In December 2016, the U.S. Department of Labor issued its Final Rule for new regulations applicable to the way in which employers administer their employees’ claims for disability under the Employment Retirement Income Security Act (ERISA). The changes went into effect on January 1, 2017, but in order to give employers time to make the required adjustments to their claims processing procedures, the new rules will apply only to claims submitted on or after January 1, 2018. Any plan that offers disability benefits must comply with the new regulations. They apply to plan administrations for both short term and long term disability benefits. This will add additional protection to employees who become disabled and need to file a disability claim. The current regulations are much more favorable to employers and insurance companies giving them the upper hand with no recourse when claims are unfairly denied. The new regulations provide additional assurance that the claims handling process is handled more fairly. Unfortunately, the new regulations will not do away with unfair claims review practices, but it is a step in the right direction.
Claims Adjudication Must Be Free of Conflicts of Interest
Individuals involved in the claims evaluation process must act totally independent from the plan. The plan cannot make any employment decisions, including hiring, firing or promoting, based on the likelihood of the employee making decisions denying benefits. All independent contractors must remain independent and their decisions must not reflect any conflict of interest. A claims adjustor cannot be paid bonuses based on the number of claims that are denied. One would hope all of these regulations are already in place. Unfortunately that is not always the case as claims are being denied by individuals who clearly have self-interest in denying the claims. As of 2018, these self-serving denials should diminish as there are now consequences for these improper and biased denials of claims.
New and Improved Disclosure Requirements
• Benefit denials must provide full and detailed information concerning all of the reasons for the denial. If the denial of benefits conflicts with a decision granting benefits by the Social Security Administration (SSA), the plan must articulate the reasons for its differing opinion. There is no requirement for the administrator to discuss why its decision may be different from that of another third party payer.
• If the denial is in conflict with the opinion of a treating health care professional, including a vocational professional, whose opinion was relied upon by the claimant, the plan administrator must explain the basis for its differing opinion. Insurance companies were not required to provide this explanation in the past and would often just state that the peer review physician disagreed with the treating physician and therefore the claim was denied. This will no longer be permitted without consequence.
• If the decision to deny benefits is in conflict with any recommendation of any expert hired by the plan to evaluate the claim, the plan must explain why it did not rely on those reports.
• Claimants have a right to access their entire claims file, including all documents relied upon by the administrator in denying benefits. The written denial of benefits must inform the claimant of this right.
• The plan must disclose the internal rules, guidelines and protocols it used in evaluating benefit claims. If none were used, the plan must also disclose this.
Claimants Rights on Appeal
The plan must provide claimants, free of charge, access to any new evidence presented on appeal. This includes copies of any document and report relied upon by the plan when it denied the claim for benefits.
Denial of Claim Must Include Information About Time Limitations
In its notice of an adverse benefit decision after review, the plan must inform claimants of their rights to bring a civil court action according to ERISA law. The notice must include a description of the contract provisions articulating time limits by which a lawsuit must be filed and a specific date upon which the time limit expires. This is a very import regulation, as most laypersons are not aware of the time limits to file suit as they are different in each state and are usually spelled out in the policies that are often not provided to the claimants.
If you have a disability claim, no matter what stage you may be at in the process, feel free to contact attorneys at Dell & Schaefer for a free consultation.