Spencer Fane LLP Logo

Administration Proposes Delay of Disability Claims and Appeals Procedures

The Department of Labor (“DOL”) 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.

As explained in our February 3, 2017, article, these regulations would modify the procedures that must be followed by ERISA plans when ruling on disability-related claims and appeals. Discretionary disability determinations (i.e., where a plan does not simply rely on a determination made by a third party, such as the Social Security Administration or a long-term disability insurer) would be subject to many of the same rules that already apply to health claims. Any plan that fails to follow these procedures could find it harder to defend against litigation filed by a plan participant or beneficiary.

Although certain aspects of the final regulations were made immediately effective, some of the more burdensome requirements were not to apply until January 1, 2018. Acting pursuant to President Trump’s Executive Order directing administrative agencies to reduce unnecessary regulatory burdens, the DOL has now proposed a 90-day delay of this final effective date. Interested parties have 15 days in which to comment on the proposed delay, but it will almost certainly be granted.

At the same time, the DOL has given interested parties 60 days in which to submit substantive comments on the final regulations. Based on those comments, the DOL “may decide to allow all or part of the Final Rule to take effect as written, propose a further extension, withdraw the Final Rule, or propose amendments to the Final Rule.” If the DOL’s actions with regard to the Fiduciary Rule are any guide, we can expect either a further delay or a complete withdrawal.

In the meantime, sponsors and administrators of plans that require a discretionary disability determination may be wondering what they should do now.

  • If a plan has already been amended to fully reflect the final regulations, or if processes and forms have already been modified to comply, there may be no reason not to move forward with compliance.
  • But if compliance with the regulations would impose a significant burden, then it probably makes sense to wait for further DOL guidance.

There is another wild card to consider. The DOL announcement notes that “several provisions in the Final Rule essentially conform the express text of certain parts of the Final Rule to various federal court decisions on full and fair review . . . . The proposed delay of the applicability date in this document does not modify or otherwise delay the application of any such controlling judicial precedents.” Plan administrators should remain sensitive to the possible application of these court decisions.

This blog post was drafted by Ken Mason, an attorney in the Spencer Fane LLP Overland Park, KS office. For more information, visit spencerfane.com.