82 FR 47409 - Claims Procedure for Plans Providing Disability Benefits; Extension of Applicability Date

DEPARTMENT OF LABOR
Employee Benefits Security Administration

Federal Register Volume 82, Issue 196 (October 12, 2017)

Page Range		47409-47415
FR Document		2017-22082

The Department of Labor proposes to delay for ninety (90) days--through April 1, 2018--the applicability of the Final Rule amending the claims procedure requirements applicable to ERISA-covered employee benefit plans that provide disability benefits. The Final Rule was published in the Federal Register on December 19, 2016, and became effective on January 18, 2017. The Final Rule currently is scheduled to apply to claims for disability benefits under ERISA-covered employee benefit plans that are filed on or after January 1, 2018. Following publication of the Final Rule, various stakeholders and members of Congress asserted that it will drive up disability benefit plan costs, cause an increase in litigation, and in so doing impair workers' access to disability insurance benefits. Pursuant to Executive Order 13777, the Department of Labor has concluded that it is appropriate to give the public an additional opportunity to submit comments and data concerning potential impacts of the Final Rule. The Department of Labor will carefully consider the submitted comments and data as part of its effort to examine regulatory alternatives that meet its objectives of ensuring the full and fair review of disability benefit claims while not imposing unnecessary costs and adverse consequences. The Department of Labor accordingly seeks public comment on a proposed 90-day delay of the applicability of the Final Rule in order to solicit additional public input and examine regulatory alternatives. If this proposal is finalized, the amendments made on December 19, 2016, would become applicable to claims for disability benefits that are filed after April 1, 2018, rather than January 1, 2018.

Federal Register, Volume 82 Issue 196 (Thursday, October 12, 2017)

[Federal Register Volume 82, Number 196 (Thursday, October 12, 2017)]
[Proposed Rules]
[Pages 47409-47415]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2017-22082]

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DEPARTMENT OF LABOR

Employee Benefits Security Administration

29 CFR Part 2560

RIN 1210-AB39

Claims Procedure for Plans Providing Disability Benefits;
Extension of Applicability Date

AGENCY: Employee Benefits Security Administration, Department of Labor.

ACTION: Proposed rule.

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SUMMARY: The Department of Labor proposes to delay for ninety (90)
days--through April 1, 2018--the applicability of the Final Rule
amending the claims procedure requirements applicable to ERISA-covered
employee benefit plans that provide disability benefits. The Final Rule
was published in the Federal Register on December 19, 2016, and became
effective on January 18, 2017. The Final Rule currently is scheduled to
apply to claims for disability benefits under ERISA-covered employee
benefit plans that are filed on or after January 1, 2018. Following
publication of the Final Rule, various stakeholders and members of
Congress asserted that it will drive up disability benefit plan costs,
cause an increase in litigation, and in so doing impair workers' access
to disability insurance benefits. Pursuant to Executive Order 13777,
the Department of Labor has concluded that it is appropriate to give
the public an additional opportunity to submit comments and data
concerning potential impacts of the Final Rule. The Department of Labor
will carefully consider the submitted comments and data as part of its
effort to examine regulatory alternatives that meet its objectives of
ensuring the full and fair review of disability benefit claims while
not imposing unnecessary costs and adverse consequences. The Department
of Labor accordingly seeks public comment on a proposed 90-day delay of
the applicability of the Final Rule in order to solicit additional
public input and examine regulatory alternatives. If this proposal is
finalized, the amendments made on December 19,

[[Page 47410]]

2016, would become applicable to claims for disability benefits that
are filed after April 1, 2018, rather than January 1, 2018.

DATES: Comments on the proposal to extend the applicability date for 90
days must be submitted to the Department on or before October 27, 2017.
Comments providing data and otherwise germane to the examination of the
merits of rescinding, modifying, or retaining the rule must be
submitted to the Department on or before December 11, 2017.

FOR FURTHER INFORMATION CONTACT: Frances P. Steen, Office of
Regulations and Interpretations, Employee Benefits Security
Administration, (202) 693-8500. This is not a toll free number.

ADDRESSES: You may submit written comments, identified by RIN 1210-
AB39, by one of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
Email: e-ORI@dol.gov. Include RIN 1210-AB39 in the subject
line of the message.
Mail: Office of Regulations and Interpretations, Employee
Benefits Security Administration, Room N-5655, U.S. Department of
Labor, 200 Constitution Avenue NW., Washington, DC 20210, Attention:
Claims Procedure for Plans Providing Disability Benefits Examination.
Instructions: All submissions received must include the agency name
and RIN for this rulemaking. Persons submitting comments electronically
are encouraged to submit only by one electronic method and not to
submit paper copies. Comments will be available to the public, without
charge, online at http://www.regulations.gov and http://www.dol.gov/ebsa and at the Public Disclosure Room, Employee Benefits Security
Administration, Suite N-1513, 200 Constitution Avenue NW., Washington,
DC 20210.
Warning: Do not include any personally identifiable or confidential
business information that you do not want publicly disclosed. Comments
are public records and are posted on the Internet as received, and can
be retrieved by most internet search engines.

SUPPLEMENTARY INFORMATION: Section 503 of the Employee Retirement
Income Security Act of 1974, as amended (``ERISA''), requires that
every employee benefit plan shall establish and maintain reasonable
procedures governing the filing of benefit claims, notification of
benefit determinations, and appeal of adverse benefit determinations.
In accordance with its authority under ERISA section 503, and its
general regulatory authority under ERISA section 505, the Department of
Labor (``Department'') long ago established regulations setting forth
minimum requirements for employee benefit plan procedures pertaining to
claims for benefits by participants and beneficiaries. 29 CFR Sec.
2560.503-1.
On December 19, 2016, the Department published a final regulation
(``Final Rule'') amending the existing claims procedure regulation; the
Final Rule revised the claims procedure rules for ERISA-covered
employee benefit plans that provide disability benefits. The Final Rule
was made effective January 18, 2017, but the Department delayed its
applicability until January 1, 2018, in order to provide adequate time
for disability benefit plans and their affected service providers to
adjust to it, as well as for consumers and others to understand the
changes made.
The Final Rule requires that plans, plan fiduciaries, and insurance
providers comply with certain requirements when dealing with disability
benefit claimants. In summary, the Final Rule includes the following
requirements for the processing of claims and appeals for disability
benefits:
Disclosure Requirements. Benefit denial notices must
contain a more complete discussion of why the plan denied a claim and
the standards it used in making the decision. For example, notices must
include a discussion of the basis for disagreeing with a disability
determination made by the Social Security Administration (``SSA'') if
presented by the claimant in support of his or her claim.
Claim File and Internal Protocols. Benefit denial notices
must include a statement that the claimant is entitled to receive, upon
request, the entire claim file and other relevant documents. Currently,
this statement is required only in notices denying benefits on appeal.
Benefit denial notices also must include the internal rules,
guidelines, protocols, standards, or other similar criteria of the plan
that were used in denying a claim, or a statement that none were used.
Currently, denial notices are not required to include these internal
rules, guidelines, protocols, or standards; instead denial notices may
include a statement that such rules, guidelines, protocols, or
standards were used in denying the claim and that a copy will be
provided to the claimant upon request.
Review and Respond to New Information. Plans may not deny
benefits on appeal based on new or additional evidence or rationales
that were not included when the benefit was denied at the claims stage,
unless the claimant is given notice and a fair opportunity to respond.
Conflicts of Interest. Plans must ensure that disability
benefit claims and appeals are adjudicated in a manner designed to
ensure the independence and impartiality of the persons involved in
making the decision. For example, a claims adjudicator or medical or
vocational expert could not be hired, promoted, terminated, or
compensated based on the likelihood of the person denying benefit
claims.
Deemed Exhaustion. If a plan does not adhere to all claims
processing rules, the claimant is deemed to have exhausted the
administrative remedies available under the plan, unless the violation
was the result of a minor error and other conditions are met. If the
claimant is deemed to have exhausted the administrative remedies
available under the plan, the claim or appeal is deemed denied on
review without the exercise of discretion by a fiduciary and the
claimant may immediately pursue his or her claim in court. A plan also
must treat a claim as re-filed on appeal upon the plan's receipt of a
court's decision rejecting the claimant's request for review.
Coverage Rescissions. Rescissions of coverage, including
retroactive terminations due to alleged misrepresentation of fact
(e.g., errors in the application for coverage) must be treated as
adverse benefit determinations, thereby triggering the plan's appeals
procedures. Rescissions for non-payment of premiums are not covered by
this provision.
Communication Requirements in Non-English Languages.
Benefit denial notices have to be provided in a non-English language in
certain situations, using essentially the standard applicable to group
health benefit notices under the Affordable Care Act (``ACA'').
Specifically, if a disability claimant's address is in a county where
10 percent or more of the population is literate only in the same non-
English language, benefit denial notices must include a prominent
statement in the relevant non-English language about the availability
of language services. In such cases, plans also would be required to
provide oral language services in the relevant non-English language and
provide written notices in the non-English language upon request.
When it adopted the Final Rule, the Department published a
regulatory impact analysis (``RIA'') to support its conclusion that
changes to the existing rules were necessary to ensure that disability
claimants receive a full and

[[Page 47411]]

fair review of their claims. The Department found at that time that the
Final Rule would change the claims review process for ERISA-covered
disability plans by expanding due process rights. The analysis
concluded that: (1) The Final Rule would help alleviate the hardship to
many individuals when they are unable to work after becoming disabled
and their claims are unfairly denied; and (2) greater consistency in
the handling of disability benefit claims and appeals, and improved
access to information about the manner in which claims and appeals are
adjudicated, would lead to efficiency gains in the system, both in
terms of the allocation of spending at a macro-economic level as well
as operational efficiencies among individual plans.
On the cost side, the RIA concluded that the amendments would have
modest costs, since many of the amendments clarified provisions of the
claims procedure regulation or required the provision of information to
claimants that adjudicators should already possess. Although the
Department requested data when it first proposed amendments to the
claims procedure regulation in April 2015 (``2015 NPRM''), the comment
letters received generally did not contain alternative cost and
benefits estimates or data that the Department could use to estimate
costs and benefits for the Final Rule. However, the Department
quantified the costs associated with two specific provisions in the
Final Rule for which it had sufficient data: The requirements to
provide (1) additional information to claimants in the appeals process;
and (2) information in a non-English language. The RIA acknowledged
that the Department did not have sufficient data to quantify the
benefits associated with the Final Rule.
After the Department published the Final Rule, certain stakeholders
asserted in writing that the Final Rule will drive up disability
benefit plan costs, cause an increase in litigation, and thus impair
workers' access to disability insurance protections.\1\ In support of
these assertions, the stakeholders say that the right to review and
respond to new information or rationales unnecessarily ``complicates
the processing of disability benefits by imposing new steps and
evidentiary burdens in the adjudication of claims,'' and that some of
the new disclosure requirements ``forc[e] plans to consider disability
standards and definitions different from those in the plan.'' \2\ In
addition, the stakeholders say that the new deemed exhaustion provision
``explicitly tilts the balance in court cases against plans and
insurers'' and ``creates perverse incentives for plaintiff's attorneys
to side-step established procedures and clog the courts for resolution
of benefit claims.'' \3\ The stakeholders argue that these provisions
(and others) collectively ``will delay any final decision for the
claimant and will significantly increase the administrative burdens on
employers and disability insurance carriers, hurting the very employee
the rule was purporting to help.'' \4\ Moreover, according to the
stakeholders, these new provisions (and others) are unnecessary in any
event because ``there are already existing robust consumer protections
applicable and available to disability claimants that have worked for
well over a decade.'' \5\ Members of Congress also presented these same
or similar concerns in writing to the Secretary of Labor.\6\
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\1\ Some of the stakeholders also asserted a comment that was
previously provided with respect to the 2015 NPRM, specifically that
the Department exceeded its authority and acted contrary to
Congressional intent by applying certain ACA protections to
disability benefit claims, arguing that if Congress had wanted these
protections to apply to disability benefit claims, it would have
expressly extended the claims and appeals rules in section 2719 of
the Public Health Service Act to plans that provide disability
benefits. The Department did not take the position that the ACA
compelled the changes in the Final Rule. Rather, because disability
claims commonly involve medical considerations, the Department was
of the view that disability benefit claimants should receive
procedural protections similar to those that apply to group health
plans, and thus it made sense to model the Final Rule on the
procedural protections and consumer safeguards that Congress
established for group health care claimants under the ACA.
\2\ Letter from Governor Dirk Kempthorne, President & Chief
Executive Officer, American Council of Life Insurers, to The
Honorable Alexander Acosta, Secretary, U.S. Department of Labor,
``Department of Labor Disability Claims Regulation,'' (July 17,
2017) (on file with the Employee Benefits Security Administration,
U.S. Department of Labor).
\3\ Letter from American Benefits Council, American Council of
Life Insurers, America's Health Insurance Plans, Cigna, The ERISA
Industry Committee, Financial Services Roundtable, Sun Life
Financial, Unum Group, Inc., to Gary Cohn, Director, National
Economic Council, The White House, Andrew P. Bremberg, Director,
Domestic Policy Council, The White House, Edward C. Hugler, Acting
Secretary, U.S. Department of Labor, ``Department of Labor
Disability Claims Regulation,'' (Mar. 14, 2017) (on file with the
Employee Benefits Security Administration, U.S. Department of
Labor).
\4\ Letter from Governor Dirk Kempthorne, supra, note 2.
\5\ Id.
\6\ Letter from David P. Roe, M.D., Member of Congress (and 27
other Members of Congress), to R. Alexander Acosta, Secretary, U.S.
Department of Labor, ``Immediate Action Needed on Disability Claims
Regulation,'' (July 28, 2017) (on file with the Employee Benefits
Security Administration, U.S. Department of Labor).
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A confidential survey of carriers covering approximately 18 million
participants in group long term disability plans (which reflects
approximately 45% of the group long-term disability insurance market),
conducted by the stakeholders estimated that the Final Rule would cause
average premium increases of 5-8% in 2018 (when the Final Rule is
scheduled to take effect) for several survey participants.\7\ The
stakeholders argue that the demand for disability insurance is highly
sensitive to price changes, such that even minor price increases can
result in take-up rate reductions. For example, they reported that when
the State of Vermont mandated mental health parity several years ago,
there was an approximately 20% increase in premiums, which resulted in
a 20% decrease of covered employees.\8\ Thus, they conclude that the
cost increases caused by the Final Rule will result in employers
reducing and/or eliminating disability income benefits, and that some
individuals may elect to drop or forego coverage, with the result being
that fewer people will have adequate income protection in the event of
disability. The stakeholders further assert that loss of access not
only may be adverse to individual workers and their families, but also
potentially adverse to federal and state public assistance programs
more generally.\9\
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\7\ Email from Michael Kreps, Principal, Groom Law Group, to
John J. Canary and Jeffrey J. Turner, Office of Regulations and
Interpretations, Employee Benefits Security Administration (July 13,
2017) (on file with the Employee Benefits Security Administration,
U.S. Department of Labor).
\8\ Id.
\9\ See, e.g., Letter from Matthew Eyles, Executive Vice
President, Policy and Regulatory Affairs, America's Health Insurance
Plans, to The Honorable R. Alexander Acosta, Secretary of Labor,
U.S. Department of Labor (May 10, 2017) (on file with the Employee
Benefits Security Administration, U.S. Department of Labor). See
also Letter from David P. Roe, M.D., Member of Congress (and 27
other Members of Congress), to R. Alexander Acosta, Secretary, U.S.
Department of Labor, ``Immediate Action Needed on Disability Claims
Regulation,'' (July 28, 2017) (on file with the Employee Benefits
Security Administration, U.S. Department of Labor).
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The stakeholders acknowledge that the Final Rule's RIA addressed
the limited data sources that were publicly available at that time, and
that the Department's ability to fully quantify and evaluate costs and
benefits was accordingly constrained. But the stakeholders say that
such data could be developed by the industry and provided to the
Department, and have promised to work with the Department to obtain
this data. They explain that collecting the relevant data is a complex
process that will take time and involve an expenditure of resources.
For example, because each carrier's data is proprietary and contains
sensitive

[[Page 47412]]

business information, an independent third party must collect it in a
manner that protects this information. This may include, among other
things, negotiating specific non-disclosure, security, and data
retention agreements. They further observe that such a process must
also be carefully designed to ensure that there are no violations of
relevant federal or state laws, such as antitrust laws. The
stakeholders also assert that each carrier's existing information
technology systems may collect and report data in different ways, so,
to be usable, the data must be aggregated into standardized data sets,
anonymized to ensure that no data point can be attributed to a single
carrier, and reviewed and analyzed to ensure accuracy and reliability
(as required for a regulatory impact analysis). The stakeholders made a
commitment to provide this data and asked the Department to delay the
Final Rule's applicability date.
On February 24, 2017, after the Final Rule amending the disability
claims procedure was published and became effective, the President
issued Executive Order 13777 (``E.O. 13777''), entitled Enforcing the
Regulatory Reform Agenda.\10\ E.O. 13777 is intended to reduce the
regulatory burdens agencies place on the American people, and directs
federal agencies to undertake specified activities to accomplish that
objective. As a first step, E.O. 13777 requires the designation of a
Regulatory Reform Officer and the establishment of a Regulatory Reform
Task Force within each federal agency covered by the Order. The Task
Forces were directed to evaluate existing regulations and make
recommendations regarding those that can be repealed, replaced, or
modified to make them less burdensome. E.O. 13777 also requires that
Task Forces seek input from entities significantly affected by
regulations, including state, local and tribal governments, small
businesses, consumers, non-governmental organizations, and trade
associations.
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\10\ 82 FR 12285 (March 1, 2017).
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In light of the foregoing, the Department has concluded that it is
appropriate to seek additional public input regarding the regulatory
impact analysis in the Final Rule. If additional reliable data and
information is submitted, the Department will be able to consider
whether it supports regulatory alternatives other than those adopted in
the Final Rule. The Department is unable to complete a notice and
comment and reexamination process by January 1, 2018, particularly
given the complex data collection and sanitation process required here,
as described by the stakeholders. Extending the applicability date past
January 1, 2018, would allow the Department to complete this public
solicitation process and examine regulatory alternatives. The
Department consequently seeks public input on a proposed 90-day
delay.\11\ For reasons discussed below, the Department believes 90 days
is a reasonable period during which to review public input and take an
appropriate course of action.
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\11\ The Department 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 requirements in the 2000 Final Rule. E.g., Saffon v. Wells
Fargo & Co. Long Term Disability Plan, 522 F.3d 863, 871-872 (9th
Cir. 2008) (finding that a full and fair review requires a plan
administrator to disclose the reasons for denial in the
administrative process); 75 FR at 43333 n.7. The proposed delay of
the applicability date in this document does not modify or otherwise
delay the application of any such controlling judicial precedents.
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As indicated above, a primary concern of the stakeholders is that
the Final Rule will unnecessarily increase the cost of coverage and
discourage the uptake and utilization of disability coverage. While a
number of the commenters on the 2015 NPRM forecasted increased
regulatory and compliance costs as a whole, few, if any, of them
offered itemized cost estimates on a provision-by-provision basis.\12\
The Department recognizes that access to disability benefits depends in
part on affordability, which is affected by regulatory burdens.
Accordingly (as opposed to generalized predictions of cost increases or
aggregate cost estimates of the Final Rule in its entirety), the
Department solicits costs estimates on each of the provisions contained
in that rule. Itemized cost estimates of this type would enhance the
Department's ability to assess costs and benefits of regulatory
alternatives and to select approaches that maximize net benefits.
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\12\ See, e.g., Comment Letter #115 (American Benefits Council)
(asserting generally that the 2015 NPRM ``is likely to impose a host
of additional costs on plans--none of which appear to have been
considered by the Department as part of its economic analysis.'');
see also Comment Letter #114 (American Council of Life Insurers)
(asserting that it ``does not believe that the Department has
properly quantified or qualified the benefits associated with the
proposed regulations or provided a sufficient cost analysis
associated with the proposed regulatory requirements.'').
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The Department also seeks data on the price elasticity of demand
for disability insurance coverage. Many stakeholders, for example,
discuss price sensitivity in this market and predict possibly
significant reductions in access to coverage unless the Final Rule is
revised or repealed (i.e., that the price elasticity of demand in this
market is relatively elastic). Evidence of this elasticity would be
very helpful to the Department. For example, a number of states (some
very recently) have banned discretionary clauses in insurance policies,
which may have resulted in increased administrative costs. In those
cases, is there data showing reduced demand (in terms of dropped
coverage or reduced uptake) following the implementation of the bans?
Another example is the Final Rule's requirement to discuss the basis
for disagreeing with a disability determination made by the SSA. Is
there data showing a detrimental impact on coverage in jurisdictions
where courts \13\ have endorsed such an explanation? Another possible
example is the changes to the claims procedure requirements made in
2000.\14\ Is there data showing a detrimental impact on coverage after
those revisions were made? This is not an exhaustive list of
potentially relevant situations or questions; instead, it is intended
to provide insight into issues the Department intends to consider and
as to which comments will be helpful.
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\13\ See, e.g., Montour v. Hartford Life and Accident Ins. Co.,
588 F.3d 623, 637 (9th Cir. 2009) (``[F]ailure to explain why it
reached a different conclusion than the SSA is yet another factor to
consider in reviewing the administrator's decision for abuse of
discretion, particularly where, as here, a plan administrator
operating with a conflict of interest requires a claimant to apply
and then benefits financially from the SSA's disability finding.'');
Brown v. Hartford Life Ins. Co., 301 F. App'x 772, 776 (10th Cir.
2008) (insurer's discussion was ``conclusory'' and ``provided no
specific discussion of how the rationale for the SSA's decision, or
the evidence the SSA considered, differed from its own policy
criteria or the medical documentation it considered'').
\14\ In November of 2000, the Department published a final rule
substantially reforming the standards governing the timeframes and
disclosure requirements for ERISA benefit claims and appeals,
including disability benefits. 65 FR 70246 (Nov. 21, 2000).
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The Department also seeks comments on any matter germane to this
examination, including the merits of rescinding, modifying, or
retaining the Final Rule. Upon completion of this public solicitation
process and review, the Department 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. The
Department requests comments on each of these possible outcomes.
Comments on whether to extend the applicability date for 90 days
must be submitted to the Department within 15 days. If the 90-day
period is insufficient, please specify a sufficient period of time and
explain why longer than 90 days is needed. Comments providing data or
otherwise germane to the examination

[[Page 47413]]

of the merits of rescinding, modifying, or retaining the rule must be
submitted to the Department within 60 days. If 60 days is not enough
time to provide input on the broader examination, including responding
to the various data requests throughout this document, commenters are
encouraged to notify the Department within the 15-day period, and to
explain why 60 days is not enough time and specify how much time is
needed. This will give the Department an opportunity to consider
whether to extend the 60-day comment period in conjunction with a
decision on whether and how long to delay the applicability date.

Regulatory Impact Analysis

The Department proposes to delay the applicability date of the
Final Rule for 90 days--through April 1, 2018. During the delay, the
Department will review the Final Rule to determine whether it is
unnecessary, ineffective, or imposes costs that exceed benefits in
conformance with E.O. 13777. As part of this process, the Department
also will review data submitted on the issues raised on the RIA in the
Final Rule to determine whether such new information and data support
changes to the Final Rule.
The delay is necessary to avoid the applicability date of the Final
Rule occurring before the Department completes its review, which would
necessarily require those regulated by the Final Rule to prepare for
and begin complying on January 1, 2018 while the Department is still
reviewing the rule. That would unnecessarily and unwisely disrupt the
disability insurance market and produce frictional costs that are not
offset by commensurate benefits. The tradeoff is that the changes in
the Final Rule will be delayed.

1. Executive Order 12866 Statement

This proposed extension of the applicability date of the Final Rule
is a significant regulatory action within the meaning of section
3(f)(4) of Executive Order 12866, because it raises novel legal or
policy issues arising out of legal mandates, the President's
priorities, or the principles set forth in the Executive Order.
Therefore, the Department has considered the costs and benefits of the
proposed extension, and the Office of Management and Budget (``OMB'')
has reviewed and approved the proposed applicability date extension.
The Department's regulatory impact analysis of the Final Rule
estimated that benefits derived by workers seeking disability benefits
justify compliance costs.\15\ The 90-day delay of the applicability
date would delay these estimated costs and benefits by 90 days.
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\15\ 81 FR 92316, 92339 (Dec. 19, 2016).
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Data limitations prevented the Department from quantifying benefits
the Final Rule would provide to workers and their family members
participating in ERISA-covered disability insurance plans. The RIA for
the Final Rule includes a qualitative analysis of the benefits. The
Department estimated at that time that as a result of the rule:
Some participants would receive payment for benefits they
were entitled to that were improperly denied by the plan;
There would be greater certainty and consistency in the
handling of disability benefit claims and appeals, and improved access
to information about the manner in which claims and appeals are
adjudicated;
Fairness and accuracy would increase in the claims
adjudication process.
The Department estimated that the requirements of the Final Rule
would have modest costs. The Department quantified the costs associated
with two provisions of the Final Rule for which it had sufficient data:
The requirements to provide: (1) Providing additional information to
claimants in the appeals process ($14.5 million annually); and (2)
providing information in a non-English language ($1.3 million
annually).
Stakeholders have raised concerns that the Department
underestimated the costs of the Final Rule and maintain that if the
Department had properly estimated costs, it would have found that the
costs exceed the Final Rule's benefits. Specifically, stakeholders
assert that: (1) Requiring benefit denial notices include a discussion
of the basis for disagreeing with a disability determination made by
the SSA will increase costs because SSA's definitions, policies, and
procedures may be different from those of private disability plans; (2)
providing that the claimant is deemed to have exhausted the
administrative remedies available under the plan if plans do not adhere
to all claims processing rules, unless the violation was the result of
a minor error and other specified conditions are met, will result in
increased litigation and administrative costs; and (3) prohibiting
plans from denying benefits on appeal based on new or additional
evidence or rationales that were not included when the benefit was
denied at the claims stage, unless the claimant is provided notice and
an opportunity to respond to the new or additional information or
rationales, will lead to protracted exchanges between plans and
claimants that will cause delays and lead to higher costs. Stakeholders
also argue that participants in disability plans are very sensitive to
price increases and predict that the cost increases associated with the
Final Rule will cause some individuals to elect to drop or forego
coverage, meaning that fewer people will have adequate income
protection in the event of disability.
During the proposed 90-day applicability date delay, the Department
intends to assess the impacts of the Final Rule. In order for the
assessment to be as robust as possible, the Department is hereby
requesting data that would help it quantify the payments for plan
benefits that plan participants would receive and any cost increases or
reductions in access to coverage that could result if the delayed
provisions of the Final Rule take effect. Specifically, the Department
requests data that it could use to assess: (1) The number of disability
claims that are filed and denial rates for such claims, including rates
separately for claimants who were previously approved under the Social
Security Disability Insurance Program (SSDI) and statistics on reasons
for denial; (2) how often plans rely on new or additional evidence or
rationales during the claims review process and the volume of the
material that comprise such additional evidence or rationales; (3) the
price elasticity of demand for disability insurance coverage; (4)
pricing or premiums for group and individual level policies and factors
that affect pricing; (5) loss ratios and the breakdown of expenses
(claims, sales, claims processing, etc.); (6) aggregate, average, and
median benefits paid and ages of claimants; (7) the projected
litigation costs associated with the new procedural requirements for
disability claims provided in the Final Rule; (8) the number of new
claims that will be granted that, but for the provisions in the Final
Rule, would have been denied, and the value of those benefits; (9) the
systems and technology that plans and insurers use to process
disability claims and cost estimates updating such systems to comply
with the Final Rule; (10) statistics on steps, timing of steps, and
disposition of claims from initial filing to final disposition,
including claims filed but never perfected or decided, up to and
including claims denied though appeal and litigated; and (11)
information regarding the costs for non-English services and the
estimated population of claimants that might be expected to use such
services. The Department understands that such data is not publicly
available and is willing

[[Page 47414]]

to work with stakeholders to ensure that any trade secrets and
proprietary business information are protected from public disclosure
and that the data collection process is designed to ensure that no
violations of antitrust or other federal or state laws occur.\16\
---------------------------------------------------------------------------

\16\ The Department is aware of a number of relevant annual and
semiannual industry surveys, such as the U.S. Group Disability
Market Survey. Where applicable, commenters are encouraged to submit
to the Department the data underlying these surveys. See, e.g., the
American Council of Life Insurers' Written Statement for the Record
entitled Do Private Long-Term Disability Policies Provide the
Protection They Promise? Before the S. Comm. on Finance, 111th Cong.
113 & n.3 (2010), in which the ACLI discusses aggregate data on
approvals and elimination periods.
---------------------------------------------------------------------------

It also would be helpful for the Department to receive data
regarding the impact of the 2000 final claims and appeals regulation
(2000 Final Rule). Commenters at the time stated that it would lead to
cost increases and decreases in consumer access. The Department is
interested in receiving data that shows: (1) Cost increases that
resulted from compliance with the 2000 Final Rule (or lack thereof) and
whether such costs were passed on to consumers; and (2) whether
employers stopped offering disability insurance benefits and/or
employee take-up rates decreased. The Department also requests data
that demonstrates how the Department's 2000 Final Rule impacted the
cost of disability claims litigation.
While the Department welcomes the submission of all relevant data,
to ensure its usability, the providers of such data are encouraged to
discuss its source(s), manner of collection, and any methodology used
to analyze it and derive conclusions from it. The Department requests
that commenters fully disclose any bias(es) associated with the data
and provide honest evaluations of its strengths and weaknesses. This
will help ensure that the Department reaches an optimal outcome and
that full transparency is provided to the public.

2. Paperwork Reduction Act

The Paperwork Reduction Act (``PRA'') prohibits federal agencies
from conducting or sponsoring a collection of information from the
public without first obtaining approval from OMB. See 44 U.S.C. 3507.
Additionally, members of the public are not required to respond to a
collection of information, nor be subject to a penalty for failing to
respond, unless such collection displays a valid OMB control number.
See 44 U.S.C. 3512.
OMB approved information collections contained in the Final Rule
under OMB Control Number 1210-0053. The Department is not modifying the
substance of the Information Collection Requests at this time;
therefore, no action under the PRA is required. The information
collections will become applicable at the same time the rule becomes
applicable. The information collection requirements contained in the
Final Rule are discussed below.
This proposal would delay the applicability date of the
Department's amendments to the disability claims procedure rule for 90
days, through April 1, 2018. The Final Rule revised the rules
applicable to ERISA-covered plans providing disability benefits. Some
of these amendments revise disclosure requirements under the claims
procedure rule that are information collections covered by the PRA. For
example, benefit denial notices must contain a full discussion of why
the plan denied the claim, and to the extent the plan did not follow or
agree with the views presented by the claimant to the plan or health
care professional treating the claimant or vocational professionals who
evaluated the claimant, or a disability determination regarding the
claimant presented by the claimant to the plan made by the SSA, the
discussion must include an explanation of the basis for disagreeing
with the views or disability determination. The notices also must
include either: (1) The specific internal rules, guidelines, protocols,
standards or other similar criteria of the plan relied upon in making
the adverse determination or, alternatively, (2) a statement that such
rules, guidelines, protocols, standards or other similar criteria of
the plan do not exist. Plan administrators also must provide (1)
claimants with any new or additional evidence considered free of
charge, and (2) notices of adverse benefit determination potentially in
an non-English language.
The burdens associated with the disability claims procedure
revisions are summarized below and discussed in detail in the
regulatory impact analysis contained in the preamble to the Final Rule
(81 FR 92317, 92340 (Dec. 19, 2016)). It should be noted that this
proposal only affects the requirements applicable to disability benefit
claims, which are a small subset of the total burden associated with
the ERISA claims procedure information collection.
Type of Review: Revised collection.
Agencies: Employee Benefits Security Administration, Department of
Labor.
Title: ERISA Claims Procedures.
OMB Number: 1210-0053.
Affected Public: Business or other for-profit; not-for-profit
institutions.
Total Respondents: 5,808,000. Total Responses: 311,790,000.
Frequency of Response: Occasionally.
Estimated Total Annual Burden Hours: 516,000.
Estimated Total Annual Burden Cost: $814,450,000.

3. Regulatory Flexibility Act

The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA) imposes
certain requirements with respect to federal rules that are subject to
the notice and comment requirements of section 553(b) of the
Administrative Procedure Act (5 U.S.C. 551 et seq.) and which are
likely to have a significant economic impact on a substantial number of
small entities. Unless an agency determines that a rule is not likely
to have a significant economic impact on a substantial number of small
entities, section 604 of the RFA requires the agency to present an
initial regulatory flexibility analysis (IRFA) of the proposed rule
describing the rule's impact on small entities and explaining how the
agency made its decisions with respect to the application of the rule
to small entities. Pursuant to section 605(b) of the RFA, the
Department certified that the Final Rule did not have a significant
economic impact on a substantial number of small entities and provided
an analysis of the rationale for that certification. Similarly, the
Department hereby certifies that the proposed rule will not have a
significant economic impact on a substantial number of small entities
because it merely delays the applicability date of the Final Rule.

4. Congressional Review Act

The proposed rule is subject to the Congressional Review Act (CRA)
provisions of the Small Business Regulatory Enforcement Fairness Act of
1996 (5 U.S.C. 801 et seq.) and, if finalized, will be transmitted to
Congress and the Comptroller General for review.

5. Unfunded Mandates Reform Act

Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-
4) requires each federal agency to prepare a written statement
assessing the effects of any federal mandate in a proposed or final
agency rule that may result in an expenditure of $100 million or more
(adjusted annually for inflation with the base year 1995) in any one
year by State, local, and tribal governments, in the aggregate, or by
the private sector. For purposes of the Unfunded Mandates Reform Act,
as well as Executive Order 12875, this proposal does not include any
federal mandate that we expect

[[Page 47415]]

would result in such expenditures by state, local, or tribal
governments, or the private sector. The Department also does not expect
that the proposed rule will have any material economic impacts on
State, local or tribal governments, or on health, safety, or the
natural environment.

6. Federalism Statement

Executive Order 13132 outlines fundamental principles of
federalism, and requires the adherence to specific criteria by federal
agencies in the process of their formulation and implementation of
policies that have ``substantial direct effects'' on the States, the
relationship between the national government and States, or on the
distribution of power and responsibilities among the various levels of
government. Federal agencies promulgating regulations that have
federalism implications must consult with State and local officials and
describe the extent of their consultation and the nature of the
concerns of State and local officials in the preamble to the Final
Rule.
This proposed rule does not have federalism implications because it
merely delays the applicability date of the rule. Therefore, the
proposed rule has no substantial direct effect on the States, the
relationship between the national government and the States, or the
distribution of power and responsibilities among the various levels of
government. In compliance with the requirement of Executive Order 13132
that agencies examine closely any policies that may have federalism
implications or limit the policy making discretion of the States, the
Department welcomes input from States regarding this assessment.

7. Executive Order 13771: Reducing Regulation and Controlling
Regulatory Costs

Executive Order 13771, titled Reducing Regulation and Controlling
Regulatory Costs, was issued on January 30, 2017. Section 2(a) of EO
13771 requires an agency, unless prohibited by law, to identify at
least two existing regulations to be repealed when the agency publicly
proposes for notice and comment, or otherwise promulgates, a new
regulation. In furtherance of this requirement, section 2(c) of EO
13771 requires that the new incremental costs associated with new
regulations shall, to the extent permitted by law, be offset by the
elimination of existing costs associated with at least two prior
regulations. This proposed rule is expected to be an EO 13771
deregulatory action.

List of Subjects in 29 CFR Part 2560

Claims, Employee benefit plans.

For the reasons stated above, the Department proposes to amend 29
CFR part 2560 as follows:

PART 2560--RULES AND REGULATIONS FOR ADMINISTRATION AND ENFORCEMENT

0
1. The authority citation for part 2560 continues to read as follows:

Authority: 29 U.S.C. 1132, 1135, and Secretary of Labor's Order
1-2011, 77 FR 1088 (Jan. 9, 2012). Section 2560.503-1 also issued
under 29 U.S.C. 1133. Section 2560.502c-7 also issued under 29
U.S.C. 1132(c)(7). Section 2560.502c-4 also issued under 29 U.S.C.
1132(c)(4). Section 2560.502c-8 also issued under 29 U.S.C.
1132(c)(8).

Sec. 2560.503-1 [Amended]

0
2. Section 2560.503-1 is amended by removing ``on or after January 1,
2018'' and adding in its place ``after April 1, 2018'' in paragraph
(p)(3) and by removing the date ``December 31, 2017'' and adding in its
place ``April 1, 2018'' in paragraph (p)(4).

Signed at Washington, DC, this 6th day of October, 2017.
Timothy D. Hauser,
Deputy Assistant Secretary for Program Operations, Employee Benefits
Security Administration, Department of Labor.
[FR Doc. 2017-22082 Filed 10-10-17; 8:45 am]
BILLING CODE 4510-29-P

Federal Register / Vol. 82, No. 196 / Thursday, October 12, 2017 / Proposed Rules 47409

relief with respect to unsigned section consideration will be given to any periods prior to the date these
754 election statements, especially comments that are submitted timely to regulations are published as final
where returns have been filed the IRS as prescribed in this preamble regulations in the Federal Register.
electronically. In order to ease the under the ADDRESSES heading. The
Kirsten Wielobob,
burden on partnerships seeking to make Treasury Department and the IRS
a valid section 754 election and to request comments on all aspects of the Deputy Commissioner for Services and
Enforcement.
eliminate the need to seek 9100 relief, proposed regulation. All comments will
the Treasury Department and the IRS [FR Doc. 2017–22080 Filed 10–11–17; 8:45 am]
be available at www.regulations.gov or
are proposing to amend the current upon request. A public hearing will be BILLING CODE 4830–01–P

regulation to remove the signature scheduled if requested in writing by any
requirement in § 1.754–1(b)(1). The person that timely submits written
amended regulation will provide that a comments. If a public hearing is DEPARTMENT OF LABOR
taxpayer making a section 754 election scheduled, notice of the date, time, and
must file a statement with its return place for the public hearing will be Employee Benefits Security
that: (i) Sets forth the name and address published in the Federal Register. Administration
of the partnership making the section
754 election, and (ii) contains a Drafting Information 29 CFR Part 2560
declaration that the partnership elects The principal author of this regulation RIN 1210–AB39
under section 754 to apply the is Meghan M. Howard of the Office of
provisions of section 734(b) and section the Associate Chief Counsel Claims Procedure for Plans Providing
743(b). (Passthroughs and Special Industries). Disability Benefits; Extension of
However, other personnel from the Applicability Date
Proposed Applicability Date
Treasury Department and the IRS
The amendments to this regulation participated in their development. AGENCY: Employee Benefits Security
are proposed to apply to taxable years Administration, Department of Labor.
ending on or after the date of List of Subjects in 26 CFR Part 1 ACTION: Proposed rule.
publication of the Treasury decision Income taxes, Reporting and
adopting these rules as a final regulation recordkeeping requirements. SUMMARY: The Department of Labor
in the Federal Register. Taxpayers, proposes to delay for ninety (90) days—
Proposed Amendment to the through April 1, 2018—the applicability
however, may rely on this proposed
Regulations of the Final Rule amending the claims
regulation for periods preceding the
proposed applicability date. Accordingly, 26 CFR part 1 is procedure requirements applicable to
Accordingly, partnerships that filed a proposed to be amended as follows: ERISA-covered employee benefit plans
timely partnership return containing an that provide disability benefits. The
otherwise valid section 754 election PART 1—INCOME TAXES Final Rule was published in the Federal
statement, but for the missing signature Register on December 19, 2016, and
■ Paragraph 1. The authority citation became effective on January 18, 2017.
of a partner on the statement, will not for part 1 continues to read in part as
need to seek 9100 relief in such cases. The Final Rule currently is scheduled to
follows: apply to claims for disability benefits
Special Analyses Authority: 26 U.S.C. 7805 * * * under ERISA-covered employee benefit
Certain IRS regulations, including this Section 1.754–1 also issued under 26 plans that are filed on or after January
one, are exempt from the requirements U.S.C. 754. 1, 2018. Following publication of the
of Executive Order 12866, as Final Rule, various stakeholders and
■ Par 2. Section 1.754–1 is amended by
supplemented and reaffirmed by members of Congress asserted that it
revising the fourth sentence of
Executive Order 13563. Therefore, a will drive up disability benefit plan
paragraph (b)(1) and adding new
regulatory impact assessment is not costs, cause an increase in litigation,
paragraph (d) to read as follows:
required. It is hereby certified that this and in so doing impair workers’ access
regulation, if adopted, would not have § 1.754–1 Time and manner of making to disability insurance benefits.
a significant economic impact on a election to adjust basis of partnership Pursuant to Executive Order 13777, the
substantial number of small entities property. Department of Labor has concluded that
under the Regulatory Flexibility Act (5 * * * * * it is appropriate to give the public an
U.S.C. chapter 6). This certification is (b) * * * additional opportunity to submit
based on the fact that this regulation (1) * * * The statement required by comments and data concerning
reduces the information currently this paragraph (b)(1) must set forth the potential impacts of the Final Rule. The
required to be collected in making an name and address of the partnership Department of Labor will carefully
election to adjust the basis of making the election, and contain a consider the submitted comments and
partnership property and thereby declaration that the partnership elects data as part of its effort to examine
reduces burden on small entities. under section 754 to apply the regulatory alternatives that meet its
Pursuant to section 7805(f) of the Code, provisions of section 734(b) and section objectives of ensuring the full and fair
743(b). * * * review of disability benefit claims while
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this regulation has been submitted to
the Chief Counsel for Advocacy of the * * * * * not imposing unnecessary costs and
Small Business Administration for (d) Applicability date. The fourth adverse consequences. The Department
comment on its impact on small sentence of paragraph (b)(1) of this of Labor accordingly seeks public
businesses. section applies to taxable years ending comment on a proposed 90-day delay of
on or after the date these regulations are the applicability of the Final Rule in
Comments and Requests for a Public published as final regulations in the order to solicit additional public input
Hearing Federal Register. Taxpayers may, and examine regulatory alternatives. If
Before this proposed regulation is however, rely on the fourth sentence of this proposal is finalized, the
adopted as a final regulation, paragraph (b)(1) of this section for amendments made on December 19,

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Federal Register / Vol. 82, No. 196 / Thursday, October 12, 2017 / Proposed Rules 47411

fair review of their claims. The assertions, the stakeholders say that the participants in group long term
Department found at that time that the right to review and respond to new disability plans (which reflects
Final Rule would change the claims information or rationales unnecessarily approximately 45% of the group long-
review process for ERISA-covered ‘‘complicates the processing of term disability insurance market),
disability plans by expanding due disability benefits by imposing new conducted by the stakeholders
process rights. The analysis concluded steps and evidentiary burdens in the estimated that the Final Rule would
that: (1) The Final Rule would help adjudication of claims,’’ and that some cause average premium increases of 5–
alleviate the hardship to many of the new disclosure requirements 8% in 2018 (when the Final Rule is
individuals when they are unable to ‘‘forc[e] plans to consider disability scheduled to take effect) for several
work after becoming disabled and their standards and definitions different from survey participants.7 The stakeholders
claims are unfairly denied; and (2) those in the plan.’’ 2 In addition, the argue that the demand for disability
greater consistency in the handling of stakeholders say that the new deemed insurance is highly sensitive to price
disability benefit claims and appeals, exhaustion provision ‘‘explicitly tilts changes, such that even minor price
and improved access to information the balance in court cases against plans increases can result in take-up rate
about the manner in which claims and and insurers’’ and ‘‘creates perverse reductions. For example, they reported
appeals are adjudicated, would lead to incentives for plaintiff’s attorneys to that when the State of Vermont
efficiency gains in the system, both in side-step established procedures and mandated mental health parity several
terms of the allocation of spending at a clog the courts for resolution of benefit years ago, there was an approximately
macro-economic level as well as claims.’’ 3 The stakeholders argue that 20% increase in premiums, which
operational efficiencies among these provisions (and others) resulted in a 20% decrease of covered
individual plans. collectively ‘‘will delay any final employees.8 Thus, they conclude that
On the cost side, the RIA concluded decision for the claimant and will the cost increases caused by the Final
that the amendments would have significantly increase the administrative Rule will result in employers reducing
modest costs, since many of the burdens on employers and disability and/or eliminating disability income
amendments clarified provisions of the insurance carriers, hurting the very benefits, and that some individuals may
claims procedure regulation or required employee the rule was purporting to elect to drop or forego coverage, with
the provision of information to help.’’ 4 Moreover, according to the the result being that fewer people will
claimants that adjudicators should stakeholders, these new provisions (and have adequate income protection in the
already possess. Although the others) are unnecessary in any event event of disability. The stakeholders
Department requested data when it first because ‘‘there are already existing further assert that loss of access not only
proposed amendments to the claims robust consumer protections applicable may be adverse to individual workers
procedure regulation in April 2015 and available to disability claimants that and their families, but also potentially
(‘‘2015 NPRM’’), the comment letters have worked for well over a decade.’’ 5 adverse to federal and state public
received generally did not contain Members of Congress also presented assistance programs more generally.9
alternative cost and benefits estimates or these same or similar concerns in The stakeholders acknowledge that
data that the Department could use to writing to the Secretary of Labor.6 the Final Rule’s RIA addressed the
estimate costs and benefits for the Final A confidential survey of carriers limited data sources that were publicly
Rule. However, the Department covering approximately 18 million available at that time, and that the
quantified the costs associated with two Department’s ability to fully quantify
specific provisions in the Final Rule for protections similar to those that apply to group and evaluate costs and benefits was
which it had sufficient data: The health plans, and thus it made sense to model the accordingly constrained. But the
requirements to provide (1) additional Final Rule on the procedural protections and stakeholders say that such data could be
consumer safeguards that Congress established for
information to claimants in the appeals group health care claimants under the ACA.
developed by the industry and provided
process; and (2) information in a non- 2 Letter from Governor Dirk Kempthorne, to the Department, and have promised
English language. The RIA President & Chief Executive Officer, American to work with the Department to obtain
acknowledged that the Department did Council of Life Insurers, to The Honorable this data. They explain that collecting
not have sufficient data to quantify the Alexander Acosta, Secretary, U.S. Department of the relevant data is a complex process
Labor, ‘‘Department of Labor Disability Claims
benefits associated with the Final Rule. Regulation,’’ (July 17, 2017) (on file with the that will take time and involve an
After the Department published the Employee Benefits Security Administration, U.S. expenditure of resources. For example,
Final Rule, certain stakeholders asserted Department of Labor). because each carrier’s data is
in writing that the Final Rule will drive 3 Letter from American Benefits Council,
proprietary and contains sensitive
up disability benefit plan costs, cause an American Council of Life Insurers, America’s
Health Insurance Plans, Cigna, The ERISA Industry
increase in litigation, and thus impair Committee, Financial Services Roundtable, Sun Life
7 Email from Michael Kreps, Principal, Groom

workers’ access to disability insurance Financial, Unum Group, Inc., to Gary Cohn, Law Group, to John J. Canary and Jeffrey J. Turner,
Office of Regulations and Interpretations, Employee
protections.1 In support of these Director, National Economic Council, The White
Benefits Security Administration (July 13, 2017) (on
House, Andrew P. Bremberg, Director, Domestic
file with the Employee Benefits Security
1 Some of the stakeholders also asserted a Policy Council, The White House, Edward C.
Administration, U.S. Department of Labor).
Hugler, Acting Secretary, U.S. Department of Labor,
comment that was previously provided with respect 8 Id.
to the 2015 NPRM, specifically that the Department ‘‘Department of Labor Disability Claims
9 See, e.g., Letter from Matthew Eyles, Executive
exceeded its authority and acted contrary to Regulation,’’ (Mar. 14, 2017) (on file with the
Employee Benefits Security Administration, U.S. Vice President, Policy and Regulatory Affairs,
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Congressional intent by applying certain ACA America’s Health Insurance Plans, to The
protections to disability benefit claims, arguing that Department of Labor).
4 Letter from Governor Dirk Kempthorne, supra,
Honorable R. Alexander Acosta, Secretary of Labor,
if Congress had wanted these protections to apply U.S. Department of Labor (May 10, 2017) (on file
to disability benefit claims, it would have expressly note 2. with the Employee Benefits Security
5 Id.
extended the claims and appeals rules in section Administration, U.S. Department of Labor). See also
2719 of the Public Health Service Act to plans that 6 Letter from David P. Roe, M.D., Member of
Letter from David P. Roe, M.D., Member of Congress
provide disability benefits. The Department did not Congress (and 27 other Members of Congress), to R. (and 27 other Members of Congress), to R.
take the position that the ACA compelled the Alexander Acosta, Secretary, U.S. Department of Alexander Acosta, Secretary, U.S. Department of
changes in the Final Rule. Rather, because disability Labor, ‘‘Immediate Action Needed on Disability Labor, ‘‘Immediate Action Needed on Disability
claims commonly involve medical considerations, Claims Regulation,’’ (July 28, 2017) (on file with the Claims Regulation,’’ (July 28, 2017) (on file with the
the Department was of the view that disability Employee Benefits Security Administration, U.S. Employee Benefits Security Administration, U.S.
benefit claimants should receive procedural Department of Labor). Department of Labor).

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47412 Federal Register / Vol. 82, No. 196 / Thursday, October 12, 2017 / Proposed Rules

business information, an independent described by the stakeholders. of demand in this market is relatively
third party must collect it in a manner Extending the applicability date past elastic). Evidence of this elasticity
that protects this information. This may January 1, 2018, would allow the would be very helpful to the
include, among other things, negotiating Department to complete this public Department. For example, a number of
specific non-disclosure, security, and solicitation process and examine states (some very recently) have banned
data retention agreements. They further regulatory alternatives. The Department discretionary clauses in insurance
observe that such a process must also be consequently seeks public input on a policies, which may have resulted in
carefully designed to ensure that there proposed 90-day delay.11 For reasons increased administrative costs. In those
are no violations of relevant federal or discussed below, the Department cases, is there data showing reduced
state laws, such as antitrust laws. The believes 90 days is a reasonable period demand (in terms of dropped coverage
stakeholders also assert that each during which to review public input or reduced uptake) following the
carrier’s existing information technology and take an appropriate course of implementation of the bans? Another
systems may collect and report data in action. example is the Final Rule’s requirement
different ways, so, to be usable, the data As indicated above, a primary to discuss the basis for disagreeing with
must be aggregated into standardized concern of the stakeholders is that the a disability determination made by the
data sets, anonymized to ensure that no Final Rule will unnecessarily increase SSA. Is there data showing a
data point can be attributed to a single the cost of coverage and discourage the detrimental impact on coverage in
carrier, and reviewed and analyzed to uptake and utilization of disability jurisdictions where courts 13 have
ensure accuracy and reliability (as coverage. While a number of the endorsed such an explanation? Another
required for a regulatory impact commenters on the 2015 NPRM possible example is the changes to the
analysis). The stakeholders made a forecasted increased regulatory and claims procedure requirements made in
commitment to provide this data and compliance costs as a whole, few, if any, 2000.14 Is there data showing a
asked the Department to delay the Final of them offered itemized cost estimates detrimental impact on coverage after
Rule’s applicability date. on a provision-by-provision basis.12 The those revisions were made? This is not
On February 24, 2017, after the Final Department recognizes that access to an exhaustive list of potentially relevant
Rule amending the disability claims disability benefits depends in part on situations or questions; instead, it is
procedure was published and became affordability, which is affected by intended to provide insight into issues
effective, the President issued Executive regulatory burdens. Accordingly (as the Department intends to consider and
Order 13777 (‘‘E.O. 13777’’), entitled opposed to generalized predictions of as to which comments will be helpful.
Enforcing the Regulatory Reform cost increases or aggregate cost The Department also seeks comments
Agenda.10 E.O. 13777 is intended to estimates of the Final Rule in its on any matter germane to this
reduce the regulatory burdens agencies entirety), the Department solicits costs examination, including the merits of
place on the American people, and estimates on each of the provisions rescinding, modifying, or retaining the
directs federal agencies to undertake contained in that rule. Itemized cost Final Rule. Upon completion of this
specified activities to accomplish that estimates of this type would enhance public solicitation process and review,
objective. As a first step, E.O. 13777 the Department’s ability to assess costs the Department may decide to allow all
requires the designation of a Regulatory and benefits of regulatory alternatives or part of the Final Rule to take effect
Reform Officer and the establishment of and to select approaches that maximize as written, propose a further extension,
a Regulatory Reform Task Force within net benefits. withdraw the Final Rule, or propose
each federal agency covered by the amendments to the Final Rule. The
The Department also seeks data on the
Order. The Task Forces were directed to Department requests comments on each
price elasticity of demand for disability
evaluate existing regulations and make of these possible outcomes.
insurance coverage. Many stakeholders, Comments on whether to extend the
recommendations regarding those that
for example, discuss price sensitivity in applicability date for 90 days must be
can be repealed, replaced, or modified
this market and predict possibly submitted to the Department within 15
to make them less burdensome. E.O.
significant reductions in access to days. If the 90-day period is insufficient,
13777 also requires that Task Forces
coverage unless the Final Rule is revised please specify a sufficient period of time
seek input from entities significantly
or repealed (i.e., that the price elasticity and explain why longer than 90 days is
affected by regulations, including state,
local and tribal governments, small 11 The Department notes that several provisions
needed. Comments providing data or
businesses, consumers, non- in the Final Rule essentially conform the express otherwise germane to the examination
governmental organizations, and trade text of certain parts of the Final Rule to various
associations. federal court decisions on full and fair review 13 See, e.g., Montour v. Hartford Life and Accident

In light of the foregoing, the requirements in the 2000 Final Rule. E.g., Saffon v. Ins. Co., 588 F.3d 623, 637 (9th Cir. 2009)
Wells Fargo & Co. Long Term Disability Plan, 522 (‘‘[F]ailure to explain why it reached a different
Department has concluded that it is F.3d 863, 871–872 (9th Cir. 2008) (finding that a full conclusion than the SSA is yet another factor to
appropriate to seek additional public and fair review requires a plan administrator to consider in reviewing the administrator’s decision
input regarding the regulatory impact disclose the reasons for denial in the administrative for abuse of discretion, particularly where, as here,
analysis in the Final Rule. If additional process); 75 FR at 43333 n.7. The proposed delay a plan administrator operating with a conflict of
of the applicability date in this document does not interest requires a claimant to apply and then
reliable data and information is modify or otherwise delay the application of any benefits financially from the SSA’s disability
submitted, the Department will be able such controlling judicial precedents. finding.’’); Brown v. Hartford Life Ins. Co., 301 F.
to consider whether it supports
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12 See, e.g., Comment Letter #115 (American App’x 772, 776 (10th Cir. 2008) (insurer’s
regulatory alternatives other than those Benefits Council) (asserting generally that the 2015 discussion was ‘‘conclusory’’ and ‘‘provided no
NPRM ‘‘is likely to impose a host of additional costs specific discussion of how the rationale for the
adopted in the Final Rule. The SSA’s decision, or the evidence the SSA
on plans—none of which appear to have been
Department is unable to complete a considered by the Department as part of its considered, differed from its own policy criteria or
notice and comment and reexamination economic analysis.’’); see also Comment Letter #114 the medical documentation it considered’’).
process by January 1, 2018, particularly (American Council of Life Insurers) (asserting that 14 In November of 2000, the Department

given the complex data collection and it ‘‘does not believe that the Department has published a final rule substantially reforming the
properly quantified or qualified the benefits standards governing the timeframes and disclosure
sanitation process required here, as associated with the proposed regulations or requirements for ERISA benefit claims and appeals,
provided a sufficient cost analysis associated with including disability benefits. 65 FR 70246 (Nov. 21,
10 82 FR 12285 (March 1, 2017). the proposed regulatory requirements.’’). 2000).

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47414 Federal Register / Vol. 82, No. 196 / Thursday, October 12, 2017 / Proposed Rules

to work with stakeholders to ensure that The Department is not modifying the Total Respondents: 5,808,000. Total
any trade secrets and proprietary substance of the Information Collection Responses: 311,790,000.
business information are protected from Requests at this time; therefore, no Frequency of Response: Occasionally.
public disclosure and that the data action under the PRA is required. The Estimated Total Annual Burden
collection process is designed to ensure information collections will become Hours: 516,000.
that no violations of antitrust or other applicable at the same time the rule Estimated Total Annual Burden Cost:
federal or state laws occur.16 becomes applicable. The information $814,450,000.
It also would be helpful for the collection requirements contained in the 3. Regulatory Flexibility Act
Department to receive data regarding the Final Rule are discussed below.
impact of the 2000 final claims and This proposal would delay the The Regulatory Flexibility Act (5
appeals regulation (2000 Final Rule). applicability date of the Department’s U.S.C. 601 et seq.) (RFA) imposes
Commenters at the time stated that it amendments to the disability claims certain requirements with respect to
would lead to cost increases and procedure rule for 90 days, through federal rules that are subject to the
decreases in consumer access. The April 1, 2018. The Final Rule revised notice and comment requirements of
Department is interested in receiving the rules applicable to ERISA-covered section 553(b) of the Administrative
data that shows: (1) Cost increases that plans providing disability benefits. Procedure Act (5 U.S.C. 551 et seq.) and
resulted from compliance with the 2000 Some of these amendments revise which are likely to have a significant
Final Rule (or lack thereof) and whether disclosure requirements under the economic impact on a substantial
such costs were passed on to claims procedure rule that are number of small entities. Unless an
consumers; and (2) whether employers information collections covered by the agency determines that a rule is not
stopped offering disability insurance PRA. For example, benefit denial likely to have a significant economic
benefits and/or employee take-up rates notices must contain a full discussion of impact on a substantial number of small
decreased. The Department also why the plan denied the claim, and to entities, section 604 of the RFA requires
requests data that demonstrates how the the extent the plan did not follow or the agency to present an initial
Department’s 2000 Final Rule impacted agree with the views presented by the regulatory flexibility analysis (IRFA) of
the cost of disability claims litigation. claimant to the plan or health care the proposed rule describing the rule’s
While the Department welcomes the professional treating the claimant or impact on small entities and explaining
submission of all relevant data, to vocational professionals who evaluated how the agency made its decisions with
ensure its usability, the providers of the claimant, or a disability respect to the application of the rule to
such data are encouraged to discuss its determination regarding the claimant small entities. Pursuant to section
source(s), manner of collection, and any presented by the claimant to the plan 605(b) of the RFA, the Department
methodology used to analyze it and made by the SSA, the discussion must certified that the Final Rule did not
derive conclusions from it. The include an explanation of the basis for have a significant economic impact on
Department requests that commenters disagreeing with the views or disability a substantial number of small entities
fully disclose any bias(es) associated determination. The notices also must and provided an analysis of the
with the data and provide honest include either: (1) The specific internal rationale for that certification. Similarly,
evaluations of its strengths and rules, guidelines, protocols, standards or the Department hereby certifies that the
weaknesses. This will help ensure that other similar criteria of the plan relied proposed rule will not have a significant
the Department reaches an optimal upon in making the adverse economic impact on a substantial
outcome and that full transparency is determination or, alternatively, (2) a number of small entities because it
provided to the public. statement that such rules, guidelines, merely delays the applicability date of
protocols, standards or other similar the Final Rule.
2. Paperwork Reduction Act
criteria of the plan do not exist. Plan 4. Congressional Review Act
The Paperwork Reduction Act administrators also must provide (1)
(‘‘PRA’’) prohibits federal agencies from claimants with any new or additional The proposed rule is subject to the
conducting or sponsoring a collection of evidence considered free of charge, and Congressional Review Act (CRA)
information from the public without (2) notices of adverse benefit provisions of the Small Business
first obtaining approval from OMB. See determination potentially in an non- Regulatory Enforcement Fairness Act of
44 U.S.C. 3507. Additionally, members English language. 1996 (5 U.S.C. 801 et seq.) and, if
of the public are not required to respond The burdens associated with the finalized, will be transmitted to
to a collection of information, nor be disability claims procedure revisions are Congress and the Comptroller General
subject to a penalty for failing to summarized below and discussed in for review.
respond, unless such collection displays detail in the regulatory impact analysis 5. Unfunded Mandates Reform Act
a valid OMB control number. See 44 contained in the preamble to the Final
U.S.C. 3512. Rule (81 FR 92317, 92340 (Dec. 19, Title II of the Unfunded Mandates
OMB approved information 2016)). It should be noted that this Reform Act of 1995 (Pub. L. 104–4)
collections contained in the Final Rule proposal only affects the requirements requires each federal agency to prepare
under OMB Control Number 1210–0053. applicable to disability benefit claims, a written statement assessing the effects
which are a small subset of the total of any federal mandate in a proposed or
final agency rule that may result in an
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16 The Department is aware of a number of
burden associated with the ERISA
relevant annual and semiannual industry surveys,
claims procedure information expenditure of $100 million or more
such as the U.S. Group Disability Market Survey. (adjusted annually for inflation with the
Where applicable, commenters are encouraged to collection.
submit to the Department the data underlying these Type of Review: Revised collection. base year 1995) in any one year by State,
surveys. See, e.g., the American Council of Life Agencies: Employee Benefits Security local, and tribal governments, in the
Insurers’ Written Statement for the Record entitled Administration, Department of Labor. aggregate, or by the private sector. For
Do Private Long-Term Disability Policies Provide purposes of the Unfunded Mandates
the Protection They Promise? Before the S. Comm.
Title: ERISA Claims Procedures.
on Finance, 111th Cong. 113 & n.3 (2010), in which OMB Number: 1210–0053. Reform Act, as well as Executive Order
the ACLI discusses aggregate data on approvals and Affected Public: Business or other for- 12875, this proposal does not include
elimination periods. profit; not-for-profit institutions. any federal mandate that we expect

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Federal Register / Vol. 82, No. 196 / Thursday, October 12, 2017 / Proposed Rules 47415

would result in such expenditures by List of Subjects in 29 CFR Part 2560 to submit an online application and
state, local, or tribal governments, or the Claims, Employee benefit plans. upload their works to the electronic
private sector. The Department also registration system, although the Office
For the reasons stated above, the
does not expect that the proposed rule may waive these requirements in
Department proposes to amend 29 CFR
will have any material economic exceptional cases. This new group
part 2560 as follows:
impacts on State, local or tribal registration option will replace the
governments, or on health, safety, or the PART 2560—RULES AND current ‘‘unpublished collections’’
natural environment. REGULATIONS FOR ADMINISTRATION option, which the Office has determined
6. Federalism Statement AND ENFORCEMENT is an ineffective mechanism for
registration of multiple unpublished
Executive Order 13132 outlines ■ 1. The authority citation for part 2560 works; among other things, it allows
fundamental principles of federalism, continues to read as follows: applicants to register an essentially
and requires the adherence to specific unlimited number of works. The
criteria by federal agencies in the Authority: 29 U.S.C. 1132, 1135, and
Secretary of Labor’s Order 1–2011, 77 FR proposed rule will allow the Office to
process of their formulation and more easily examine each work for
1088 (Jan. 9, 2012). Section 2560.503–1 also
implementation of policies that have issued under 29 U.S.C. 1133. Section copyrightable authorship, create a more
‘‘substantial direct effects’’ on the 2560.502c–7 also issued under 29 U.S.C. robust record of the claim, and improve
States, the relationship between the 1132(c)(7). Section 2560.502c–4 also issued the efficiency of the registration process.
national government and States, or on under 29 U.S.C. 1132(c)(4). Section The Proposed Rule also makes unrelated
the distribution of power and 2560.502c–8 also issued under 29 U.S.C. technical amendments to the ‘‘unit of
responsibilities among the various 1132(c)(8).
publication’’ regulation.
levels of government. Federal agencies
§ 2560.503–1 [Amended] DATES: Comments must be made in
promulgating regulations that have
federalism implications must consult ■ 2. Section 2560.503–1 is amended by writing and must be received in the U.S.
with State and local officials and removing ‘‘on or after January 1, 2018’’ Copyright Office no later than
describe the extent of their consultation and adding in its place ‘‘after April 1, November 13, 2017.
and the nature of the concerns of State 2018’’ in paragraph (p)(3) and by ADDRESSES: For reasons of government
and local officials in the preamble to the removing the date ‘‘December 31, 2017’’ efficiency, the Copyright Office is using
Final Rule. and adding in its place ‘‘April 1, 2018’’ the regulations.gov system for the
This proposed rule does not have in paragraph (p)(4). submission and posting of public
federalism implications because it Signed at Washington, DC, this 6th day of comments in this proceeding. All
merely delays the applicability date of October, 2017. comments are therefore to be submitted
the rule. Therefore, the proposed rule Timothy D. Hauser, electronically through regulations.gov.
has no substantial direct effect on the Deputy Assistant Secretary for Program Specific instructions for submitting
States, the relationship between the Operations, Employee Benefits Security comments are available on the
national government and the States, or Administration, Department of Labor. Copyright Office Web site at https://
the distribution of power and [FR Doc. 2017–22082 Filed 10–10–17; 8:45 am] www.copyright.gov/rulemaking/group-
responsibilities among the various BILLING CODE 4510–29–P unpublished/. If electronic submission
levels of government. In compliance of comments is not feasible due to lack
with the requirement of Executive Order of access to a computer and/or the
13132 that agencies examine closely any LIBRARY OF CONGRESS internet, please contact the Office for
policies that may have federalism special instructions using the contact
implications or limit the policy making U.S. Copyright Office information below.
discretion of the States, the Department FOR FURTHER INFORMATION CONTACT:
welcomes input from States regarding 37 CFR Parts 201, 202 Robert J. Kasunic, Associate Register of
this assessment. Copyrights and Director of Registration
[Docket No. 2017–15]
7. Executive Order 13771: Reducing Policy and Practice; Erik Bertin, Deputy
Regulation and Controlling Regulatory Group Registration of Unpublished Director of Registration Policy and
Costs Works Practice; or Regan A. Smith, Deputy
General Counsel, by telephone at 202–
Executive Order 13771, titled AGENCY: U.S. Copyright Office, Library 707–8040 or by email at rkas@loc.gov,
Reducing Regulation and Controlling of Congress. ebertin@loc.gov, and resm@loc.gov.
Regulatory Costs, was issued on January ACTION: Notice of proposed rulemaking. SUPPLEMENTARY INFORMATION:
30, 2017. Section 2(a) of EO 13771
requires an agency, unless prohibited by SUMMARY: The U.S. Copyright Office is I. Background
law, to identify at least two existing proposing to create a new group
regulations to be repealed when the registration option for a limited number A. Group Registration Under the 1976
agency publicly proposes for notice and of unpublished works. To qualify for Act
comment, or otherwise promulgates, a this group option, all the works must be When Congress enacted the Copyright
new regulation. In furtherance of this created by the same author or the same Act of 1976 (the ‘‘Act’’), it authorized
asabaliauskas on DSKBBXCHB2PROD with PROPOSALS

requirement, section 2(c) of EO 13771 joint authors, and the author or joint the Register of Copyrights (the
requires that the new incremental costs authors must be named as the copyright ‘‘Register’’) to specify by regulation the
associated with new regulations shall, to claimant for each work. The claim to administrative classes of works for the
the extent permitted by law, be offset by copyright in each work must be the purpose of seeking a registration and the
the elimination of existing costs same, and each work must be registered nature of the deposits required for each
associated with at least two prior in the same administrative class. In class. In addition, Congress gave the
regulations. This proposed rule is general, applicants will be allowed to Register the discretion to allow groups
expected to be an EO 13771 include up to five works in each of related works to be registered with
deregulatory action. submission. Applicants will be required one application and one filing fee, a

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Document Created: 2018-10-25 10:04:58
Document Modified: 2018-10-25 10:04:58

Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Proposed Rules
Action		Proposed rule.
Dates		Comments on the proposal to extend the applicability date for 90 days must be submitted to the Department on or before October 27, 2017. Comments providing data and otherwise germane to the examination of the merits of rescinding, modifying, or retaining the rule must be submitted to the Department on or before December 11, 2017.
Contact		Frances P. Steen, Office of Regulations and Interpretations, Employee Benefits Security Administration, (202) 693-8500. This is not a toll free number.
FR Citation		82 FR 47409
RIN Number		1210-AB39
CFR Associated		Claims and Employee Benefit Plans

82 FR 47409 - Claims Procedure for Plans Providing Disability Benefits; Extension of Applicability Date

DEPARTMENT OF LABOREmployee Benefits Security Administration

Federal Register Volume 82, Issue 196 (October 12, 2017)

DEPARTMENT OF LABOR
Employee Benefits Security Administration