United States: DOL Proposes 90-Day Delay Of New ERISA Disability Claims Procedures

Taking a page from the fiduciary rule playbook, today the U.S. Department of Labor (DOL) proposed a 90-day delay of the implementation of the amended ERISA claims procedure rule for employer-sponsored disability plans ("Final Rule"). The Final Rule was scheduled to take effect for ERISA disability benefits claims on January 1, 2018. The proposed delay would postpone the Final Rule's application to April 1, 2018, giving the DOL time to decide whether to amend, modify or rescind the Final Rule.

If not delayed (and ultimately amended or rescinded), the Final Rule would make sweeping and costly changes to the current claims procedure for ERISA disability plans. Some of the most substantial changes of the Final Rule include: new conflict of interest rules, burdensome changes to disability benefit denial notices, the unfettered right of plan participants to review and respond to all new information generated in the appeal process, and a procedure pursuant to which plan participants could proceed straight to federal court without fully exhausting their disability plans' appeal process. For a comprehensive discussion of the Final Rule read our recent article in DRI's For The Defense Magazine here.

The DOL's proposed delay was prompted by valid concerns raised by various stakeholders and Congress that the Final Rule will increase the cost of offering disability benefits plans to employees, increase litigation, and ultimately result in employees having less access to disability benefits. This is less than ironic given that part of the rationale for adopting the Final Rule was a stated belief that the incidence of disability benefits litigation was "too high."

In any event, the proposed extension will provide the public additional time to submit comments and information on the New Rule to allow the DOL to more fully and fairly evaluate its necessity – or lack of necessity as the case may be. If recent history is a guide, it is relatively safe to assume that the delay will result in a substantial modification and/or rescission of the Final Rule.

Comments on the proposal to extend the Final Rule are due to the DOL on or before October 27, 2017. Any data or other pertinent information to examine the merits of changing, amending or rescinding the Final Rule is due on or before December 11, 2017.

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