The Department of Labor (DOL) has issued final regulations on claim procedures for plans providing disability benefits. The final rule revises the current rules primarily by adopting certain procedural protections and safeguards for disability benefit claims that are currently applicable to claims for group health benefits pursuant to the Affordable Care Act (ACA).
The major provisions of the final rule require that:
- Claims and appeals must be adjudicated in a manner designed to ensure independence and impartiality of the persons involved in making the benefit determination. For example, a plan cannot provide bonuses based on the number of denials made by a claim adjudicator. Similarly, a plan cannot contract with a medical expert based on the expert’s reputation for outcomes in contested cases.
- Benefits denial notices must contain a complete discussion of why the plan denied the claim and the standards applied in reaching the decision, including the basis for disagreeing with the views of health care professionals, vocational professionals or with disability benefit determinations by the Social Security Administration (SSA). The final rule requires that determinations on disability benefit claims contain a discussion of the basis for disagreeing with an SSA disability determination presented by the claimant to the plan. Claim administrators working with an apparently deficient administrative record must inform claimants of the alleged deficiency and provide them with an opportunity to resolve the stated problem by furnishing missing information. The regulations make it clear that boilerplate text about possible differences in applicable definitions, presumptions or evidence is not sufficient; a discussion of the actual differences will be necessary.
- Claimants must be given timely notice of their right to access to their entire claim file and other relevant documents and be guaranteed the right to present evidence and testimony in support of their claim during the review process.
- Claimants must be given notices and a fair opportunity to respond before denials at the appeals stage are based on new or additional evidence or rationales.
- Plans cannot prohibit a claimant from seeking court review of a claim denial based on a failure to exhaust administrative remedies under the plan if the plan failed to comply with the claims procedure requirements unless the violation was the result of a minor error, was non-prejudicial, attributable to good cause or matters beyond the plan’s control, in the context of an ongoing good-faith exchange of information and not reflective of a pattern or practice of non-compliance.
- Certain rescissions of coverage are to be treated as adverse benefit determinations triggering the plan’s appeals procedures. Failure to pay premiums or make contributions does not constitute a rescission.
- Required notices and disclosures issued under the claims procedure regulation must be written in a culturally and linguistically appropriate manner. The final adopts the standards already applicable to group health plans under the ACA. Specifically, if a claimant’s address is in a county where 10% or more of the population is literate only in the same non-English language, notices of adverse benefit determinations have to include a statement prominently displayed in the applicable non-English language clearly indicating how to access language services provided by the plan. In addition, plans must provide a customer assistance process (such as a telephone hotline) with oral language services in the non-English language and provide written notices in the non-English language upon request.
These regulations do not change the required time frames for deciding disability claims, which is generally 45 days after receipt of the claim. This can be extended by 30 days if necessary due to matters beyond the control of the plan, with a second 30-day extension also possible, with timely notice required for each extension. These regulations clarify that a provision that allows for deciding disability claims at quarterly meetings only applies to multiemployer plans.
Although these regulations technically only apply to disability benefit claims, the preamble to the regulations indicates that the DOL believes that notices of adverse benefit determinations for all types of benefits are required to include disclosure about any applicable contractual limitations period.