Quite often, a claimant who is receiving long term disability benefits will be required by the insurance company to file for Social Security Disability. In fact, often the Plan will provide a representative to assist the claimant in obtaining Social Security disability benefits. If SSA awards benefits, the LTD carrier then claims an overpayment of benefits. More often than not, the claimant is found disabled by SSA around two years after he/she became disabled, which is right around the time period when the LTD definition of disability changes. I have represented a number of individuals who are approved by SSA for disability, and then denied by the LTD carrier a month or two later. In the 6th Circuit, the LTD carrier is not permitted to ignore the SSA disability finding. In situations where the LTD carrier has required the claimant to apply for disability, and receives a financial benefit from an award of SSA disability, a reviewing court will generally take those facts in to serious consideration in determinating when the decision to deny LTD benefits was arbitrary and capricious. Calvert v. Firstar Finance, Inc., 409 F.3d 286 (6th Cir. 2005); Glenn v. Metlife, 461 F.3d 660 (6th Cir. 2006). As a practical and legal matter, if the LTD carrier requiring the claimant to apply for disability, is assisting the claimant in applying for disability, and receives a financial benefit from the claimant obtaining disability through SSA, the carrier should be estopped from arguing that the claimant is not disabled.
For example, in Raybourne v. Cigna Life Ins. Co. of New York, 2012 U.S.App. Lexis 24018 (7th Cir. Nov. 21, 2012), Raybourne applied for long term disability benefits with Cigna. He also filed for Social Security disability benefits. Cigna hired a company to assist Raybourne with his Social Security disability claim. Raybourne’s disability claim was approved by the Social Security Administration; however, just a few months prior to the disability award, Cigna hired a physician to review the file. Said physician opined that Raybourne was not disabled. The report from Cigna was never provided to the Judge deciding Raybourne’s Social Security disability claim. Instead, after Raybourne was awarded social security disability benefits, Cigna “recouped from the back benefits the money the insurer had paid to Raybourne during the first twenty-four months of his disability.” Even more disturbing is the fact that just three weeks before Raybournes social security disability hearing, Cigna denied Raybourne claim for long term disability. In other words, Cigna hired someone to argue that Raybourne was disabled, despite the fact that Cigna had denied his claim for private disability benefits just three weeks prior to the hearing. Cigna denied Raybourne’s administrative appeals, and did not even mention the social security disability finding. The case went to federal court, at which time the federal judge remanded the claim back to Cigna for consideration of the SSA disability determination. Cigna then supplied a list of “reasons” for not accepting the disability finding of the social security administrative law judge. The Court noted the “seemingly inconsistent positions taken by the insurer” that were “financially advantageous to the insurer.” The Court further noted that Cigna did not produce the report from their doctor to the Social Security Administration, and instead, only used his report “when it was financially advantageous to the insurer.” Ultimately, the Court concluded: “Cigna’s denial of benefits was not supported by substantial medical evidence but instead was the result of a structural conflict of interest.” The Court also affirmed the award of attorney fees to Raybourne’s attorney.
If you would like to discuss your Social Security and/or Long Term Disability claim, please click here to obtain the author’s contact information.