New ERISA Disability Claim Regulations – Part 6
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 sixth 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 plan notifications be made in a “culturally and linguistically-appropriate manner.” This post will address the requirement that plans disclose new evidence and new rationales that they intend to rely upon to deny an appeal and provide the claimant a reasonable opportunity to respond before the plan issues a denial notice.
I. Summary of the Changes to the 503 Regulation
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E. Disclosure of New Evidence and New Rationales Prior to Denial on Review
1. The Rule
Section 503-1(h)(4) requires that before a plan can issue an adverse benefit decision on review of a disability benefit claim, the plan must provide the claimant with (1) “any new or additional evidence considered, relied upon, or generated by” the person making the benefit determination, and (2) “any new or additional rationale” for denying the claim. The new or additional evidence or rationale must be provided:
as soon as possible and sufficiently in advance of the date on which the notice of adverse benefits determination on review is required to be provided . . . to give the claimant a reasonable opportunity to respond prior to that date.
- DOL Comments
The new requirements already apply to claims involving group health plans under the ACA.[1] The provision is intended to be limited to the appeal stage.[2] When the plan has decided it is going to deny the claim on appeal, it must furnish any new or additional evidence to the claimant.[3] “The provision does not require that the plan provide the claimant with information in a piecemeal fashion without knowing whether, and if so how, that information may affect the decision.”[4]
According to the DOL, the prior 503 Regulation already requires plans to provide claimants with new or additional evidence or rationales upon request and an opportunity to respond in certain circumstances.[5] The plan would have to furnish the new or additional evidence to the claimant before the expiration of the 45-day deadline, or 90 days if an extension is available.
The Regulation does not limit the types of evidence that claimants may submit.[6] Plans may not refuse to accept video, audio or other electronic media and may not “impose courtroom evidentiary standards” in determining whether to accept or consider a claimant’s evidence.
If the claimant’s response caused the plan to generate new or additional evidence, the plan would have to furnish the new or additional evidence to the claimant and allow the claimant a reasonable opportunity to respond to the new or additional evidence.[7]
The plan may not provide the claimant only evidence that supports the denial of the appeal while withholding evidence that supports the claim.[8]
Finally, if the new or additional evidence or rationale is received or determined by the plan so late that it would be impossible to provide it to the claimant in time for the claimant to have a reasonable opportunity to respond before the plan’s deadline for deciding the appeal expires, the period is tolled until such time as the claimant has had a reasonable opportunity to respond.[9]
- Implications
The new provisions will help provide for greater give and take between the claimant and the plan, provide the claimant with an opportunity to respond to new or additional evidence and rationales that the plan intends to use to justify denying the appeal, and avoid the necessity of second appeals in many cases.
© Andrew Whiteman 2019
[1] 81 Federal Register 243, p. 92324-92325.
[2] Id., p. 92325.
[3] Id., p. 92326.
[4] Id.
[5] Id., n.16.
[6] Id.
[7] Id., p. 92325.
[8] Id., n.21.
[9] Id., pp. 92326-92327.