The U.S. Department of Labor has announced new rules amending the claims procedures for disability benefit plans will go into effect April 1, 2018. According to the DOL, this new rule change will “give America's workers new procedural protections when dealing with plan fiduciaries and insurance providers who deny their claims for disability benefits.”
The final rule will require plan providers, plan fiduciaries, and insurance companies to comply with new ERISA requirements related to the disability claims process. One of the biggest changes involves notice and disclosure requirements. Denial of benefits must contain a complete discussion of why the claim was denied and the standards used to evaluate the claim.
Denial notices must also include a statement that the claimant is entitled to receive the entire claim file and related documents, including internal rules, guidelines, standards, protocols, and other criteria used to deny the claim.
Changes also require independence in evaluating claims and avoiding potential conflicts of interest. For example, a claims adjudicator or medical expert cannot be hired or compensated based on the likelihood to deny the benefit claims.
When the plan providers do not follow claims processing rules, the claimant may not need to otherwise exhaust all administrative remedies before taking the claim to court. A claimant may be deemed to have exhausted the remedies under the plan if the plan does not adhere to the plan's rules.
Any revision to coverage by the plan will be treated as an adverse benefit determination, allowing the participant to appeal the decision. Rescissions of coverage, which includes termination of benefits due to alleged misrepresentations by the insured will trigger the appeals procedures.
The applicability date for new disability benefit claim rules was delayed for 90 days from January 1st, to allow for comments on the costs and benefits of the new rule. The DOL received hundreds of comment letters from a variety of stakeholders, including the insurance industry, employer groups, consumer advocates, and disability benefit lawyers.
According to the DOL, only a few of the comments submitted provided the requested qualitative data. The DOL sought data to support the claims from the insurance industry and others that the new rule would dramatically increase the costs to disability benefit plans, increase litigation, and impair access to disability benefit protections for workers.
The final rule was initially published in the Federal Register back on December 19, 2016, effective January 18, 2017. After reviewing the comments, the DOL will allow the final rule to become applicable for claims for disability benefits filed on or after April 1, 2018.
If you have any questions about your disability benefits or the new disability benefit claims procedures, Butterfield Schechter LLP is here to help. We will help you appeal wrongfully denied disability benefits, identify potential problems before they arise, and be there to represent your interests in ERISA litigation. Contact our office today with any questions you have on how we can help you secure your disability benefits.