90-Day Delay of Applicability Date for New Disability Benefit Claims Procedure Requirements
In early December 2017, the U.S. Department of Labor announced a ninety (90) day delay – through April 1, 2018 – of the applicability date for ERISA plans to comply with a final rule amending the claims procedure requirements applicable to disability benefits. The new requirements were to become applicable to claims for disability benefits filed on or after January 1, 2018.
The delay is in response to concerns raised by interested stakeholders that the claims procedure amendments will drive up disability benefit plan costs, cause an increase in litigation and, in so doing, impair workers’ access to disability insurance benefits. The Department issued the delay to give stakeholders the opportunity to submit, and for the Department to consider, data and information related to such concerns.
The final rule will subject disability claims procedures to protections and safeguards similar to those applicable to group health plans under the Affordable Care Act. Some of the key changes include:
(1) Denial Notice Requirements Enhanced. Benefit denial notices must detail the reasons and criteria relied upon when denying benefits, including a detailed explanation of the basis for disagreeing with a determination made by the claimant’s physician or the Social Security Administration. Further, notices must include (i) internal rules, guidelines, protocols, and criteria the plan used in denying the claim; and (ii) a statement that the claimant is entitled to receive the entire claim file and other relevant documents.
(2) New Conflicts of Interest Criteria. Plans must ensure that impartial and independent persons are involved in making decisions regarding disability benefit claims and appeals.
(3) Enhanced Notice and Opportunity to Respond Conditions. Plans may not deny benefits on appeal based on new or additional evidence that were not included when the benefit was at the claims stage, unless the claimant is given notice and a fair opportunity to respond.
(4) Deemed Exhaustion Process. If plans do not adhere to the material claims processing rules, the claimant is deemed to have exhausted the administrative remedies available under the plan, the claim or appeal is deemed denied, and the claimant may immediately pursue his or her claim in court.
(5) Heightened Adverse Benefit Determinations. Rescissions of coverage, including retroactive terminations due to alleged misrepresentations of fact, must be treated as adverse benefit determinations, thereby triggering the plan’s appeals procedures.
(6) Non-English Language. Benefit denial notices must be provided in a culturally and linguistically appropriate manner, including a statement in the relevant non-English language about the availability of language services, a verbal customer assistance process in the non-English language, and written notices in the non-English language upon request.
If employers have already amended their benefit plans to incorporate the new disability claim procedure requirements, the plans should nonetheless be administered in accordance with the terms of their plan documents, despite the delay in applicability of the new requirements.