4) 

pricing or premiums for group and 

individual level policies and factors that 

affect pricing; (5) loss ratios and the 

breakdown of expenses (claims, sales, 

claims processing, etc.); (6) aggregate, 

average, and median benefits paid and 

ages of claimants; (7) the projected 

litigation costs associated with the new 

procedural requirements for disability 

claims provided in the Final Rule; (8) 

the number of new claims that will be 

granted that, but for the provisions in 

the Final Rule, would have been denied, 

and the value of those benefits; (9) the 

systems and technology that plans and 

insurers use to process disability claims 

and cost estimates updating such 

systems to comply with the Final Rule; 

(10) statistics on steps, timing of steps, 

and disposition of claims from initial 

filing to final disposition, including 

claims filed but never perfected or 

decided, up to and including claims 

denied though appeal and litigated; and 

(11) information regarding the costs for 

non-English services and the estimated 

population of claimants that might be 

expected to use such services. The 

Department understands that such data 

is not publicly available and is willing 


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47414 Federal Register / Vol. 82, No. 196 / Thursday, October 12, 2017 / Proposed Rules 

16The Department is aware of a number of 

relevant annual and semiannual industry surveys, 

such as the U.S. Group Disability Market Survey. 

Where applicable, commenters are encouraged to 

submit to the Department the data underlying these 

surveys. See, e.g., the American Council of Life 

Insurers’ Written Statement for the Record entitled 

Do Private Long-Term Disability Policies Provide 

the Protection They Promise? Before the S. Comm. 

on Finance, 111th Cong. 113 & n.3 (2010), in which 

the ACLI discusses aggregate data on approvals and 

elimination periods. 

to work with stakeholders to ensure that 

any trade secrets and proprietary 

business information are protected from 

public disclosure and that the data 

collection process is designed to ensure 

that no violations of antitrust or other 

federal or state laws occur.16

It also would be helpful for the 

Department to receive data regarding the 

impact of the 2000 final claims and 

appeals regulation (2000 Final Rule). 

Commenters at the time stated that it 

would lead to cost increases and 

decreases in consumer access. The 

Department is interested in receiving 

data that shows: (1) Cost increases that 

resulted from compliance with the 2000 

Final Rule (or lack thereof) and whether 

such costs were passed on to 

consumers; and (2) whether employers 

stopped offering disability insurance 

benefits and/or employee take-up rates 

decreased. The Department also 

requests data that demonstrates how the 

Department’s 2000 Final Rule impacted 

the cost of disability claims litigation. 

While the Department welcomes the 

submission of all relevant data, to 

ensure its usability, the providers of 

such data are encouraged to discuss its 

source(s), manner of collection, and any 

methodology used to analyze it and 

derive conclusions from it. The 

Department requests that commenters 

fully disclose any bias(es) associated 

with the data and provide honest 

evaluations of its strengths and 

weaknesses. This will help ensure that 

the Department reaches an optimal 

outcome and that full transparency is 

provided to the public. 

2. Paperwork Reduction Act 

The Paperwork Reduction Act 

(‘‘PRA’’) prohibits federal agencies from 

conducting or sponsoring a collection of 

information from the public without 

first obtaining approval from OMB. See 

44 U.S.C. 3507. Additionally, members 

of the public are not required to respond 

to a collection of information, nor be 

subject to a penalty for failing to 

respond, unless such collection displays 

a valid OMB control number. See 44 

U.S.C. 3512. 

OMB approved information 

collections contained in the Final Rule 

under OMB Control Number 1210–0053. 

The Department is not modifying the 

substance of the Information Collection 

Requests at this time; therefore, no 

action under the PRA is required. The 

information collections will become 

applicable at the same time the rule 

becomes applicable. The information 

collection requirements contained in the 

Final Rule are discussed below. 

This proposal would delay the 

applicability date of the Department’s 

amendments to the disability claims 

procedure rule for 90 days, through 

April 1, 2018. The Final Rule revised 

the rules applicable to ERISA-covered 

plans providing disability benefits. 

Some of these amendments revise 

disclosure requirements under the 

claims procedure rule that are 

information collections covered by the 

PRA. For example, benefit denial 

notices must contain a full discussion of 

why the plan denied the claim, and to 

the extent the plan did not follow or 

agree with the views presented by the 

claimant to the plan or health care 

professional treating the claimant or 

vocational professionals who evaluated 

the claimant, or a disability 

determination regarding the claimant 

presented by the claimant to the plan 

made by the SSA, the discussion must 

include an explanation of the basis for 

disagreeing with the views or disability 

determination. The notices also must 

include either: (1) The specific internal 

rules, guidelines, protocols, standards or 

other similar criteria of the plan relied 

upon in making the adverse 

determination or, alternatively, (2) a 

statement that such rules, guidelines, 

protocols, standards or other similar 

criteria of the plan do not exist. Plan 

administrators also must provide (1) 

claimants with any new or additional 

evidence considered free of charge, and 

(2) notices of adverse benefit 

determination potentially in an nonEnglish language. 

The burdens associated with the 

disability claims procedure revisions are 

summarized below and discussed in 

detail in the regulatory impact analysis 

contained in the preamble to the Final 

Rule (81 FR 92317, 92340 (Dec. 19, 

2016)). It should be noted that this 

proposal only affects the requirements 

applicable to disability benefit claims, 

which are a small subset of the total 

burden associated with the ERISA 

claims procedure information 

collection. 

Type of Review: Revised collection. 

Agencies: Employee Benefits Security 

Administration, Department of Labor. 

Title: ERISA Claims Procedures. 

OMB Number: 1210–0053. 

Affected Public: Business or other forprofit; not-for-profit institutions. 

Total Respondents: 5,808,000. Total 

Responses: 311,790,000. 

Frequency of Response: Occasionally. 

Estimated Total Annual Burden 

Hours: 516,000. 

Estimated Total Annual Burden Cost: 

$814,450,000. 

3. Regulatory Flexibility Act 

The Regulatory Flexibility Act (5 

U.S.C. 601 et seq.) (RFA) imposes 

certain requirements with respect to 

federal rules that are subject to the 

notice and comment requirements of 

section 553(b) of the Administrative 

Procedure Act (5 U.S.C. 551 et seq.) and 

which are likely to have a significant 

economic impact on a substantial 

number of small entities. Unless an 

agency determines that a rule is not 

likely to have a significant economic 

impact on a substantial number of small 

entities, section 604 of the RFA requires 

the agency to present an initial 

regulatory flexibility analysis (IRFA) of 

the proposed rule describing the rule’s 

impact on small entities and explaining 

how the agency made its decisions with 

respect to the application of the rule to 

small entities. Pursuant to section 

605(b) of the RFA, the Department 

certified that the Final Rule did not 

have a significant economic impact on 

a substantial number of small entities 

and provided an analysis of the 

rationale for that certification. Similarly, 

the Department hereby certifies that the 

proposed rule will not have a significant 

economic impact on a substantial 

number of small entities because it 

merely delays the applicability date of 

the Final Rule. 

4. Congressional Review Act 

The proposed rule is subject to the 

Congressional Review Act (CRA) 

provisions of the Small Business 

Regulatory Enforcement Fairness Act of 

1996 (5 U.S.C. 801 et seq.) and, if 

finalized, will be transmitted to 

Congress and the Comptroller General 

for review. 

5. Unfunded Mandates Reform Act 

Title II of the Unfunded Mandates 

Reform Act of 1995 (Pub. L. 104–4) 

requires each federal agency to prepare 

a written statement assessing the effects 

of any federal mandate in a proposed or 

final agency rule that may result in an 

expenditure of $100 million or more 

(adjusted annually for inflation with the 

base year 1995) in any one year by State, 

local, and tribal governments, in the 

aggregate, or by the private sector. For 

purposes of the Unfunded Mandates 

Reform Act, as well as Executive Order 

12875, this proposal does not include 

any federal mandate that we expect 


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Federal Register / Vol. 82, No. 196 / Thursday, October 12, 2017 / Proposed Rules 47415 

would result in such expenditures by 

state, local, or tribal governments, or the 

private sector. The Department also 

does not expect that the proposed rule 

will have any material economic 

impacts on State, local or tribal 

governments, or on health, safety, or the 

natural environment. 

6. Federalism Statement 

Executive Order 13132 outlines 

fundamental principles of federalism, 

and requires the adherence to specific 

criteria by federal agencies in the 

process of their formulation and 

implementation of policies that have 

‘‘substantial direct effects’’ on the 

States, the relationship between the 

national government and States, or on 

the distribution of power and 

responsibilities among the various 

levels of government. Federal agencies 

promulgating regulations that have 

federalism implications must consult 

with State and local officials and 

describe the extent of their consultation 

and the nature of the concerns of State 

and local officials in the preamble to the 

Final Rule. 

This proposed rule does not have 

federalism implications because it 

merely delays the applicability date of 

the rule. Therefore, the proposed rule 

has no substantial direct effect on the 

States, the relationship between the 

national government and the States, or 

the distribution of power and 

responsibilities among the various 

levels of government. In compliance 

with the requirement of Executive Order 

13132 that agencies examine closely any 

policies that may have federalism 

implications or limit the policy making 

discretion of the States, the Department 

welcomes input from States regarding 

this assessment. 

7. Executive Order 13771: Reducing 

Regulation and Controlling Regulatory 

Costs 

Executive Order 13771, titled 

Reducing Regulation and Controlling 

Regulatory Costs, was issued on January 

30, 2017. Section 2(a) of EO 13771 

requires an agency, unless prohibited by 

law, to identify at least two existing 

regulations to be repealed when the 

agency publicly proposes for notice and 

comment, or otherwise promulgates, a 

new regulation. In furtherance of this 

requirement, section 2(c) of EO 13771 

requires that the new incremental costs 

associated with new regulations shall, to 

the extent permitted by law, be offset by 

the elimination of existing costs 

associated with at least two prior 

regulations. This proposed rule is 

expected to be an EO 13771 

deregulatory action. 

List of Subjects in 29 CFR Part 2560 

Claims, Employee benefit plans. 

For the reasons stated above, the 

Department proposes to amend 29 CFR 

part 2560 as follows: 

PART 2560—RULES AND 

REGULATIONS FOR ADMINISTRATION 

AND ENFORCEMENT 

■ 1. The authority citation for part 2560 

continues to read as follows: 

Authority: 29 U.S.C. 1132, 1135, and 

Secretary of Labor’s Order 1–2011, 77 FR 

1088 (Jan. 9, 2012). Section 2560.503–1 also 

issued under 29 U.S.C. 1133. Section 

2560.502c–7 also issued under 29 U.S.C. 

1132(c)(7). Section 2560.502c–4 also issued 

under 29 U.S.C. 1132(c)(4). Section 

2560.502c–8 also issued under 29 U.S.C. 

1132(c)(8). 

§ 2560.503–1 [Amended] 

■ 2. Section 2560.503–1 is amended by 

removing ‘‘on or after January 1, 2018’’ 

and adding in its place ‘‘after April 1, 

2018’’ in paragraph (p)(3) and by 

removing the date ‘‘December 31, 2017’’ 

and adding in its place ‘‘April 1, 2018’’ 

in paragraph (p)(4). 

Signed at Washington, DC, this 6th day of 

October, 2017. 

Timothy D. Hauser, 

Deputy Assistant Secretary for Program 

Operations, Employee Benefits Security 

Administration, Department of Labor. 

[FR Doc. 2017–22082 Filed 10–10–17; 8:45 am] 

BILLING CODE 4510–29–P 

LIBRARY OF CONGRESS 

U.S. Copyright Office 

37 CFR Parts 201, 202 

[Docket No. 2017–15] 

Group Registration of Unpublished 

Works 

AGENCY: U.S. Copyright Office, Library 

of Congress. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The U.S. Copyright Office is 

proposing to create a new group 

registration option for a limited number 

of unpublished works. To qualify for 

this group option, all the works must be 

created by the same author or the same 

joint authors, and the author or joint 

authors must be named as the copyright 

claimant for each work. The claim to 

copyright in each work must be the 

same, and each work must be registered 

in the same administrative class. In 

general, applicants will be allowed to 

include up to five works in each 

submission. Applicants will be required 

to submit an online application and 

upload their works to the electronic 

registration system, although the Office 

may waive these requirements in 

exceptional cases. This new group 

registration option will replace the 

current ‘‘unpublished collections’’ 

option, which the Office has determined 

is an ineffective mechanism for 

registration of multiple unpublished 

works; among other things, it allows 

applicants to register an essentially 

unlimited number of works. The 

proposed rule will allow the Office to 

more easily examine each work for 

copyrightable authorship, create a more 

robust record of the claim, and improve 

the efficiency of the registration process. 

The Proposed Rule also makes unrelated 

technical amendments to the ‘‘unit of 

publication’’ regulation. 

DATES: Comments must be made in 

writing and must be received in the U.S. 

Copyright Office no later than 

November 13, 2017. 

ADDRESSES: For reasons of government 

efficiency, the Copyright Office is using 

the regulations.gov system for the 

submission and posting of public 

comments in this proceeding. All 

comments are therefore to be submitted 

electronically through regulations.gov. 

Specific instructions for submitting 

comments are available on the 

Copyright Office Web site at https://

www.copyright.gov/rulemaking/groupunpublished/. If electronic submission 

of comments is not feasible due to lack 

of access to a computer and/or the 

internet, please contact the Office for 

special instructions using the contact 

information below. 

FOR FURTHER INFORMATION CONTACT: 

Robert J. Kasunic, Associate Register of 

Copyrights and Director of Registration 

Policy and Practice; Erik Bertin, Deputy 

Director of Registration Policy and 

Practice; or Regan A. Smith, Deputy 

General Counsel, by telephone at 202– 

707–8040 or by email at rkas@loc.gov, 

ebertin@loc.gov, and resm@loc.gov. 

SUPPLEMENTARY INFORMATION: 

I. Background 

A. Group Registration Under the 1976 

Act 

When Congress enacted the Copyright 

Act of 1976 (the ‘‘Act’’), it authorized 

the Register of Copyrights (the 

‘‘Register’’) to specify by regulation the 

administrative classes of works for the 

purpose of seeking a registration and the 

nature of the deposits required for each 

class. In addition, Congress gave the 

Register the discretion to allow groups 

of related works to be registered with 

one application and one filing fee, a 


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