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New Department of Labor Disability Claim Procedure: A Trap for the Unwary

Blank Rome Workplace

On April 1, 2018, a new Department of Labor regulation that modifies the procedures ERISA-governed plans must use to evaluate disability claims took effect.

According to a Department of Labor news release, the modified procedures:

give America’s workers new procedural protections when dealing with plan fiduciaries and insurance providers who deny their claims for disability benefits … and ensures, for example, that disability claimants receive a clear explanation of why their claim was denied as well as their rights to appeal a denial of a benefit claim, and to review and respond to new information developed by the plan during the course of an appeal. The rule also requires that a claims adjudicator could not be hired, promoted, terminated, or compensated based on the likelihood of denying claims.

Why It Matters

Failure to modify the claims procedures of a benefit plan that is covered by the new rule undermines the ability of the plan to obtain deference in litigation to an administrative determination as to whether a plan participant is disabled for purposes of the plan.

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