What Are the New ERISA Disability Regulations? Will they Affect You?

How will new ERISA rules affect your disability claim or appeal?

Beginning January 1, 2018, the regulations that control ERISA claims and appeals will change.

This is good news, because the new ERISA disability regulations will give short and long term disability claimants a much needed layer of protection.

It is well-known that group disability claims are fraught with deceptive practices. This is largely because existing ERISA regulations make it easy for insurers to deny valid disability claims without penalties. Under ERISA, legal remedies and due process for claimants are very limited.

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The new ERISA disability regulations will help level the playing field for claimants.

Insurance companies will now have to comply with new procedural rules when administering ERISA claims and appeals.

Disabled workers will be given a fair chance to develop and perfect their claims. If the insurance company unreasonably denies a claim, litigation should no longer automatically lean in favor of the insurance company.

The new rules will apply to both short term and long term disability benefit plans provided through your employer.

New ERISA Disability Rules – Changes So Claimants May Receive a Full and Fair Review

Here is a run-down of the seven main rule changes; each regulation is followed by our disability law firm’s understanding and examples.

1. Claims and appeals must be adjudicated in a manner designed to ensure independence and impartiality of the persons involved in making the benefit determination.

In other words, the person reviewing and deciding whether disability benefits will be awarded must not be given nor must not act upon any incentive to deny a claim. There must be no conflict of interest, no unprincipled benefit denials or other breaches of fiduciary duty

Common examples of wrongful behavior taken by insurance providers include the payment of compensation to claims examiners who deny “x-number” of claims, or the promotion of claim handlers as incentive to deny. Other examples include hiring in-house medical examiners or vocational experts who routinely find in favor of denial to the benefit of the insurance company.

2. Benefit denial notices must contain a complete discussion of why the Plan denied the claim and the standards applied in reaching the decision, including the basis for disagreeing with the views of health care professionals, vocational professionals, or with disability benefit determinations by the Social Security Administration (SSA).

It is common for insurers to give vague, unsupported, or even no explanation of why they denied your claim. With the new ERISA disability regulations, your denial letter must explain clearly why your claim was denied. For example, exactly why did the insurance company disagree with the SSA determination of disability? Did the insurer disagree with your doctor, or your vocational expert? They must list the disagreements out and explain in detail the basis for each of their findings.

Also, all internal rules or procedures the insurance provider follows to reach a decision of denial must be explained; if there are no such internal guidelines, that fact must be clearly stated.

3. Claimants must be given timely notice of their right to access their entire claim file and other relevant documents and be guaranteed the right to present evidence and testimony in support of their claim during the review process.

Many who file claims may not even know to ask for their claim file. Many insurers won’t mention it or are vague about the process. Under the new rule you must be notified by the insurer of your rights to access your claim file and all other insurance company documents necessary for you to properly file and develop your claim.

Also, a full and fair review means that you have a right to review and respond to new evidence or rationale developed by the insurer during the administrative review prior to the appeal decision.

4. Claimants must be given notice and a fair opportunity to respond before denials at the appeals stage are based on new or additional evidence or rationales.

With the new ERISA disability regulations, you will have the right to review and respond to new information before the Plan makes a decision on appeal. If your appeal is denied, and the denial is based on new or additional evidence, the insurer must give you fair notice and a fair chance to respond.

Any appeal denial letter is required to describe any time limits required under the plan to file a lawsuit and the date that time period expires.

5. Plans cannot prohibit a claimant from seeking court review of a claim denial based on a failure to exhaust administrative remedies under the plan if the plan failed to comply with the claims procedure requirements unless the violation was the result of a minor error.

Sometimes the insurance company’s strategy to deny a claim is to cause delays, withhold documents or information, or use other frustrating maneuvers to wear one’s resolve down until time runs out before the Plan’s internal administrative appeal can be completed. Other times the insurer may make an error.

The new ERISA disability regulations prevent you from being barred from suing the insurance company if you fail to complete the internal appeals process when (1) the insurance company behaves wrongly or ((2) procedural errors occur. The court would review such a disputed decision de novo (starting over without regard for the insurer’s decision).

6. Certain rescissions of coverage are to be treated as adverse benefit determinations triggering the plan’s appeals procedures.

This rule amends the definition of an “adverse benefit determination” to now include a rescission (withdrawal) of disability benefit coverage that has a retroactive effect. So, a retroactive rescission of coverage is considered to be a denial of benefits that sets off the Plan’s appeal process.

7. Required notices and disclosures issued under the claims procedure regulation must be written in a culturally and linguistically appropriate manner.

Disability denial letters must be written in a manner and language that is understandable to the claimant, or otherwise include information of the availability of language services.

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Why Did the DOL Re-Examine ERISA Disability Rules?

These important changes to ERISA law are the result of the Department of Labor’s review of ERISA legal cases since 2000. The DOL agency handling the matter is the Employee Benefits Security Administration.

DOL acknowledges that ERISA rules are inadequate from a claimant’s standpoint. As the Federal Register states in the Final Rule,

“…[group] disability cases dominate the ERISA litigation landscape today. …Insurers and plans looking to contain disability benefit costs may be motivated to aggressively dispute disability claims. Concerns exist regarding conflicts of interest impairing the objectivity and fairness of the process for deciding claims for group health benefits.”

The new rules can also apply under 401(k) and pension plans, in certain cases when benefits are conditioned upon the claimant being disabled.

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The Role of the Affordable Care Act (ACA) in Updating ERISA Standards

New ACA claim requirements have already been established for group health care claimants. This final ERISA rule will ensure that disability claimants receive similar protections that Congress established for group health plans under the ACA.

Naturally, the final rule has adjustments to account for the different features of group disability benefits claims vs. group health claims.

The intent of the Final Rule is to make the ERISA claim process more fair and realistic for disabled claimants. It proposes to hold insurance companies accountable for fairness and accuracy in their review of claims “… that otherwise might have been denied by plan administrators in the absence of the fuller protections provided by this final regulation.”

Concerns for Insurance Companies

Certainly the new ERISA disability regulations come as bad news for disability insurers who do not play fair. These changes will affect their administrative costs, increase burdens of handling claims, as well as increase litigation risk and add new legal complexities that work against them rather than for them.

As they review the new ERISA rules during 2017, insurance companies may seek new ways to minimize these costs and risks.

Questions? Give Us a Call!

Will these new ERISA disability regulations affect your existing claim? Will you need an attorney to file a new insurance claim for disability benefits?

We can best answer these and all specific questions by reviewing your case. If you have concerns, we urge you to speak with an experienced disability lawyer at Marc Whitehead & Associates.

Final note:

As the new political year unfolds, there is always a possibility that a new administration may have an effect on the existing Affordable Care Act and resultant laws. Know that we are fully engaged with the evolving ERISA laws and regulations and are able to answer any questions and handle any disability case you may have.

We serve clients in ERISA disability appeals and litigation as well as help you file a rock-solid initial long term disability Application.

Article Source:

Federal Register, Claims Procedure for Plan Providing Disability Benefits; accessed 1-2-2017; https://www.federalregister.gov/documents/2016/12/19/2016-30070/claims-procedure-for-plans-providing-disability-benefits

What Are the New ERISA Disability Regulations?