Effective April 1, new rules will change the claims procedures for disability benefit plans. If you are denied a claim, these amended rules could affect you. Attorney Corey Schechter of Butterfield Schechter LLP recently outlined what the new rules mean and how they can affect U.S. citizens, plan fiduciaries and insurance providers who deny claims:
The final rule will require plan providers, plan fiduciaries, and insurance companies to comply with new ERISA requirements related to the disability claims process. One of the biggest changes involves notice and disclosure requirements. Denial of benefits must contain a complete discussion of why the claim was denied and the standards used to evaluate the claim.
Denial notices must also include a statement that the claimant is entitled to receive the entire claim file and related documents, including internal rules, guidelines, standards, protocols, and other criteria used to deny the claim.
Changes also require independence in evaluating claims and avoiding potential conflicts of interest. For example, a claims adjudicator or medical expert cannot be hired or compensated based on the likelihood to deny the benefit claims.
When the plan providers do not follow claims processing rules, the claimant may not need to otherwise exhaust all administrative remedies before taking the claim to court. A claimant may be deemed to have exhausted the remedies under the plan if the plan does not adhere to the plan’s rules.
Any revision to coverage by the plan will be treated as an adverse benefit determination, allowing the participant to appeal the decision. Rescissions of coverage, which includes termination of benefits due to alleged misrepresentations by the insured will trigger the appeals procedures.
The applicability date for new disability benefit claim rules was delayed for 90 days from January 1st, to allow for comments on the costs and benefits of the new rule. The DOL received hundreds of comment letters from a variety of stakeholders, including the insurance industry, employer groups, consumer advocates, and disability benefit lawyers.
According to the DOL, only a few of the comments submitted provided the requested qualitative data. The DOL sought data to support the claims from the insurance industry and others that the new rule would dramatically increase the costs to disability benefit plans, increase litigation, and impair access to disability benefit protections for workers.
The final rule was initially published in the Federal Register back on December 19, 2016, effective January 18, 2017. After reviewing the comments, the DOL will allow the final rule to become applicable for claims for disability benefits filed on or after April 1, 2018.
Corey Schechter shared further relevant information on Butterfield Schechter LLP’s blog here.
This information is for educational purposes only and is not intended to provide legal counsel or serve as legal advice. If you have a legal matter, it is best to consult the advice of an attorney. You can get referred to an attorney for a free 30-minute consultation through the San Diego County Bar’s Lawyer Referral & Information Service at www.sdcba.org/ineedalawyer or by calling 1 (800) 464-1529.
Butterfield Schechter LLP is a member of the SDCBA’s 100 Percent Club.