New ERISA Disability Claim Regulations – Part 4

On April 1, 2018, a new disability claim regulation came into effect. The regulation was promulgated by the United States Department of Labor (referred to herein as “DOL”) under the authority of the Employee Retirement Income Security Act of 1974 (“ERISA”) and applies to all employee benefit plans that provide disability benefits.

This is the fourth in a series of nine blog posts that will summarize important features of the new regulation. The new regulation amended existing regulation in the following eight areas:

Conflicts of interest involving claims adjudicators and medical and vocational consultants.
Additional disclosures required with denial notices.
Disclosure of plan criteria.
Requires notifications to be made in a “culturally and linguistically-appropriate manner.”
Disclosure of new evidence and new rationales prior to denial on review.
Disclosure of contractual limitations period deadline.
Enhanced remedy for a plan’s violation of the regulation.
Expansion of the definition of “adverse benefit determination.”

The last blog post discussed the requirement that plans disclose additional information in their denial notices. The following will discuss the third change to the regulation – the requirement that plans disclose “specific internal rules, guidelines, protocols, standards or other similar criteria” the plan relied upon in making the adverse benefit determination or provide a statement that such rules, guidelines, etc. do not exist.

I. Summary of the Changes to the 503 Regulation

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C. Disclosure of Plan Criteria

1. The Rule

A plan’s adverse benefit notifications must set forth:

Either the specific internal rules, guidelines, protocols, standards or other similar criteria of the plan relied upon in making the adverse determination or, alternatively, a statement that such rules, guidelines, protocols, standards or other similar criteria of the plan do not exist.[1]

2. DOL Comments

Plans may not refuse to disclose internal rules, guidelines, protocols, standards or other similar criteria on the basis that such material is confidential or proprietary.[2] The DOL does not believe that disclosure of such material would be unduly burdensome because “[e]ven under the existing claims procedure regulation, internal rules, guidelines, protocols, standards or similar criteria relied upon in denying the claim must be provided to the claimant upon request.”[3]

It is important to note that even under the prior rule, plans would be required upon request to verify that it has produced all the internal rules guidelines, etc. concerning the denied claim that were or should have been considered in deciding the claim.[4] The amendments did not change this requirement. The DOL comments emphasize that it may be important for the claimant to know that a claim was denied without the claims adjudicator having considered a rule, guideline, protocol, standard or other similar criteria that was intended to govern the determination of the claim.

Such criteria could include, for example, information that “demonstrates compliance with administrative processes and safeguards.”[5]

Indeed, the Department has taken the position that internal rules, guidelines, protocols, or similar criteria would constitute instruments under which a plan is established or operated within the meaning of section 104(b)(4) of ERISA and, as such, must be disclosed to participants and beneficiaries. See FAQs About The Benefit Claims Procedure Regulation, C-17 (www.dol.gov/sites/default/files/ ebsa/about-ebsa/our-activities/ programs-and-initiatives/outreach-andeducation/hbec/CAGHDP.pdf).[6]

3. Implications

Under the guidance of the DOL, claims administrators should be required to produce their entire claims manuals or at least those portions that are “relevant” to the claim. Denial notices will be required to include a disclosure of any external guidelines that the plan or its consultants relied upon as part of the claim determination process. This would include, for example, the “MD Guidelines” often cited by the plan’s medical consultants and Dictionary of Occupation Titles material considered by vocational reviewers in defining the claimant’s occupation.

[1] Section 503-1(g)(1)(vii)(C) and (j)(6)(iii).

[2] 81 Federal Register 243, p. 92323.

[3] Id.

[4] Id.

[5] Id.

[6] Id., p. 92324.

Whiteman Law Firm specializes in cases involving claims for disability insurance and other employee benefits. These cases typically involve application of a federal law, the Employee Retirement Income Security Act of 1974, known by the acronym ERISA, and are usually resolved through the benefit plan’s appeal process or federal court. We have helped hundreds of individuals with their claims for short-term and long-term disability insurance benefits.

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