In a recent decision, the Sixth U.S. Circuit Court of Appeals resolved an important question in a way that should put administrators of ERISA plans in a far stronger position vis-à-vis claimants who disagree with the administrators’ plan interpretations. Essentially, the court in Clemons v. Norton Healthcare Retirement Plan held that the contract-interpretation doctrine of “contra proferentum” has no application once a court has determined that a plan document grants the administrator the type of broad discretion approved by the U.S. Supreme Court in its 1989 Firestone decision.
Claims & Appeals
When the Department of Labor (“DOL”) delayed by 90 days the date by which ERISA plans were required to comply with a set of disability claims and appeals regulations issued in the waning days of the Obama Administration, we predicted that a further delay – or even a complete withdrawal – of the regulations could be in the works. As it turns out, we were wrong. Instead, the DOL announced in early January that the regulations will become fully applicable on April 1st – and without change.
The Department of Labor has proposed a 90-day delay in the applicability of disability claims and appeals regulations that were finalized in the waning days of the Obama Administration. Rather than applying to claims filed on or after January 1, 2018, the regulations would now apply to claims filed on or after April 1, 2018. Moreover, it seems likely that a further delay – or even a complete withdrawal – of the regulations could be in the works.
The Department of Labor has issued final regulations under Section 503 of ERISA that purport to enhance the disability benefit claims and appeals process for plan participants. These regulations amend the DOL’s disability claims procedure regulations issued in 2002. The new regulations generally affect the procedures for filing disability benefit claims, providing notice of adverse benefit determinations, and appealing adverse benefit determinations.
As explained in ourAugust 2010 article, “interim final regulations” issued under the Affordable Care Act (“ACA”) will require that group health plans (other than those that are “grandfathered”) comply with a number of internal claims and appeals procedures that go beyond those previously required under ERISA. Although these new requirements are generally effective for plan years beginning on or after September 23, 2010, the Department of Labor (“DOL”) granted a limited extension of this compliance deadline in late 2010. Then in March of this year, the compliance deadline was further extended for certain of these requirements.
In a series of FAQs, the agencies charged with implementing health care reform have slightly eased the pressure on employers and employers to comply with the new claims and appeals requirements.
Following up on their earlier guidance concerning the new requirements for dealing with health plan claims and appeals, the agencies charged with implementing health care reform have now issued interim guidance on the new rules for “external reviews.” This latest guidance includes model notices that plan administrators may want to use for this purpose.
Unless an employer health plan is “grandfathered,” it will soon be required to comply with a far more rigorous set of rules for processing benefit claims and appeals. The agencies charged with enforcing this requirement have just issued their initial set of guidance.
We are occasionally reminded that the claims and appeals procedures carefully spelled out in ERISA plans have real meaning. Although the regulatory deadlines within which plan fiduciaries must render decisions on benefit claims and appeals may appear arbitrary – and although many plan administrators treat them as mere “guidelines” – the failure to abide by those deadlines can have disastrous consequences in court.
Changes to the federal rules governing civil litigation will affect the way that benefit claims and appeals are processed. While third-party claims administrators will be most directly affected, plan sponsors and their human resources staff should also be aware of the new rules. Failure to abide by them could make it more difficult to succeed if claim decisions are challenged in court.