United States: DOL Proposes To Bring ERISA Disability Denials In Line With The Affordable Care Act

Last Updated: December 4 2015
Article by Neil V. Shah

On November 18, 2015, the Department of Labor (the "Department") published a notice of Proposed Rulemaking at 80 Fed. Reg. 222 (the "Proposed Rule") to amend ERISA's claims procedures (29 C.F.R. 2560.503-1) as they apply to claims for disability benefits. One of the purposes of the Proposed Rule is to make ERISA's claims procedures for disability claims consistent with the Affordable Care Act's claims procedures for group health plans. The Proposed Rule contains several components.

First, the Proposed Rule expands a disability plan's duty to ensure that claim decisions are free from conflicts of interest. To that end, the Proposed Rule amends subsection (b) of the claims procedures to require that a disability plan's claims procedures must "ensure that all claims and appeals for disability benefits are adjudicated in a manner designed to ensure the independence and impartiality of the persons involved in making the decision." The amendment further provides that "decisions regarding hiring, compensation, termination, promotion, or other similar matters with respect to any individual (such as a claims adjudicator or medical expert) must not be made based upon the likelihood that the individual will support the denial of benefits."

Proskauer's Perspective: Even prior to the proposed amendment, many plans had already taken affirmative steps to ensure the independence and impartiality of the persons involved in the decision-making process. The Proposed Rule therefore likely will not present an additional burden to plans.

Second, the Proposed Rule amends subsection (g)(1) of the claims procedures to expand the types of information that a plan must include in an adverse benefit determination of disability benefits. Specifically, it requires a plan to include: (i) a discussion of the decision, including the basis for disagreeing with the views of a treating physician or determinations by the Social Security Administration; (ii) the specific criteria relied upon in making the adverse benefit determination or a statement that no such specific criteria exist; and (iii) a statement that the claimant is entitled to receive "reasonable access" to all documents and information relevant to his or her claim, upon request and free of charge.

Proskauer's Perspective: The Department noted that several courts previously held that the failure to provide a discussion of the decision or the specific criteria relied upon in making the adverse benefit determination could make a claim denial arbitrary and capricious. The Proposed Rule therefore appears to be an effort to extend this standard across other jurisdictions.

Third, the Proposed Rule replaces subsection (h)(4) of the claims procedures to require a plan to provide a claimant any additional evidence, information, or additional rationales for denying the claim developed during the course of an appeal, and to allow the claimant a reasonable opportunity to respond before the plan issues a final decision. Because these rules conflict with the detailed timing rules contained in subsection (i) of the claims procedures, the Department has requested comments on "whether, and to what extent, modifications to the existing timing rules are needed."

Proskauer's Perspective: Many plans already provide claimants an opportunity to respond to new evidence during the appeals process; the Department's request for comment underlines its interest in ensuring that plans and participants will have adequate time to engage in a dialogue concerning the evidence presented during the administrative review process.

Fourth, the Proposed Rule allows a party to deem a plan's administrative remedies exhausted if the plan fails to adhere to the claims procedures. The Proposed Rule also provides an exception for certain types of violations that are: (i) de minimis; (ii) non-prejudicial; (iii) attributable to good cause or matters beyond a plan's control; (iv) in the context of an ongoing good-faith exchange of information; and (v) not reflective of a pattern or practice of noncompliance. If a court determines that any of these exceptions apply, the Proposed Rule requires the plan to re-route the underlying claim through its internal appeals process and to provide the claimant notice of the resubmission.

Proskauer's Perspective: The Proposed Rule on when administrative remedies are deemed exhausted mirrors the existing standard adopted by the courts, and the safe harbor is similar to the "substantial compliance" doctrine that many courts had previously adopted to excuse minor digressions from the claims procedures.

Fifth, the Proposed Rule expands the definition of "adverse benefit determination" for disability claims to include "any rescission of disability coverage with respect to a participant or beneficiary (whether or not, in connection with the rescission, there is an adverse effect on any particular benefit at that time)." The Department noted that many rescissions of coverage (e.g., as part of an internal audit) do not trigger the procedural protections in the ERISA's existing claims procedures, and that this gap may make participants and beneficiaries "face dangerous and unwanted lapses in disability coverage without their knowledge, and without knowing how to challenge the rescission."

Proskauer's Perspective: Plans should consider the effect of this proposal on their arrangements with claims administrators and third-party vendors. By way of example, many claims administrators contract with outside vendors to identify factors that warrant rescinding disability coverage. Coupled with other provisions in the Proposed Rule, the outside vendor's determination may constitute an adverse benefit determination and the information it considered in rendering its determination may have to be produced to the claimant.

Sixth, the Proposed Rule requires that notices and disclosures be both culturally and linguistically appropriate for claimants who reside in a county where 10% or more of the population are literate in only one non-English language. Affected individuals must be provided access to a customer assistance process (e.g., telephone hotline) to answer questions and assist them with filing claims and appeals in the non-English language.

Proskauer's Perspective: The Department identified 225 affected counties in the United States, the overwhelming majority of which contained Spanish-language speakers. Information on these counties is available on the Department's website, and plans should assess whether their customers reside in the affected counties.

Seventh, the Proposed Rule seeks comments on a requirement that plans be required to prominently identify any contractual limitations period both in the plan and in any adverse benefit determination, and to provide updated notices should that date change. The Department noted that the federal circuit courts to have considered the issue are split, and that "plans may be in a better position than claimants to understand and to explain what those provisions mean."

Proskauer's Perspective: In response to the current split in authority, and in an abundance of caution, many plans have already amended participant communications to prominently include this information. Plans should nevertheless consider whether their voluntary efforts comply with the Proposed Rule.

Lastly, the Proposed Rule makes a technical correction to subsection (i)(3)(i) of the claims procedures clarifying that the extended time frames for deciding disability claims only apply to multi-employer plans.

Comments to the Proposed Rule are due by January 19, 2016.

Proskauer's Perspective

Many plans already have implemented procedures that are consistent with the Proposed Rule's requirements in light of existing case law and developing "best practices." Nevertheless, plan administrators should not rush to amend their plan documents until the Proposed Rule is finalized and approved for implementation. In the meantime, administrators should begin to review their existing policies and procedures and assess their ability to comply with the newly added provisions.

DOL Proposes to Bring ERISA Disability Denials in Line with the Affordable Care Act

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.