The Employer's Legal Resource: New Rules regarding Disability Benefit Claims and Appeals
The DOL's Employee Benefits Security Administration recently published a final rule, effective January 18, 2017, which revises certain procedures for disability benefit claims and appeals. In the spirit of David Letterman, here are the top 10 things you need to know about the new regulations.
Plans must insure the independence and impartiality of persons involved in deciding claims and appeals. Thus, decisions regarding hiring, promotion, compensation, and other employment related decisions cannot be based on the likelihood the person will support denial of disability benefits, or award persons based on benefit denials. And a plan cannot engage a medical or vocational expert based on the expert's reputation for outcomes in contested cases.
Benefit denial notices must contain a complete discussion of why the plan denied the claim and explain the standards applied in reaching the decision. An explanation of the basis for disagreeing with the views of the claimant's healthcare and vocational professionals, and an explanation of the basis for disagreeing with disability benefit determinations made by the Social Security Administration, must be included in the discussion of why the plan denied the claim.
The definition of adverse benefit determination is amended to include a rescission of disability coverage that has a retroactive effect, except to the extent it is attributable to a failure to timely pay required premiums or contributions toward the cost of coverage.
Claimants must be given timely notice of their right to access their entire claim file and other relevant documents used to make the benefit decision, as well as any internal rules or guidelines the claims administrator relied upon in denying the claim. (If no internal rules or guidelines exist, this must be timely disclosed as well.)
Claimants must be guaranteed the right to present evidence and testimony in support of the claim during the review process.
If denials at the appeal stage are based on new or additional evidence or rationales, claimants must be given notice, a right to review, and a fair opportunity to respond to the new evidence and 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 claim's procedure requirements, unless the violation was the result of a minor error.
The appeal denial letter must specify plan-imposed deadlines for filing a lawsuit, and the date the limitations period expires.
Required notices and disclosures issued under the claim's procedure regulation must be written in a culturally and linguistically appropriate manner. If a claimant's address is in a county where ten percent or more of the population speak only the same non-English language, the notices to the claimant have to include a statement in that language indicating how to access language services provided by the plan.
And, the Number 1 thing to know
The regulation applies to all claims for disability benefits filed on or after January 1, 2018. In order to comply with the regulations you will need to not only make the required revisions to your plan by that time, but you will also need to put in place any new processes or procedures (decision maker compensation, for example) required by the regulations.
By Jon E. Brightmire, JBrightmire@dsda.com