ERISA’S New Claims and Appeals Procedures for Disability Benefits Claims
“It’s a New Dawn; It’s a New Day; It’s a New Life for Me; and I’m Feeling [not so] Good”
While Nina Simone’s song captures the power of “feeling good,” the effects of an employee’s disability do not feel good for the employee or employer. And if your organization offers employee benefits that require the plan administrator to determine whether a plan participant is disabled, you should confirm that your plans reflect updated claims and appeal procedures. Regulations finalized back in 2016 are now in effect.
“This Old World is a New World for Me”
Under ERISA, a federal law that applies to most benefit plans that are offered by an employer to its employees, the plan administrator is required to adopt reasonable procedures to govern how participants file claims and appeals, when and how such claims and appeals will be reviewed, and how notification of denials will be provided. The requirements have changed over the years. Most recently, in December 2016, the U.S. Department of Labor (“DOL”) published a final regulation that revises requirements that apply to disability benefits. Although the new regulation was final in January 2017, with the change in presidential administration, the DOL delayed its effective date pending consideration of its effects. Many wondered if this delay would eventually lead to its withdrawal. However, the DOL announced in 2018 that no further delays would be adopted. As a result, the final regulations apply to claims involving disability determinations that are filed in ERISA plans on or after April 1, 2018.
“And a Bold World for Me”
The final regulations specifically adopt procedural changes to make the rules for disability claims and appeals more similar to the rules for group health plan claims and appeals. The new rules require changes in operations as well as changes in plan communications. For instance, if there is new evidence or a new rationale presented on appeal, the claimant may affirmatively respond to the new evidence or rationale before the determination on appeal is made. If a determination is made that differs from the views of the Social Security Administration or the claimant’s experts, the denial notice should address the difference. And depending on where a claimant lives, the plan may be required to provide notices and disclosures in a culturally and linguistically appropriate manner. This can include taglines that indicate how to access non-English language assistance; offering a telephone customer assistance hotline that answers questions and provides assistance in filing claims and appeals in a non-English language; and upon request, translating notices into a non-English language.
The stakes for noncompliance are high. Some errors may permit a claimant to request a court’s review without first being required to exhaust the plan’s claim and appeal procedures. Typically, an ERISA plan is permitted to require a claimant to exhaust the plan’s claims and appeals procedures. Doing so supports Congress’s desire to permit a plan administrator to exercise its discretion in interpreting and applying plan language. The potential to shift decision-making power from a plan administrator to a reviewing court emphasizes how important it is for plan sponsors to have their plans reviewed by experienced benefits counsel to ensure compliance.