How federal regulations will affect group disability claims in 2018
The United States Department of Labor issued regulations that revise how employer-sponsored disability plans will handle claims and appeals. These regulations apply to plans that fall under the Employee Retirement Income Security Act (ERISA).
These changes are scheduled to take effect January 1, 2018, meaning they will apply to disability claims or appeals filed on or after this date. As we approach the implementation of these regulations, it is important to understand how they may affect your disability benefits.
Recap: What is ERISA?
If you received your long-term disability insurance coverage through your employer or union, or through a voluntary employer benefit plan, a claim against your insurance company is likely subject to the Employee Retirement Income Security Act (ERISA) of 1974.
ERISA was intended to protect workers’ pension benefits from the grasp of large, greedy corporations, and to standardize the administration of employee benefit plans.
Historically speaking, subsequent amendments have rendered ERISA generally unkind to policyholders by making it easier for insurers to deny valid claims without penalties and providing claimants with very limited forms of legal recourse.
Under ERISA, policyholders have no constitutional right to a trial by jury, and no right to sue unless they have first exhausted all administrative remedies for their denied claim.
If your ERISA-governed policy requires two or three appeals, you must follow these steps before you are able to file a lawsuit. Even then, you are not afforded the right to ask for real damages, including punitive, bad faith, emotional distress and extra-contractual. There is also no right to accelerate your future benefits if they were unfairly denied.
There are some exceptions to ERISA; generally, government, church and public sector employees’ insurance plans are exempt.
What are the new regulations?
The new rules will apply to short term and long term disability insurance plans provided through your employer, and will add procedural safeguards to the claims and appeals processes. Here are some of the new regulations:
Claims and appeals must be decided independently and impartially.
This means that those in the position to approve or deny claims should not be incentivized to deny said claims.
The intent of this rule is to protect policyholders from conflicts of interest, deceitful benefit denials or other breaches of fiduciary duty committed by the insurance company and to increase the chances of a fair claims evaluation.
This new regulation will prohibit insurers from engaging in conduct like providing bonuses to claims examiners based on how many denials they issue, or hiring in-house medical experts who routinely recommend a denial to benefit the insurance company.
Denial letters must contain several specific details.
As of January 1, 2018, denial letters must include an explanation of why the insurer did or did not agree with the disability determinations or views expressed by health care professionals, vocational experts and/or the Social Security Administration (SSA).
Currently, it is common for insurance to provide ambiguous or unsubstantiated explanations of why your claim was denied; in some cases, they may provide no explanation at all.
These regulations aim to ensure the reason for denial is stated in clear detail, which can help you build a strong appeal that addresses each issue or concern.
Furthermore, the letter must outline any company rules or guidelines the insurer used in determining the claim; if no rules exist, this must also be stated.
The letter must also inform the claimant about their right to access their claim file and any other documents relevant to their claim; currently, this notice must be offered only if an appeal is denied.
Denial letters and required communications must also be culturally and linguistically appropriate, which means they must be written in a manner and language the claimant can understand.
If your address is in a county where 10 percent or more of the population is literate only in the same non-English language, the letter must also include information in that language about the availability of language services. This intends to ensure non-English speakers be appropriately notified of their denial and provide them with the necessary information to pursue an appeal if desired.
There are exceptions to the restrictions against suing the insurance company.
Claimants will no longer be barred from suing the insurer due to “failure to exhaust the plan’s claim procedures” if the insurer itself did not comply with its own claim procedures.
Essentially, this means that you’re no longer prohibited from suing, even if you haven’t exhausted all the plan’s administrative remedies, if the insurer has behaved wrongly or if procedural errors have occurred. However, there is an exception if the insurer makes certain minor errors.
The lengthy administrative appeal process can often exhaust the claimant’s resolve to fight for their benefits, and intentional delays or withholding of information may cause claimants to miss the appeal deadline or force them to submit poorly supported appeals. These new regulations aim to prevent insurers from using these deceptive tactics to deny claims and to provide policyholders with additional legal recourse.
The definition of adverse benefit determinations has expanded.
As of January 1, retroactive rescissions of coverage – for example, in which the insurer withdraws your policy due to misleading or inaccurate on your application – will be considered benefit denials that trigger your plan’s appeal procedures. This will allow you to appeal the insurer’s decision through the required administrative remedies.
However, this does not apply to rescissions for nonpayment of premiums.
The impact of new regulations
The Department of Labor reviewed ERISA legal cases dating back to 2000, and their findings led to the formation of these additional safeguards for policyholders against the might of Big Insurance.
However, the insurers have had nearly a year to review these regulations and may turn to other denial strategies in order to minimize their costs and risks.
Read the regulations in full for more information about the impact of these new procedures.
Questions about your ERISA disability claim?
The disability claims and appeals processes can be confusing, even with new regulations that are supposed to make them fairer and clearer.
An experienced long-term disability insurance can help you determine how to proceed with your ERISA disability claim or appeal.
If you are preparing to file an appeal for your wrongfully denied long-term disability insurance claim, contact our top-rated long-term disability insurance attorneys for a free consultation.
The legal team at DarrasLaw has successfully handled ERISA disability insurance claims at all stages, from initial applications to appeals and lawsuits. There is no risk involved in contacting DarrasLaw; if you have questions about your group long-term disability insurance claim or appeal, our legal team is here to help.