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News Items, by Subject

Disability plans

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Fifth Circuit Provides Guidance on 'Regular Occupation' Definition
"Is 'regular occupation' defined as the duties the claimant is actually doing in his or her specific job? NO. Each claim should be assessed from the perspective of duties of the job generally in the national economy and not how the job is 'performed for a specific employer or in a specific locale.' " [Nichols v. Reliance Standard Life Ins. Co. (5th Cir. May 23, 2019)] (Lane Powell PC)
Only 4 in 10 Employees Protect Their Paychecks with Disability insurance
"Roughly 4 in 10 working Americans (41%) report they have employer-sponsored disability insurance coverage ... Of the 64% of working Americans who report not having voluntary disability coverage, just under half (47%) say it is because their employer does not offer it; among them, nearly 3 in 5 (58%) say if their employer was to offer it, they would be likely to purchase it." (OneAmerica)
Deciding 'Own Occupation' Disability Claims: When an Attorney's Headaches Are Not Disabling
"Practicing law can create real headaches. But do headaches constitute a disabling condition justifying ERISA-governed long term disability benefits? This new case explains the correct process in assessing 'job duties' in the 'Own Occupation' analysis." [Foster v. Principal Life Ins. Co., No. 17-30997 (5th Cir. Apr. 4, 2019)] (Lane Powell PC)
Second Circuit Holds Attorney's Lawsuit for Disability Benefits Time-Barred under Policy's Limitations Period
"The Second Circuit found that the district court properly reasoned that Arkun had submitted proof of loss by October 6, 2008 (the date she completed her appeal submission) and the Policy required her to seek judicial review within three years of that date. She had to file her lawsuit by October 6, 2011 but did not. Arkun had nearly two and a half years to file this lawsuit after the Defendants denied her appeal, which is a reasonable amount of time to bring a lawsuit." [Arkun v. Unum Group, No. 17-3354 (2d Cir. Apr. 12, 2019; unpub.)] (Kantor & Kantor)
In Employee Classification Dispute, Tenth Circuit Holds That LTD Plan's Provisions Failed to Confer Discretion
"[T]he Tenth Circuit held that the [long-term disability] policy did not confer discretion on a health insurer to determine whether a claimant was a salesperson or a non-sales employee, a distinction that significantly impacted the amount of LTD benefits the claimant would receive under the policy." [Hodges v. Life Ins. Co. of North America (LINA), No. 18-1279 (10th Cir. Apr. 2, 2019)] (Thomson Reuters Practical Law)
Eighth Circuit: When Malingering Justifies Disability Claim Denial
"When the claimant's neuropsychological testing is rendered invalid due to 'failed validity tests,' that may be enough to deny the claim. It is important that the record contain evidence how the tests were conducted, and how the tests objectively measured validity." [Johnston v. Prudential Ins. Co., No. 17-3415 (8th Cir. Feb. 25, 2019)] (Lane Powell PC)
[Guidance Overview] DOL Reaffirms ERISA Preemption of State Wage Withholding Laws
"This information letter, dated December 4, 2018, responds to a question from an insurers' association about whether ERISA would preempt a state law that prohibits an employer from implementing automatic enrollment arrangements under which the employer automatically enrolls an employee in the employer's disability plan, and contributes part of the employee's wages as plan contributions (unless the employee affirmatively opts out of the arrangement)." (Winston & Strawn LLP)
District Court: Employee Not Entitled to Disability Benefits for 'Disability' Requiring Workplace Accommodation
"[N]otable for employers ... is Defendant's underlying argument that the fact that Plaintiff could perform his job with a reasonable accommodation meant that Plaintiff was not eligible for STD benefits under the Plan, because it demonstrated that (while requiring accommodation) he was not incapable of performing the essential functions of his occupation." [Cannon v. Charter Communications Short Term Disability Plan, No. 18-041 (W.D.N.C. Jan. 16, 2019)] (Seyfarth Shaw LLP)
Court Upholds Denial of Insurer's Disability Benefits Due to Pre-Existing Condition
"This opinion has troubling implications. The court looked at only part of the exclusion and ignored the fact that Holzman sought advice and received treatment for facial paralysis, not cancer. The cancer was unsuspected and was thus undiagnosed and untreated until after the coverage went into effect." [Holzman v. Hartford Life & Accident Ins. Co., No. 17-11436 (D. Mass., Jan. 14, 2019)] (DeBofsky, Sherman & Casciari, P.C.)
Longterm Disability, 'Un-Retirement' and Pension Plans
"It can take time to resolve an employee's claim for long-term disability benefits, especially in complicated cases.... An eligible employee may take an early pension without regard to disability.... [But] the employee can be substantially penalized for taking an early pension to pay bills when there's a delay in processing a long-term disability claim.... One possible solution is for the employee to try to 'un-retire' -- to retroactively cancel the pension." (Bob Blum Mediation, via Los Angeles & San Francisco Daily Journal)
Insurer's Acceptance of LTD Insurance Premiums Does Not Guarantee Coverage
"[T]he court ruled that the insurer did not waive its right to deny coverage by accepting premiums and failing to notify him that coverage was not in effect.... [T]he employer had paid premiums to the insurer on an aggregate basis that did not provide data at the individual employee level. As a result, the insurer did not know what amount in premiums was being paid for which employees." [Ward v. Aetna Life Ins. Co., No. 17-331 (S.D. Miss. Dec. 20, 2018)] (The Wagner Law Group)
Court Rules that Payment and Acceptance of Long-Term Disability Insurance Premiums Does Not Guarantee Coverage
"The court found that Aetna did not waive its right to deny coverage by accepting premiums and failing to notify [the employee] that coverage was not in effect.... [T]he employer paid premiums under an aggregate billing method and did not provide Aetna with data at the individual employee level.... The employer is responsible for enrollment and collecting premiums." [Ward v. Aetna Life Ins. Co., No. 17-331 (S.D. Miss. Dec. 20, 2018)] (Kantor & Kantor)
Scope of ERISA and Occupation-Specific Disability
"The question the court had to resolve was whether McCann's prior employer made 'contributions' to or 'endorsed' the program ... The court concluded that allowing the program to be publicized to employees was not enough, but 'endorsement exists where there is some showing of material employer involvement in the creation or administration of a plan.' ... [T]he court ... found relevant the fact that Henry Ford Hospital had encouraged its residents to enroll in the disability program and recommended the residents purchase the coverage offered by Provident." [McCann v. Unum Provident, No. 16-2014 (3d Cir. Oct. 5, 2018)] (DeBofsky, Sherman & Casciari, PC)
Trends in Social Security Disability Insurance Enrollment (PDF)
21 pages. "Multiple factors have contributed to the growth in the SSDI enrollment between 1985 and 2014. Some of the main factors are [1] the increased eligibility and rising disability incidence among women, [2] the attainment of peak disability-claiming years (between age 50 and full retirement age) among baby boomers ... [3] the increase in full retirement age (FRA) from 65 to 66, [4] fewer job opportunities during economic recessions, and [5] the legislative reform that expanded the eligibility standard in SSDI. Some factors may have prolonged effect s on SSDI benefit receipt." [Report R45419, Nov. 30, 2018] (Congressional Research Service [CRS])
What Are the Content Requirements for a Disability Claim Denial Notice?
"Specific reasons, plan provisions, and additional information ... Discussion of the decision.... Scientific or clinical judgment.... Internal rules and guidelines.... Right to obtain documents.... Appeals and right to sue." (Thomson Reuters / EBIA)
Third Circuit Applies Materiality Endorsement Standard in DOL Voluntary Plan Safe Harbor Analysis
"[T]he Third Circuit's analysis here considers factors -- such as representations made by an employer's broker -- to which an employer expecting to rely on the safe harbor may not be paying close attention. Interestingly, the court also indicates that the employer's selection of only one provider of supplemental disability insurance (as opposed to offering individuals a menu of options) worked against the employer under the Third Circuit's 'material involvement' endorsement standard." [McCann v. Unum Provident, No. 16-2014 (3d Cir. Oct. 5, 2018)] (Thomson Reuters Practical Law)
Neutralizing the Effects of 'Conflict of Interest' in Disability Determinations
"[A] structural 'conflict of interest' can occur where the plan administrator has the 'dual role' of administering and funding the plan benefit. Courts typically look for evidence that the structural conflict actually affected the claim handling, which can affect the scrutiny of review. One well-known and easy way to inoculate the effect of structural conflicts of interest is to use 'independent peer reviewers.' " [Green v. Life Ins. Co. of North America (LINA), No. 17-1383 (10th Cir. Sept. 26, 2018)] (Lane Powell PC)
Individual Disability Insurance Policies May Create ERISA-Covered Plan
"The owner, as employer, had signed a form specifying the eligible class of employees, and stating that the employer would pay all or part of the premium, as well as recommend the individual LTD polices to eligible employees through an endorsement letter. Also, although individual policies were involved, the employer had made initial contact with the insurer and had facilitated discounted premiums which meant it had 'contributed' to the program, regardless of whether it actually paid the premiums or not." [Bommarito v. The Northwestern Mut. Life Ins. Co., No. 15-1187 (E.D. Cal. July 23, 2018) (The Wagner Law Group)
District Court Compels Unum to Produce Information About Its Alleged Forecasting and Targeting of Disability Claims for Termination
"Plaintiff alleged that Unum wrongfully terminated her long term disability benefits under the Boy Scouts of America Long Term Disability Plan. Plaintiff filed a motion to compel responses to discovery requests aimed at ascertaining Unum's business practice of forecasting and targeting disability claims for potential 'recoveries' or terminations.... The court found Unum's boilerplate objections to be improper especially when Unum failed to submit any evidentiary declarations supporting the objections." [Gray v. Unum Life Ins. Co. of America, No. 17-1778 (C.D. Cal. Sept. 21, 2018; unpub.)] (Kantor & Kantor)
Bifurcated Trials: A Road Map for Better Results for Insurers Facing ERISA Disability Claim Litigation
"[E]ven if an insurer incorrectly denied an insured's claim, it does not necessarily follow that the insured has continued to be disabled through the date of trial. Thus, a jury must determine not only if an insured was disabled when an insurer denied his or her claim, but also whether the insured remained continuously disabled from the date of that denial through the date of trial.... Insurance counsel, however, frequently allow these two time periods to conflate so that when deciding whether an insurer erroneously denied a claim, jurors are allowed to consider evidence that did not even exist at the time of the claim denial. This is a mistake." (Thompson Coburn)
District Court Provides Guidance on Video Surveillance in Disability Cases
"A plan administrator is not required to ignore inconsistencies between a plaintiff's assessment of his or her level of activity and footage of the plaintiff participating in those activities. For video surveillance to be meaningful, inconsistencies between the plaintiff's assessment and the actual level of activity must be more than minor." [Eaton v. Reliance Standard Life Ins. Co., No. 16-2764 (W.D. Tenn. July 31, 2018)] (Robinson + Cole LLP)
Two Key Ways to Limit Overbroad Discovery in Disability Cases
"Does an insurer's litigation history dating back 10 years justify overbroad discovery in an ERISA case? It might... Also, in each case you should reassess whether or not to argue for the arbitrary and capricious standard. Consider the adverse effects of pushing for application of the abuse of discretion standard... versus stipulating to the de novo standard. This can help limit discovery." [Black v. Hartford Life Ins. Co., No. 17-1785 (D. Or. Aug. 14, 2018)] (Lane Powell PC)
Tenth Circuit Provides Roadmap for Plan Administrators in Analysis of AT&T Disability Benefit Denial
"The Plan consulted with five doctors from different areas of specialty, and all five concluded [the employee-participant] was not disabled.... The Tenth Circuit noted that the Plan did not expressly require objective evidence and was critical of the physicians' insistence upon objective evidence.... The Tenth Circuit found significant that one of the physician consultants rewrote his review on several occasions, not in response to new evidence, but in response to '[The administrator's] narrowly tailored leading questions.' " [McMillan v. AT&T Umbrella Benefit Plan No. 1, No. 17-5111 (10th Cir. Aug. 13, 2018)] (Thompson Coburn)
[Guidance Overview] New Disability Claims Procedures Affect Retirement Plans and Deferred Compensation Plans Too
"A retirement plan that determines a participant's 'disability' by requiring that the participant be entitled to benefits under the employer's long term disability plan or qualify for Social Security disability benefits does not have to be amended to comply with the Final Rule.... However, a retirement plan under which the plan sponsor or plan administrator must itself determine a participant's disability either will have to adopt a new definition of disability that eliminates all discretion or adjust its claims procedures to comply with the Final Rule." (Verrill Dana LLP)
Court Provides Tips on Effective Use of Video Surveillance in Disability Claim Decisions
"For the video surveillance to be meaningful, inconsistencies between the plaintiff's assessment and the actual level of activity 'must be more than minor.' ... The video in this case was helpful because it 'showed Plaintiff partaking in activities for hours at a time.' ... An independent reviewing physician's opinion may be given greater weight when relying on a medical record review and video surveillance." [Eaton v. Reliance Standard Life Ins. Co., No. 16-2764 (W.D. Tenn. July 31, 2018)] (Lane Powell PC)
One Sure-Fire Way to Engage Employees in Voluntary Benefits
"One way is to understand what employees might need given their life stage, family situation or other variables. To help employees sort this out, here are few scenarios of how voluntary benefits could help employees[.]" (Voya)
District Court Finds Two-Decade Pattern of Insurer's 'Extraordinary' Steps to Deny Disability Claims
"The court queried whether Reliance based its denial on substantial evidence. Its answer: No.... The court then queried whether Reliance has a conflict of interest. Its answer: Yes. The court found over 100 decisions in the last 21 years criticizing Reliance's disability decisions.... [T]he court noted that Reliance submitted no evidence showing that it has taken steps to mitigate its conflict of interest.... [T]he court found that Reliance abused its discretion by denying Nichols' benefits." [Nichols v. Reliance Standard Life Ins. Co., No. 17-42 (S.D. Miss. June 29, 2018). (Kantor & Kantor)
Court Focuses on Definition of 'Regular Occupation' in Disability Benefits Dispute
"[The district court found that] [1] The fact that Unum requested additional information and proof that plaintiff satisfied the elimination period after relying on information provided by plaintiff's employer does not qualify as a moving target.... [2] [T]he Dictionary of Occupational Titles is an acceptable source for nationwide job descriptions and classifications." [Dahlka v. Unum Life Ins. Co. of Am., No. 17-245 (W.D. Wis. June 12, 2018)] (Lane Powell PC)
Employer's Endorsement of Long-Term Disability Policy Created ERISA Plan
"[T]his insurer sought to avoid state-law claims... [T]he employer was not a party to the lawsuit.... [T]he court did not address whether the employer believed its program qualified for the voluntary plan safe harbor or complied with ERISA. Nevertheless, the case serves as a warning to employers seeking to avoid the application of ERISA to these types of arrangements[.]" [Stolebarger v. Prudential Ins. Co. of Am., No. 17-6161 (N.D. Cal. May 18, 2018)] (Thomson Reuters / EBIA)
Migraine Impacts Employers in Both Health Care Spend and Lost Productivity
"[F]rom 2011 to 2015, employees treated for migraine had higher health care costs on average than employees without migraine treatments -- a difference of about $2,000 per year. Employees treated for migraine also had an average of 2.2 more sick days per year, at a cost of almost $600 in wages and benefits.... Employees who take short-term disability leave for migraine miss an average of 38 work days per episode--an economic loss to their employer of about $10,400." (Integrated Benefits Institute)
Insurer's Payment of Reduced Benefits Not a Fiduciary Breach
"Contrary to the widow's [assertion], LINA did not have a fiduciary duty to notify her husband that he had not completed the evidence of insurability requirement needed for the full amount of supplemental benefits. The plan documents showed that the circumstances in this case resulted not from any fault of LINA but, rather, from the employer's errors in failing to fulfill its fiduciary duties." [Gordon v. CIGNA Corp., No. 17-1188 (4th Cir. May 15, 2018)] (Wolters Kluwer Law & Business)
Ninth Circuit Holds That Substantial Contribution Standard Applies to AD&D Policy Exclusion
"[T]he court held that the substantial contribution standard applies in interpreting the concepts of cause and contribution in the exclusion for 'any loss caused or contributed to by illness or infirmity.' Applying this standard, the court found that diabetes did not substantially cause or contribute to the amputation where Dowdy suffered a deep infection related to the original injury and the fracture itself was slow to heal. For these reasons, the court found that Plaintiff is entitled to benefits." [Dowdy v. Metropolitan Life Ins. Co., No. 16-15824 (9th Cir. May 16, 2018)] (Kantor & Kantor)
Disability Benefits Claims May Settle Faster Under New Claims Procedures Regs
"If the plan administrator fails to strictly comply with the new rules, then the Labor Department has strongly suggested that any court review of a disability claim denial should be under a de novo standard.... In California, de novo review always will occur for litigated insured disability benefit claims. This is the case even if the new Labor Department rules are precisely followed by the plan administrator and if the plan is well drafted to give decision discretion to the plan administrator." (Bob Blum Mediation)
[Guidance Overview] New DOL Claims Procedures for Disability Benefits: Action Items to Stay in Compliance
"Review and identify all company-sponsored employee benefit plans to determine if the plan conditions benefits, including the payment or vesting thereof, on a determination of disability.... Amend claims procedures and update notices, Summary Plan Description and third-party service provider agreements ... Employees involved in making disability claims determinations should be trained on the new requirements imposed under the Final Regulations." (Buchanan Ingersoll & Rooney PC)
[Guidance Overview] DOL's Final Rule on Disability Claim Procedures Take Effect
"The Disability Claims Regulations deem a claimant to have exhausted all administrative remedies if a plan fails to strictly adhere to all of the DOL claims regulations, so it is vital for the plan administrator or follow these requirements.... The special rules require [a plan] to provide oral language services ... that would answer questions in the applicable non-English language and provide assistance with filing claims and appeals in such language; provide, upon request, a notice written in such language; and include in the English versions of all notices, a written statement prominently displayed in any applicable non-English language clearly indicating how to access the language services provided by the plan." (Friday Eldredge & Clark LLP)
Two Ways the New DOL Disability Claims Regs Will Change Litigation
"The new regulations allow for the court to substitute de novo review in cases where an insurer failed to strictly adhere to the regulations.... There are several strategic advantages to agreeing to de novo review, depending on your administrative file." (Lane Powell PC)
[Guidance Overview] New DOL Disability Claims Regs Now Effective
"[M]ost notable ... is the DOL's new 'deemed exhausted' rule, under which a claimant is deemed to have exhausted the administrative remedies available under a plan -- and is therefore permitted to proceed immediately to litigation -- if a plan fails to strictly adhere to any of the claims procedures[.]" (Robinson + Cole LLP)
[Guidance Overview] Expanded Disability Claims Procedure Rules Become Effective in Three Days
"Plan sponsors need to review their plans to determine whether such plans provide disability benefits and, if so, whether the rule applies. This review should encompass not only short- and long-term disability plans, but also ERISA-governed retirement, severance and 'top hat' plans that provide disability benefits.... [A]ppropriate steps should be taken to amend plan documents, prepare necessary participant communications and confirm proper administration of any disability claims filed on or after April 1." (McGuireWoods)
Sixth Circuit Affirms Finding That AT&T Did Not Violate Current DOL Disability Claims Regs
"AT&T's welfare benefit plan doesn't owe disability benefits to a worker who said the company violated federal regulations by consulting the same doctor when considering her initial claim and her subsequent appeal. The worker accused AT&T of violating the Labor Department's standards for evaluating disability benefit claims, including a provision prohibiting plan administrators from using the same doctor to evaluate both the initial and appeal phases of a worker's claim for benefits." [Castor v. AT&T Umbrella Benefit Plan No. 3, No. 17-3400 (6th Cir. Mar. 26, 2018; unpub.)] (Bloomberg BNA)
Part-Time Employee Entitled to Disability Benefits
"LINA argued it based its decision on updated medical evidence reviewed by case managers, an on-staff physician, and an independent board certified clinical neuropsychologist.... Looking at the definition of residual disability in the plan, LINA needed medical evidence to show [the employee] was capable of performing each and every material duty ... on a full-time basis. While LINA had discretion in interpreting and administering the plan, this discretion did not permit LINA to ignore the language of the plan." [Van Steen v. Life Ins. Co. of North America, Nos. 16-1405, 16-1421 (10th Cir. Jan. 2, 2018)] (McAfee & Taft)
[Guidance Overview] Prepare to Address Disability Claims Under All Types of Benefit Plans Differently, Starting April 1, 2018
"Does a third party (external) reviewer determine if disability exists? If so, either the plan document, insurance contract or service agreement needs to require that that third party comply with the new DOL rules.... Many benefit plans detail claims procedures only in the SPD; in that case, the plan document might not need to be updated, but a summary of material modifications should be provided to plan participants outlining the disability claims procedure changes." (Frost Brown Todd LLC)
Don't Amend Executive Comp Plans Yet for New Disability Claims Rules
"It is likely that all or a portion of the benefits earned or accrued before 2018 under non-qualified deferred compensation, executive retirement, and severance plans will be exempt from the $1 million deductibility limits of Code Section 162(m) under the grandfathering provisions of the transition rule.... Do not amend your non-qualified deferred compensation, executive retirement, and severance plans now in order to preserve the exemption." (Winston & Strawn LLP)
[Guidance Overview] Will Your Plan Need to Follow the New Disability Claims Procedures on April 1?
"Affected plans can include welfare plans (including 'wrap' plans with short-term disability and long-term disability benefits), certain pension plans, and 401(k), 403(b), and non-qualified 'top hat' deferred compensation plans ... Any plan for which disability is determined by the plan administrator or its delegate, and not by the Social Security Administration or a disability insurer, must be administered in accordance with the new rules beginning April 1, 2018, and the plan's claims procedures must comply in form with the new rules." (Husch Blackwell)
Third Circuit Adopts Plan-Friendly Interpretation of a 'Mental or Nervous Disorder' Limitation
"The Third Circuit stated that the plan's language made clear that to remain eligible for benefits beyond 24 months, it was the plaintiff's burden to 'prove she was totally disabled from any occupation solely due to a physical condition.' The Third Circuit further explained that the terms of the mental nervous limitation in the plan ... means 'that benefits may be terminated when physical disability alone is insufficient to render a claimant totally disabled.' " [Krash v. Reliance Standard Life Ins. Group, No. 17-1814 (3d Cir. Feb. 12, 2018)] (Seyfarth Shaw LLP)
[Guidance Overview] Are Your Qualified and Nonqualified Employee Benefit Plans in Compliance with the New ERISA Disability Claims Regs?
"[W]here a plan does not provide for its own fiduciaries to make a determination of disability -- but instead defers to the determination made by the administrator of another plan (like the employer's long-term disability plan) -- then only the terms of the other plan need to be amended. Examples include health plans that extend eligibility, or deferred compensation plans that provide accelerated vesting, to claimants who are receiving benefits under the employer's long-term disability plan or Social Security Disability Insurance (SSDI)." (Katten Muchin Rosenman LLP)
[Guidance Overview] New Disability Claims Procedures Take Effect April 2, 2018
"Plan sponsors should start by identifying which of their ERISA plans allow for an exercise of discretion by a claims administrator in determining the disability status of a participant.... [It] is this exercise of discretion -- rather than the application of an impartial, objective standard -- that implicates the Final Rule. Accordingly, claims under a health plan, a long- or short-term disability plan, or even a retirement plan could be affected." (Verrill Dana LLP)
[Guidance Overview] New Disability Claims Procedure Regulations Take Effect on April 1, 2018
"If the new claims procedures are not followed, then the claimant will be deemed to have exhausted administrative remedies. As a result, the claimant would be allowed to immediately file a lawsuit to seek a review of the disability determination. The court reviewing the claim would not be required to give any deference to the prior decision of the plan as a result of the failure to follow the new claims procedures." (Duane Morris LLP)
Is Your Short-Term Disability Program Covered by ERISA?
"To determine whether a plan fits within this safe harbor exception, the label and intent of the employer are not controlling. Instead, an employer must answer these 4 questions ... [1] Who is getting paid? ... [2] How much are the payments? ... [3] What source is the payment coming from? ... [4] Why are the payments being made?" (Graydon)
[Guidance Overview] New ERISA Claims Procedures for Plans Providing Disability Benefits Effective April 1, 2018
"Appeal denial notices should be revised to include the time limitation as to when a claimant can bring a claim in federal court under Section 502(a). All notices must also be presented in a culturally and linguistically appropriate manner, which means that the plan must provide oral language services to claimants such as answering questions in a non-English language and providing assistance with filing claims in any applicable non-English language." (Holland & Knight)
[Guidance Overview] New ERISA Disability Benefit Claims and Appeals Rules Take Effect April 2, 2018
"The new rules will apply to disability benefit claims under both pension and welfare plans, but only if the plan's claims adjudicator must make a determination of disability in order to decide the claim. If a plan conditions eligibility for benefits on a finding of disability by a third party, such as the Social Security Administration (SSA) or an employer's long-term disability plan, the plan is not subject to the new rules. Plans may be amended to condition eligibility on a determination of disability made by the SSA or the employer's long-term disability plan to avoid the application of the new rules[.]" (Hanson Bridgett LLP)
[Guidance Overview] DOL Says New Disability Claim Regs to Apply April 1
"The 2016 amendments add a new requirement applicable during the claim appeal phase: a plan must give a claimant reasonable time to review and respond to 'new or additional evidence' or a 'new or additional rationale' for denying his or her claim.... [The DOL] places no limits on the amount of back-and-forth required. Nor is there any adjustment in the time allowed for rendering a decision in order to accommodate this additional procedure.... [T]he preamble also suggests that when the claimant does respond, if the response prompts further review by a medical professional, which is likely (and may be required by the regulations), the plan may need to send the matter to the claimant for another response, and so on." (Ogletree Deakins)
Claim Denial Letter Is Only as Good as the Analysis Contained in the Medical Examiner's Report
"Don't rely on the mere conclusions by the independent reviewer and inform your independent medical reviewer that the reasons for the conclusions are as important as the conclusions themselves. That is because ... your denial letter is only as good as the analysis/reasons stated in the IME report." [Westfall v. Liberty Life Assurance Co. of Boston, No. 16-2921 (N.D. Ohio Feb. 28, 2018)] (Lane Powell PC)
Compliance Issues That Should Be on Your Radar Screen for 2018
"Employers finalizing their 2017 reporting should be aware of issues raised by the IRS in 2015 employer shared responsibility assessment letters (Letter 226J) that the agency began to send last fall.... New disability rules apply in April.... Wellness plan rules in flux.... Mental health parity in crosshairs again.... Expected guidance on HRAs." (Mercer)
[Guidance Overview] New Claims Procedures for Disability Benefit Claims Take Effect
"The new rules intend to offer additional procedural protections and safeguards to claimants seeking disability benefits under an ERISA plan.... [C]laimants must receive an opportunity to review and respond to new evidence or rationales developed by the plan while an appeal is pending.... [D]isability benefit denial notices must contain a 'discussion of the decision' when the plan does not follow a Social Security Administration disability determination or otherwise contradicts the views of the treating professionals." (Latham & Watkins)
[Guidance Overview] April 1, 2018 Is Fast Approaching -- Are Your Disability Claims Procedures Ready?
"To avoid claimants being deemed to have exhausted the plan's claims procedures, enabling them to sue the plan with the favorable de novo standard of review, the claims procedures of all plans providing a disability benefit must be reviewed against these final regulations. This includes disability, pension, defined contribution plans (401(k) and 403(b)) and nonqualified deferred compensation plans." (Foley & Lardner LLP)
[Guidance Overview] No Further Delays for Enhanced Disability Claims Procedures
"For plans where the administrator will retain the discretion to make disability determinations, the plan sponsor should, prior to April 1, [1] ensure that plan administrators and benefits staff are aware of, and will follow, the new rules in practice; [2] update plan documents and SPDs to reflect the new procedures; and [3] update ABD letters, disability claims forms, communications, notices, company intranet, and employee handbooks[.]" (McCarter & English)
[Guidance Overview] Don't Overlook Death and Disability Benefits in Reporting Potential Payments Upon Termination of Employment or Change in Control
"Many companies' equity incentive plans or award agreements provide for full or partially accelerated vesting upon an executive's termination of employment due to death or disability.... Compliance and Disclosure Interpretation (C&DI) Question 126.02 states that the Instruction 5 standard that the 'scope' of arrangements not discriminate in favor of executive officers would not be satisfied where the awards to executives are in amounts greater than those provided to all salaried employees -- which is nearly always the case." (Winston & Strawn LLP)
Facebook Has a New Friend: Disability Insurers
"Social media monitoring is a growing practice in which insurers or third party investigators review a person's online footprint for information relevant to their claimed disability.... Some insurers use third-party investigative firms to run social media checks on people claiming disability. At those firms, business is booming." (Bloomberg BNA)
[Guidance Overview] New Disability Claims Procedure Rules Take Effect April 1 (PDF)
"The Final Rule is very likely to increase the administrative costs and burdens of administering disability benefits under ERISA plans and is likely to make it easier for claimants to pursue their claims in court. Key changes to the procedures that ERISA plans must use to process disability claims include: ... [1] Disclosure of the basis for disagreeing with a third party.... [2] Right to review and respond to new information before final decision.... [3] Strict compliance and possible de novo review." (Groom Law Group)
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