From time to time, the U.S. Department of Labor promulgates new regulations governing disability insurance benefit claims and health insurance benefit claims that are governed by the Employee Retirement Income Security Act of 1974, commonly referred to as ERISA. The regulations must be followed by plan administrators and claim administrators when reviewing disability insurance and health insurance benefit claims submitted by claimants. Recently, the Department of Labor proposed changes to the regulations governing long-term disability insurance benefit claims and short-term disability insurance benefit claims.
The proposed regulations, if approved, will benefit a claimant by providing greater access to information during the claims review process and requiring administrators to explain why their claim decision differs from State or Federal agencies that considered the claimant disabled and unable to return to work.
The stated purpose of the proposed new regulations, which can be found here, is to provide “procedural fairness” to claimants, as well as to adopt procedural protections and safeguards that are currently applicable to group health plans under the Affordable Care Act.
One of the changes is that a claims administrator would be required to “[a]llow a claimant to review the claim file and to present evidence and testimony as part of the disability benefit claims and appeals process.” In addition, the new regulations would:
Provide that, before an adverse determination on review is made, the plan administrator shall provide the claimant, free of charge, with any new or additional evidence 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 determination on review is given, in order to give the claimant a reasonable opportunity to respond before that date.
Currently, until an adverse decision is made, the claims administrator is entitled to withhold from the claimant the entirety of the claim file. This allows the claim administrator to withhold opinions and reports regarding disability offered by paid physicians, who typically never examine the claimant, and any other evidence in the claim file. Refusing to allow the claimant access to the claim file while the claim is open forces the claimant to operate without a full and complete understanding of the opinions that the insurance company may be relying on in reviewing the claim. This makes it unnecessarily difficult for a claimant to know what information the insurer might deem important and sufficient to support the claim for disability insurance benefits.
Another important change is that denial letters must include “the basis for disagreeing with the views or decisions of any treating health care professionals or other payers of benefits who granted the claimant’s similar claims (including disability determinations by the SSA).” Recently, some district courts have ruled that a failure to distinguish contrary disability determinations, whether related to Workers’ Compensation Benefits, State disability insurance benefits or Social Security disability insurance benefits, will result in a reduction in the amount of discretion afforded to the administrator in abuse of discretion cases. This new regulation would codify this requirement nationwide and expand it, as it would force the administrator to explain in all claim denials why its opinion that a claimant is not disabled differs from conclusions reached by other entities after evaluating the same disabling conditions, medical evidence and job duties.
Finally, a failure by the administrator to follow these and other requirements will allow a claimant to consider the claim to be “deemed denied.” This would allow a claimant to be “deemed to have exhausted the administrative remedies under the Plan,” and proceed to litigation without the necessity of an appeal. However, the regulations also note that if a court finds the violation to be “de minimus,” then the matter would be remanded back to the plan administrator for further review. Given the risk of remand and resulting delay, a claimant might be reluctant to exercise this option.
As a whole, these regulations, if enacted, would greatly benefit claimants and should make it easier from them to understand the claim review process, the reasons for denial and easier to provide their administrators with documents to support their claims. Indeed, these proposed regulations would “give some teeth” to the requirement that insurers engage in a “meaningful dialogue” with the claimant.