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

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...