In a letter dated February 27, 2019, the Department of Labor (“DOL”) has reiterated that an ERISA-covered plan cannot prevent a plan participant from appointing an authorized representative for initial claims and for claims appeals.
DOL regulations expressly give participants and beneficiaries the right to appoint authorized representatives to act on their behalf in connection with an initial claim for benefits as well as any appeal of a claims decision.
“Although a plan may establish reasonable procedures for determining whether an individual has been authorized to act on behalf of a claimant, the procedure cannot prevent claimants from choosing for themselves who will act as their representative or preclude them from designating an authorized representative for the initial claim, an appeal of an adverse benefit determination, or both. The plan must include any procedures for designating authorized representatives in the plan’s claims procedures and in the plan’s summary plan description (SPD) or a separate document that accompanies the SPD.”
The DOL goes on to say:
“Nothing in the regulation precludes a plan from communicating with both the claimant and the claimant’s authorized representative. However, it is the view of the Department that, for purposes of the claims procedure rules, when a claimant clearly designates an authorized representative to act and receive notices on his or her behalf with respect to a claim, the plan should, in the absence of a contrary direction from the claimant, direct all information and notifications to which the claimant is otherwise entitled to the representative authorized to act on the claimant’s behalf with respect to that aspect of the claim (e.g., initial determination, request for documents, appeal, etc.). In this regard, it is important that both claimants and plans understand and make clear the extent to which an authorized representative will be acting on behalf of the claimant.”
NOTE: The DOL letter only refers to the appointment of an authorized representative and does not discuss the assignment of benefits. Assignments and appointment of a representative differ in important aspects. An assignment transfers ownership of a claim to a third party, giving it standing to assert those rights and to sue on its own behalf. The appointment of an authorized representative, on the other hand, does not transfer an ownership interest in the claim.
Most jurisdictions have ruled that properly worded anti-assignment clauses in ERISA-covered plans are valid.