By: Joseph P. Yonadi, Jr.
On October 10th the Department of Labor (DOL) proposed to extend by 90 days the applicability date for the Final DOL Claims Procedure Regulations (Rule) from January 1, 2018 to April 1, 2018.
At the beginning of this year, the Final Rule went into effect on January 1, 2017. However, the applicability was set for January 1, 2018 in order to give enough time to plan sponsors and claims administrators to update their claim procedure processes caused by the Rule. Please see the Benesch Law Client Bulletin explaining the changes contained within the Rule here.
The key requirements of the Rule include:
- Benefits denial notices must contain a discussion of why the plan denied a claim, including the basis for disagreeing with the Social Security Administration disability determination, and standards it used in making the decision;
- Denial notices, not just notice denying benefits on appeal, must include a statement that the claimant is entitled to receive, upon request, the entire claim file and other relevant documents;
- Denial notices must include internal rules, guidelines, protocols, standards, or other similar criteria of the plan that were used in denying a claim, or a statement that none were in used;
- Plans may not deny benefits on appeal based on new or additional evidence or rationales, if those were not included when the benefit was denied at the claims stage, unless the claimant is given a fair opportunity to respond;
- The Plan must ensure that the adjudication of claims and appeals are free of conflict of interest;
- If the Plan does not adhere to all claims processing rules, the claimant is deemed to have exhausted the administrative remedies available under the Plan, unless the violation was the result of a minor error and other conditions are met, and if a court rejects a claimant’s request for review, the claim must be treated as re-flied on appeal;
- Rescissions of coverage, including retroactive terminations due to alleged misrepresentation of fact, must be treated as adverse benefit determination, triggering the appeal procedures; and
- Benefit denial notices have to be provided in a non-English language in certain situations, e.g., where the claimant’s address is in a county where 10% or more of the population is literate only in the same non-English language.
The comment period on the proposal to extend the applicability date for 90 days ends on October 27, 2017. Plan sponsors and claim administrators should seek legal counsel for guidance on how to approach the processing of disability benefits claims in light of the proposed extension to the Rules.