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In September, we discussed changes in federal regulations that will revise how employer-sponsored disability plans will handle claims and appeals. These regulations, issued by the United States Department of Labor (DOL), apply to plans that fall under the Employee Retirement Income Security Act (ERISA).

These changes – scheduled to take effect January 1, 2018 – have been delayed until April 1, 2018, according to the National Law Review. This means that these regulations will apply to disability claims or appeals filed on or after April 1.

What is ERISA?

Long-term disability insurance coverage received or purchased through your employer or union – or through a voluntary employer benefit plan – is likely subject to the Employee Retirement Income Security Act (ERISA) of 1974, which intended to standardize the administration of employee benefit plans and protect workers’ pension benefits from large corporations.

In most cases, successive amendments to ERISA have made it easier for insurers to deny valid claims without penalty and provided policyholders with very little legal recourse.

The challenges of ERISA claims

Unlike most individual disability policies, ERISA-governed disability policies have additional restrictions that can make it more difficult to receive benefits if your claim is denied.

Under ERISA, you have no constitutional right to a trial by jury, and no right to sue unless you have first exhausted all appeals and administrative remedies outlined in your policy.

For example, if your policy “allows” you three appeals for a denied claim, you must first file all three appeals before you can file a lawsuit. You are also restricted if you do sue the insurance company; you cannot ask for real damages, including punitive, bad faith, emotional distress and extra-contractual. There is also no right to accelerate any future benefits if you were unfairly denied.

Recap: What are the new regulations?

As we approach the implementation of these regulations, it is important to understand how they may affect your disability benefits.

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.

Before forming the new regulations, the DOL first reviewed ERISA legal cases dating back to 2000. Their findings led to the conclusion that policyholders required additional safeguards against Big Insurance, and additional regulations were formed, including.

Claims and appeals must be decided fairly and impartially.

This provision states that people in a position to approve or deny ERISA disability claims should not be incentivized to deny said claims.

In other words, policyholders should be protected from conflicts of interest or deceitful benefits denials on behalf of the insurer and have the access to a fair claims evaluation.

Denial letters must contain specific information.

If this new regulation remains intact, denial letters will have to explain clearly, why the insurer did or did not agree with disability determinations made by health care professionals, vocational experts and/or the Social Security Administration (SSA).

The letter must also detail any company rules or guidelines the insurance company used in determining the claim decision. If no such rules exist, the letter must also explain this.

Furthermore, decision letters must inform claimants about their right to access their claim file and any other documents relevant to their claim, not just when an appeal is denied.

There are exceptions to the restrictions against suing the insurance company.

Under this provision, claimants would no longer be barred from suing the insurance company due to “failure to exhaust the plan’s claim procedures” if the insurer itself did not comply with its own claim procedures.

In other words, if the insurer has behaved wrongly or if procedural errors occurred during your claims process, you may be able to sue, even if you have exhausted your plan’s administrative remedies.

Read the regulations in full to learn more about the potential impact of these new procedures.

Why was application of the regulations delayed?

The National Law Review reports that the delay is in place to allow the Department of Labor time to consider comments and data “as part of its effort … to pursue regulatory alternatives that meet its objectives of ensuring the full and fair review of disability benefit claims while not imposing unnecessary costs and adverse consequences.”

This means that the DOL is seeking more information and may look at alternative, less costly and/or burdensome regulations that could achieve the same overall objectives as the previously proposed rules.

The DOL will accept comments providing data and information about the merits of rescinding, modifying or upholding the regulations until December 11; then, using the collected responses, it will consider whether to rescind or modify the final regulations.

Reportedly, the DOL will evaluate each provision through a cost/benefit analysis, which means some regulations may be kept while others are modified or scrapped. It has been suggested that the DOL may not take an all-or-nothing approach to approving the regulations in question, but it is impossible to be certain at this time.

The impact of delayed regulations

By delaying the application of these regulations and seeking further feedback and data on them, it becomes possible that at least some of the regulations will not go into effect as they are, or may not be implemented at all.

While amendment of the regulations may benefit the insurers, it could be a setback for policyholders in the end. If implementation of a specific provision is determined to be too costly, it is possible that the provision could be revised in a way that makes it more cost-effective to implement, but less effective for policyholders.

It is also possible costly regulations could be rescinded altogether, causing policyholders to lose much-needed protections against Big Insurance that the new regulations were intended to provide.

Until they are passed, all group long-term disability insurance claimants will be subject to the current ERISA provisions and claim hurdles.

Questions about your ERISA disability claim?

The disability claims and appeals processes can be confusing, even if the regulations intend to make them fairer and clearer.

An experienced long-term disability insurance attorney can help you determine how to proceed with your ERISA disability claim or

If you are preparing to file an appeal for your wrongfully denied long-term disability insurance claim, contact our top-rated ERISA 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.

DarrasLaw is Americas' most honored and decorated disability litigation firm in the country. Mr. Darras has seen more, evaluated more, litigated more, and resolved more individual and group long term disability and long-term care cases than any other lawyer in the United States.

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