Reasonable Claims Procedures Under DOL Regulations

DOL regulations require that every ERISA plan establish and maintain reasonable procedures governing:

1. The filing of benefit claims;
2. Notification of benefit determinations; and
3. Appeal of adverse benefit determinations.

A plan’s claims procedures must meet five requirements in order to be deemed reasonable. The procedures must:

1. Comply with regulatory requirements pertaining to:

a. The procedures appropriate for the type of benefit claim (i.e., health, disability or pension plan);
b. What constitutes a “claim for benefits” for purposes of the administrative review requirement;
c. The timing of notification of benefit determinations;
d. The manner and content of the notification of benefit determination;
e. Appeal of adverse benefit determinations;
f. The timing of notification of benefit determinations on review; and
g. The manner and content of notification of benefit determinations on review.

2. Be described in the summary plan description (SPD), which must be provided to all participants under ERISA Section 102;

3. Not unduly hamper the initiation or processing of claims;

4. Not limit a person’s ability to authorize a representative to act on his or her behalf; and

5. Contain administrative processes and safeguards designed to ensure that benefit determinations are made according to the terms of the plan and are consistently applied to similarly situated claimants.

Additional requirements apply to group health plans and plans providing disability benefits. Three such requirements apply to both group health and disability benefits. A fourth requirement applies only to group health plans.

The three additional requirements that apply to group health plans and plans providing disability benefits are:
1. No more than two administrative appeals may be required before the claimant is permitted to file a civil suit in court;
2. To the extent the plan offers voluntary levels of appeal in addition to the two maximum appeal levels, the claims procedures must provide that:

a. The plan waives any right to assert that a claimant has failed to exhaust administrative remedies because the claimant did not elect to submit a benefit dispute to any such voluntary level of appeal;
b. Any statute of limitations or other defense based on timeliness is tolled during the time any such voluntary appeal is pending;
c. The claimant may only elect the voluntary levels of appeal after the two maximum levels;
d. The plan provides the claimant, upon request, sufficient information relating to the voluntary level of appeal to enable the claimant to make an informed judgment about whether to submit a benefit dispute to the voluntary level of appeal; and
e. No fees or costs are imposed on the claimant as part of the voluntary level of appeal.

3. No mandatory arbitration is required, unless the arbitration is conducted as one of the two maximum levels of appeal.

The fourth requirement that applies only to group health plans is:

4. In the case of pre-service claims (i.e., a claim for a benefit with respect to which pre-authorization is necessary in advance of obtaining medical care), if the claimant or an authorized representative fails to follow the plan’s procedures, the claimant or representative must be notified of the failure and the proper procedures to be followed. This notification must be provided as soon as possible, but not later 5 days (24 hours in the case of an urgent care claim) following the failure.