On December 19, 2016, the Department of Labor ended a year-long process to update the regulations governing claim procedures for disability plans, 29 C.F.R. §  2560.503-1. The text of the new regulations, and the DOL’s explanation of changes and the comment process, can be found here.

The DOL’s express goal in establishing these new regulations is to “strengthen[] 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.” The DOL concluded that a stronger regulation was needed, in part, because “disability cases dominate the ERISA litigation landscape today[.]”

The DOL initially proposed these changes to the regulations in November 2015. It received numerous comments, both for and against the changes, but it “decided to adopt the improvements in procedural protections and other safeguards largely as set forth” in the 2015 proposal.

The new regulations are not limited to traditional disability insurance benefit plans. They apply to any benefit in any type of plan that is conditioned on a determination of disability by the plan, regardless of what the plan is called or how the benefit is characterized. For example, the new regulations presumably would govern accelerated retirement benefits or life waiver of premium benefits premised on disability.

A number of the changes were intended to codify standard practices among disability plan fiduciaries, such as not basing personnel decisions on claim determinations, and explaining departures from an award of SSDI benefits.

Other changes are more dramatic, including:

  • A requirement to disclose new evidence and rationales on administrative appeal in sufficient time for the claimant to respond before the deadline for deciding the appeal.
  • Significant tightening elimination of the judicially created “substantial compliance” doctrine, under which minor violations of the regulations typically would not result in adverse consequences for the fiduciary.
  • An apparent regulatory presumption that if a relevant written procedure was not physically consulted during the claim process, then the procedure does not exist.

The new regulation becomes effective January 18, 2017, but the new provisions in the new regulation apply only to claims filed after January 1, 2018.