The DOL recently finalized regulations (“Final Rule”) regarding the claims procedure for employee benefit plans which provide disability benefits. The Final Rule largely tracks the proposed rule which came out last year. The Final Rule strengthens current rules by providing additional procedural protections and safeguards. It requires 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;
- Benefit denial notices must contain a complete discussion of why the plan denied the claim and the standards that were applied in reaching that decision, including the basis for disagreeing with the views of health care professionals, vocational professionals or with disability benefit determinations made by the Social Security Administration;
- Claimants must be given timely notice of their right to access their claim file and other relevant documents and must be guaranteed the right to present testimony and evidence to support their claim during the review process;
- Claimants must be given notice and a fair opportunity to respond to new or additional evidence or rationales during the appeals stage;
- 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 resulted from only a minor error);
- Certain rescissions of coverage would be treated as adverse benefit determinations triggering the plan’s appeal procedures; and
- Required notices and disclosures related to the claims procedure must be written in a culturally and linguistically appropriate manner.
The new regulations will affect plan administrators, participants and beneficiaries of plans providing disability benefits, as well as others who assist in providing such benefits, including third party administrators. The Final Rule takes effect January 18, 2017 and applies to all claims for disability benefits filed on or after January 1, 2018.