Client Alert: New Disability Claims Procedures Requirements
DOL Adds Important Protections to Ensure Fairness, Transparency and Accuracy of Disability Claims Process
The Employee Benefits Security Administration of the Department of Labor (DOL) recently issued final regulations revising the claims procedure regulations under the Employee Retirement Income Security Act of 1974, as amended ("ERISA") for employee benefit plans providing disability benefits. The regulation applies to all claims for disability benefits filed on and after January 1, 2018.
The final regulations provide enhanced procedural protections to disability benefit claimants.
Claims and appeals must be adjudicated in a manner designed to ensure independence and impartiality of the persons involved in making the benefit determination;
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;
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;
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;
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;
Certain rescissions of coverage are to be treated as adverse benefit determinations triggering the plan's appeal procedures; and
Required notices and disclosures issued under the claims procedure regulation must be written in a culturally and linguistically appropriate manner.
Notably, the new rules approve the use of contractual limitations periods for challenging benefit denials (i.e., a plan-imposed statute of limitations) but require that a description of the limitations period, including the date by which a claimant must file suit, be included in the notice of adverse benefit determination.
Plan sponsors should review the regulations and work with their third party administrators to update existing claims procedures by January 1, 2018. Plan documents, insurance contracts and summary plan descriptions should be updated as necessary. In addition, now that the DOL has expressly approved the use of limitations periods in benefit plans, plan sponsors should consider adding a contractual statute of limitations period. If a plan includes a limitations period, confirm that it complies with the new guidance. Finally, plan sponsors will want to consider whether to implement the new procedures prior to the January 1, 2018 effective date.
The information provided is for educational purposes only. This information is from sources we believe to be reliable, but we cannot guarantee or represent that it is accurate or complete. The opinions are those of the writer, and the opinions and information presented are subject to change without notice.