Whoa Esq.’s! ERISA Changes Aren’t Effective Yet

As most of you should know the proposed ERISA changes intended to go into effect on January 1st were extended to April 1, 2018. The extension was caused by the insurance industry’s opposition to changes that would “cost them more money”, or “cause the elimination of disability insurance offerings.”

Of course we can all assume that the real reason for the opposition is that the proposed ERISA changes provide an even playing field for claimants and make it more difficult for insurers such as Unum, (a company opposing changes) to deny appeals.

Lately, DCS Inc. has been receiving calls from claimants telling me that attorneys, who formerly refused to accept their cases, are calling them marketing their services under the proposed new regulations. I also heard from several sources that some attorneys are putting forth the changes when they aren’t even effective yet.

Wait a minute Esq.’s! The ERISA changes won’t be effective until April 1, 2018, if in fact they are approved. Try as I might to find ways to be kind to attorneys on the blog, I think over booking the ERISA changes prematurely, or marketing future services based on the proposed changes sounds a bit like a squeaky wheel to  me.

In any event, please see the proposed changes listed below. If these changes do go through the Department of Labor claimants may finally get an even playing field in the ERISA claims review process.

Disclosure Requirements.Benefit denial notices must contain a more complete discussion of why the plan denied a claim and the standards it used in making the decision. For example, notices must include a discussion of the basis for disagreeing with a disability determination made by the Social Security Administration (“SSA”) if presented by the claimant in support of his or her claim. (Actually, Unum already does this and has a scheme in place to “not consider” SSDI decisions.)

Claim File and Internal Protocols. Benefit denial notices must include a statement that the claimant is entitled to receive, upon request, the entire claim file and other relevant documents. Currently, this statement is required only in notices denying benefits on appeal. Benefit denial notices also must include the 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 used. (Internal claims manuals etc. would need to be provided.) Currently, denial notices are not required to include these internal rules, guidelines, protocols, or standards; instead denial notices may include a statement that such rules, guidelines, protocols, or standards were used in denying the claim and that a copy will be provided to the claimant upon request. (Insurers may decide to republish their benefit claims manuals to remove process disclosure. Some companies such as Lincoln Financial and Liberty Mutual will have a problem with giving up this information.)

Review and Respond to New Information. Plans may not deny benefits on appeal based on new or additional evidence or rationales that were not included when the benefit was denied at the claims stage, unless the claimant is given notice and a fair opportunity to respond. (This suggests that appeal denial decisions must be based on whether or not the original denial was the right decision to make. Many insurers engage in ad hoc investigations to obtain new evidence to deny claims.)

Conflicts of InterestPlans must ensure that disability benefit claims and appeals are adjudicated in a manner designed to ensure the independence and impartiality of the persons involved in making the decision. For example, a claims adjudicator or medical or vocational expert could not be hired, promoted, terminated, or compensated based on the likelihood of the person denying benefit claims.

Deemed Exhaustion. If a 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. If the claimant is deemed to have exhausted the administrative remedies available under the plan, the claim or appeal is deemed denied on review without the exercise of discretion by a fiduciary and the claimant may immediately pursue his or her claim in court. A plan also must treat a claim as re-filed on appeal upon the plan’s receipt of a court’s decision rejecting the claimant’s request for review.

Coverage Rescissions. Rescissions of coverage, including retroactive terminations due to alleged misrepresentation of fact (e.g., errors in the application for coverage) must be treated as adverse benefit determinations, thereby triggering the plan’s appeals procedures. Rescissions for non-payment of premiums are not covered by this provision.

Communication Requirements in Non-English LanguagesBenefit denial notices have to be provided in a non-English language in certain situations, using essentially the standard applicable to group health benefit notices under the Affordable Care Act (“ACA”). Specifically, if a disability claimant’s address is in a county where 10 percent or more of the population is literate only in the same non-English language, benefit denial notices must include a prominent statement in the relevant non-English language about the availability of language services. In such cases, plans also would be required to provide oral language services in the relevant non-English language and provide written notices in the non-English language upon request.

Claimants should be aware that these proposed changes, if approved, won’t be effective until April 1, 2018. In my opinion it is unethical for attorneys to be marketing their services based on changes that are not yet approved or in force. If you receive any cold calls from attorneys on this matter, tell them to take a hike, at least until April 1st.