Long Term Disability and Social Security Disability

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 need assistance with your long term disability claim, feel free to contact The Hamilton Firm.

Conflict of Interest

In Metropolitan Life Ins. Co. v. Glenn, 554 U.S. 105 (2008, the Supreme Court addressed the conflict of interest issue in the context of LTD plans governed by ERISA:

Often the entity that administers the plan, such as an employer or an insurance company, both determines whether an employee is eligible for benefits and pays benefits out of its own pocket. We here decide that this dual role creates a conflict of interest; that a reviewing court should consider that conflict as a factor in determining whether the plan administrator has abused its discretion in denying benefits; and that the significance of the factor will depend upon the circumstances of the particular case.

In Glenn,  the insurer encouraged Glenn to file for Social Security Disability, and even recommended a lawyer to help her in obtaining SSDI benefits.  Glenn was awarded SSDI benefits.  The insurer then collected the majority of her SSDI benefits as an alleged overpayment.  Despite having encouraged Glenn to apply for SSDI benefits, and then having collected an overpayment when her claim was accepted, the insurer denied the LTD claim.  In other words, the insurer disregarded SSA’s finding of disability. The Court found that, in these circumstances, there was nothing improper in concluding that the insurer’s conflict of interest tipped the balance in favor of finding that the denial of benefits was arbitrary and capricious. Glenn, 554 U.S. at 117-118.

Neuromusculoskeletal and Soft Tissue Exclusion

I have seen a number of MetLife long term disability policies that contain a neuromusculoskeletal and soft tissue exclusion.  The exclusion is not necessarily an exclusion per se, but rather, a limitation.  Most of the policies limit benefits to two years if the claimant is disabled due to a neuromusculoskeletal and soft tissue disorder unless there is “objective medical evidence of. . . . seropositive arthritis;  spinal tumors, malignancy, or vascular malformations; radiculopathies; myelopathies; traumatic spinal cord necrosis; or myopathies.  Perhaps this exclusion was intended to cover conditions such as fibromyalgia.  Regardless of the intent, the exclusion has the potential to exclude a number of serious conditions.  More troubling is the fact that it seems very unlikely that an individual purchasing a long term disability policy would have any idea whatsoever that he/she could be disabled, but still only receive two years of benefits.  Unfortunately, the jurisprudence appears to uphold this exclusion.  In one recent case, the plaintiff argued that the language was ambiguous.  The Court concluded that “MetLife’s interpretation of the Plan is reasonable.”  Brien v. Metropolitan Life Ins. Co., 2012 U.S.Dist. Lexis 135790 (Sept. 21, 2012).  The Plaintiff argued that because he was disabled due to a number of conditions, including conditions supported by objective medical evidence, the exclusion did not apply. The Court disagreed and upheld the denial of benefits.

Waiver

It can be crucial to hire an experienced long term disability lawyer at the early stages of the claim for a number of reasons.  One reason is that if the claim is denied, and an appeal is filed that does not assert the correct arguments, the insurance company may attempt to argue in Court that the claimant is precluded from raising an argument in Court that was not previously asserted in the appeal to the Plan Administrator.  For example, in Frost v. Hartford Life & Accident Ins. Co., 2010 U.S. Dist. Lexis 7271 (D.N.H. Jan. 28, 2010), the Court described an ERISA plaintiff’s failure to raise an argument before a plan administrator prior to raising the argument in federal court as a “flaw.”

If you need help with your long term disability claim, feel free to contact Patrick A. Cruise in Chattanooga, TN.

LTD Overpayment Applied to Monthly Benefit

In Franks v. Aetna Life Ins. Co., 2012 U.S.Dist. Lexis 155519 (N.D. Cal. October 30, 2012), the district court held that the long term disability carrier was allowed to offset SSDI benefits and apply said offset to future LTD benefits.

If you need assistance with you long term disability claim, contact Patrick Cruise at The Hamilton Firm.

Long Term Disability: Mental Conditions

Some Long Term Disability (LTD) Plans contain a limitation with regard to certain disabilities.  For example, one Plan we see quite frequently includes the following provision:  “Disabilities, due to sickness or injury, which are primarily based on self-reported symptoms, and disabilities due to mental illness have a limited pay period up to 24 months.”  In other words, according to the Plan, a person who is disabled due to a mental illness is only able to collect 2 years worth of LTD benefits. Such a provision is troubling as it concerns mental health conditions, but perhaps more troubling is the “self reported symptoms” limitation.  Said limitation has the potential to apply to nearly every case.  The inequity of the provision should be readily apparent.  Moreover, most if not all people who have Long Term Disability insurance have no idea that this provision could be used to deny their claim.

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