May 21, 2020 Issue: Spring 2020

Joint Agency Action Automatically Extends Group Disability Appeal Deadlines During the COVID-19 Pandemic

By: Claire Kennedy-Wilkins, Springer Ayeni, APLC

On May 4, 2020, the Internal Revenue Service and Employee Benefits Security Administration jointly issued a new rule extending certain deadlines applicable to participants in group disability benefit plans under the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code.  Extension of Certain Timeframes for Employee Benefit Plans, Participants, and Beneficiaries Affected by the COVID–19 Outbreak, 85 Fed. Reg. 26351 (May 4, 2020).  Specifically, the rule automatically extends participants’ deadlines for filing initial benefit claims and appeals of adverse benefit determinations.  (The rule also extended numerous deadlines applicable to participants with other types of ERISA claims and plans.) 

Most significantly for participants in disability benefit plans, individuals whose group disability benefit claims were denied after September 3, 2019 now have additional time within which to request review of their benefit denials.  Per the new rule, when calculating the 180-day day appeal period provided by 29 C.F.R. § 2560.503-1(h), group disability plans “must disregard” what the rule refers to as the “Outbreak Period.”  The Outbreak Period is defined as the period from March 1, 2020 until 60 days after the end of either the current COVID-19 National Emergency or “such other date announced by the Agencies in a future notification.”  The rule also contemplates the possibility that there will be different Outbreak Periods for different parts of the country and advises that additional guidance will be issued under such circumstances.  The agencies also caution that they will continue to monitor the situation and may provide additional relief, as warranted.

The new rule operates to significantly extend the time participants have to appeal insurance company disability benefit denials.  For example, for a claim denied or terminated on January 1, 2020, which a participant would ordinarily need to appeal by June 29, 2020, only 60 days passed before the Outbreak Period started tolling the 180-day deadline.  Once the Outbreak Period ends – 60 days after the end of the current COVID-19 National Emergency ends – the participant still has 120 more days within which to file his or her request for review.  As of May 4, 2020, the earliest this participant’s appeal could be due would be October 31, 2020 – with that date extended each day the present National Emergency continues.  Likewise, for participants in jurisdictions without a so called “notice-prejudice rule,” their group disability plans’ deadlines for filing benefit claims is extended by the duration of the Outbreak Period. 

The new rule is a welcome acknowledgement of the fact that during this unprecedented public health crisis, many participants are unable to safely obtain the medical reports and evaluations that they need to support their disability appeals – or are outright barred from doing so by provider office closures and/or the varying level of “stay at home orders” in place across the country.  Indeed, many individuals are disabled by conditions that put them at high risk for COVID-19 complications, making it especially important for them to avoid unnecessary exposure at medical facilities during the midst of the present pandemic.  Until the issuance of this joint agency rule, such participants were at the mercy of disability insurance companies when it came to extending their appeal deadlines, forcing some participants to make the difficult choice between obtaining evidence to strengthen their claims and support their appeals and protecting their health by staying at home during the COVID-19 outbreak.  The need to submit ample evidence with participants’ disability appeals – ranging from medical evaluations and reports to functional capacity evaluations and in-person vocational assessments – is underscored by the fact that participants are largely precluded from submitting additional evidence in support of their claims post-appeal; instead, if their claims proceed to litigation, the record is limited to what was submitted up through the end of the appeal period.  Absent additional agency action, if President Trump ends the National Emergency, as part of his campaign to “reopen” the country, before the significant COVID-19 exposure and health risks are resolved, participants will again be forced to choose between their health and their financial security.