The War On The Disabled Starts

Congress is about to declare war on entitlements to cut government help for those in need so as to save money for those at the top of the income pyramid.  After all, with rising costs and no replacement for old tax cuts, revenue has to come from somewhere. 

It doesn’t help that “60 Minutes” a well watched and generally well regarded television news journal recently aired a misleading, one-sided view of Social Security benefits and those who receive them.

In handling ERISA claims we are so used to fighting insurance companies, that we take their one-sided tactics as a matter of course.  Those in the Social Security field may not be accustomed to the way the other side is going to fight to cut benefits to those in need.

The difference lies in the nature of the different practices.  In Social Security, claims are tried before impartial SSA judges who are selected for their ability to make unprejudiced judgments about disabilities.  They have no axe to grind and are paid by the Government, not a private business interested in making profits.

On the other hand, ERISA plans are usually administered by people closely affiliated with insurance companies.  Many times their livelihood depends on these same insurance companies who are definitely interested in making profits.  So, plan administrators  pay out as few benefit dollars as possible.  Every dollar saved goes right to the insurer’s bottom line.

ERISA lawyers are accustomed to plan administrator’s leaning heavily in favor of employers (and their insurance companies) in making benefits decisions.  So, you learn to fight their tactics as hard as you can to give clients a chance at success.  Social Security advocates, used to much more impartial judges, may have difficulty in doing this. 

Be sure, this fight is going to be “down and dirty”.  There are elements in Congress that won’t believe people truly get sick or get hurt, some so badly that they legitimately can’t work anymore.  They look at each recipient as a “moocher”, freeloading at the public trough. 

These elements ignore the fact that studies have shown that fraud rates are low and that benefits are far from generous.  “60 Minutes” helped paint SSDI unfairly as wasteful and loaded with abuse.

These are some of the facts “60 Minutes” omitted from its report:

  • SSDI fraud is less than 1% in its disability program.
  • Application rates have risen, but award rates have declined.
  • Retirement age has risen from 65 to 67 meaning that those on SSDI remain on it longer before being eligible to switch to retirement benefits.
  • One in five male and one in six female SSDI recipients die within 5 years of first receiving benefits.  (Does this sound like “fakery)?
  • The average SSDI benefit is just above $1,130 a month, about $35 a day.  Try living on that for a while.

In 1994, the Disability Insurance Trust Fund was predicted to face the problem it faces in 2016.  Historically, Congress has 10 times reallocated funds between retirement and disability accounts because of demographic changes, without a problem.  It could now do so again, insuring that both funds would remain solvent until 2033.

But, will this Congress do it?  Not very likely.

This Congress is more likely to vilify and blame the people relying on $35 a day to live, than it is to fix a problem which an easily be fixed.

What has happened to America?


Get Your Scorecard Here

What a lovely gift for insurance companies!

There’s going to be a Congressional investigation of SSDI brought on by charges that an SSDI judge ruled in favor of applicants 99.7% of the time. The fact that the judge is only one of 1500 judges in the SSDI system will be of little significance to the investigators.

The majority of House Republicans, seem to be salivating at the opportunity to ravage the Social Security system as we know it, and to turn it over to private insurance companies. With Republicans holding a large majority in the House, they will have a field day with hearings on this issue.

Insurance companies are certain to jump on the bandwagon because of the ongoing question of what weight courts should give an SSDI finding of disability on ERISA and private disability income insurance claims they are considering. Successful SSDI claimants want the SSDI judgment to weigh heavily in an ERISA disability case, while insurance companies generally ignore SSDI findings (even though they usually have forced claimants to apply for the SSDI disability benefits).

Group LTD insurers get the best of both worlds when a claimant wins in SSDI:

* Insurance companies get the first money from the claimant’s SSDI benefits and repay themselves the money they have already paid the claimant under the terms of their policy.
* Insurance companies then completely ignore the SSDI finding of disability while defending the claimant’s case under their disability policy.

A 99.7% success rate in an adversarial litigation system should raise the strongest suspicions. It certainly requires severe “looking into” and remediation. But, it shouldn’t negate the value of an SSDI decision as part of the evidentiary fabric in an ERISA disability case.

We have a suggestion to help a Federal judge decide. Have the SSDI judge’s scorecard of disability decisions supplied to the court with the SSDI judgment. This will give the trial court a good handle on any predispositions the SSDI judge may have and make it easier for the trial judge to value of the SSDI judgment in ruling on the case before it.

But, at the same time, the court should be supplied with a scorecard on each doctor in the insurer’s stable of “physicians” who has rendered an opinion about the claim before it. In what percentage of cases in which the particular insurance company doctor ruled did the physician find the claimant had a disability? Such scorecard information would also afford the court a better picture of the value of the insurance doctor’s opinion.

After all, what’s sauce for the goose is sauce for the gander.

A court having the benefit of knowing if either or both an SSDI judge and/or an insurance doctor had a predisposition, would certainly help a judge weighing the factors in coming to a decision, as required by the Supreme Court in MetLife v. Glenn, 128 S. Ct.2343 (2008).





Are Courts Finally Getting It?

A ”hot-off-the-presses” decision from the Illinois Federal District Court finally lays out, without all of the obfuscating folderol, the true basis for getting to the truth of the ERISA-SSDI tug of war:   See Raybourne v. Cigna, No. 07C3205, (N.D. Ill., September 23. 2010).

Did an LTD insurance administrator, in denying a policy claim, meet the burden of establishing a credible basis for rejecting an SSDI finding of disability?


Long-standing LTD insurance company strategy has been to insist that claimants must pursue SSDI claims to be eligible for their LTD disability benefits. There is nothing wrong with this, as LTD insurance policies usually provide that third party payments to a claimant (including SSDI) have to be used to offset payment of benefits by the insurer.

The problem is that after forcing the claimant to make a disability claim to SSDI so as to receive benefits which go straight into the pocket of the LTD insurance carrier, the carrier then completely ignores the SSDI decision in its own determination of its own liability under its disability policy.

LTD insurance companies were getting away with this ploy for years, until MetLife v. Glenn, 554 U.S. 105 (2008), when the U.S. Supreme Court woke up to the fact that there is an inherent conflict of interest in a situation where an insurance company which has to pay the claim is the entity which makes the initial decision as to whether the claim is actually covered. Add to this already conflicted siutation the added insult that in ERISA cases, the LTD insurance company’s decision must be given deference, Firestone v. Bruch, 489 U.S. 101 (1989) , and you have a stew which smells bad right from the start.

Why the courts seemed to be blind for so long to the unfairness of putting such extreme power in the hands of one party to a controversy, is hard to fathom, particularly when that party is an insurance company, a class of entities not known for being overgenerous. Firestone was decided in 1989 and Glenn in 2008.

Those who represent disability claimants have been afflicted by the free ride the Firestone decision has given insurance companies for almost 25 years. No court so clearly took them to task on the SSDI issue as did the District Court in the Raybourne decision. Hopefully, now the shoe is on the other foot, where it actually belongs.

Why should an LTD insurer be able to force a claimant to obtain an SSDI ruling that finds the claimant disabled so that the SSDI benefits go into the insurer’s pocket, and then ignore the SSDI decision in the claimant’s claim against the insurer?

Hopefully, the inherent conflict so clearly defined in Raybourne, as a result of Glenn, will give otherFederal courts the gumption to reexamine the unfair body of ERISA law which has grown in the wake of Firestone. They should examine closely evidence of the LTD insurance company system of hiring and maintaining stables of supposedly “independent” medical examiners and financially rewarding employees on the basis of their record of denial of claims.

LTD insurance companies should, as do all other litigants, have to meet the burden of proof once it has shifted to them. If a party shows a court that an expert witness might have a prejudice for or against a party, the court must scrutinize that evidence closely. It should not give that evidence “deference” as otherwise suggested by Firestone.

Glenn gives attorneys the tools to show the conflict of interest and how it might affect the insurer’s decision. We only hope that having this tool, judges are as straightforward and skeptical as Judge Gettleman was in deciding Raybourne.

Claimants have the duty of proving they are disabled. Once they do, LTD insurance companies should have the duty of proving that they are not.



Fairness, Anyone?

Ever since Firestone v. Bruch, 109 S. Ct. 948 (1989),many disability insurance carriers have been getting a free ride on SSDI. 

LTD insurance companies force claimants to pursue Social Security for disability benefits so they can recoup monies they have laid out in paying the  private insurance claim.  And then insurers totally ignore the SSDI disability finding when evaluating the claim they have to pay under their ERISA policy. 

 However, as courts come to realize the obvious conflict of interest these claims generate, they are beginning to look at this free ride more and more closely.  Why should insurers be permitted to force claimants to go after SSDI benefits and then totally ignore them when deciding its own case with the same claimant?

The U. S. Supreme Court itself has recognized the problem.  It succinctly stated in MetLife v. Glenn, 128 S. Ct. 2343 (2008)  at Page 2352:

“…MetLife had encouraged Glenn to argue to the Social Security Administration that she could do no work, received the bulk of the benefits of her success in doing so (being entitled to receive an offset from her retroactive Social Security award), and then ignored the agency’s finding in concluding she could do sedentary work…”

Wouldn’t it be more evenhanded to have a successful SSDI claim raise a rebuttable presumption in the private LTD case that the claim is legitimate medically and is totally disabling?  Such a presumption would not be anywhere near a  lock on the issue, but would require the insurance company to come forth with reasonable proof that the SSDI finding was mistaken or that the SSDI decision did not apply to the current LTD claim. 

Proving SSDI claims is not a walk in the park.  SSDI judges have no more inclination to award benefits than do employers and insurance companies.  Only about one-third of SSDI claims result in benefits being initially awarded to claimants.  There is no conflict of interest nagging at an SSDI judge as there is at an insurance administrator, so the SSDI decision would appear more reliable.

While the SSDI judgment should not bind the insurer, it is a considered judicial decision that warrants more than a snub in defense of a claim.

If Federal District Courts were to hold that SSDI judgments raise a rebuttable presumption that a claimant is totally disabled, the insurer would be required to rebut on the merits a judgment by an unconflicted court, instead of paying the judgment lip service, and then ignoring it, to justify denial of a private LTD claim for its own benefit.

There are many reasons why such a presumption could be overcome by an insurance company:

* The terms of the insurance policy does not cover the illness or injury
* Evidence of an error in the SSDI proceeding or findings
* New evidence after the SSDI hearing (the claimant should also then be able to meet this evidence).
* Fraud on the SSDI court which impugns the decision (i.e., evidence that the claimant is working)..

With a rebuttable presumption approach, more weight would be given to an SSDI judgment, but the judgment still would not be binding on the Federal District Court when the insurer could show, with real evidence, that it should not be binding.

Such a judgment should not be ignored by an insurer which has benefited from it, unless there is a legitimate evidentiary reason for not following it.

A rebuttable presumption approach by Federal Courts to SSDI judgments would seem to be a fair way to deal with this crucial issue in ERISA LTD cases.



Don't Ignore SSDI

Why should disability income insurers be allowed to ignore the decisions of Social Security judges, yet take their share of the claimant’s money and run?

This vexing question was raised in Austin v. Life Insurance Company of North America, (2010 LEXIS 38294 (C.D.Cal. 2010), with the court coming down hard on the insurer for its cavalier attitude toward a Social Security decision. In that case the insurance company didn’t have the “couth” to even mention the SSDI decision favoring its policyholder in denying the disability benefits claim.

In the court’s words the failure of the insurer to mention the SSDI decision indicates “…complete disregard for a contrary conclusion without so much as an explanation and raises questions about whether an adverse benefits determination was the product of a principled and deliberative reasoning process.”

It has become common practice for group disability insurance companies to require their insureds to make a claim for benefits to the Social Security Administration if they want to keep on receiving their long term disability income benefits. In fact, this tactic is so important to insurers that they will many times supply free of charge professional assistance to claimants to pursue these SSDI claims.

Why this considerate conduct by insurance companies, you might ask? Because, if the insured claimant is successful in receiving disability benefits from Social Security, the insurer is fully reimbursed from the first SSDI monies received for prior payments it has already made to claimant and, is an offset against future benefits.

What is so unfair about these disability policy “claw back” provisions is that the insurer usually disregards the SSDI judgment in defending its denial of policy benefits to its own insured without considering in any way the SSDI decision. This is a common practice and should be dealt with as sternly as the California District Court did in Austin.

As those who practice in the SSDI world know, a claimant has no walk in the park when pressing a claim for benefits. SSDI judges require convincing proof of disability before they make long term awards. And, once such an award is made, it should be carefully considered by a private insurer in determining a claimant’s case for long term benefits under the terms of its policy.

An SSDI ruling is not res judicata in an ERISA matter. The policy language, procedural matters and a truly different determination by the insurer’s medical experts may affect the decision. But, what must be required by all judges in support of the insurer’s decision, is a reasoned denial, citing the basis for differentiating between the SSDI ruling and the private insurer denial.

Simply ignoring the SSDI decision should be anathema to any judge considering an ERISA appeal. Disability carriers should not be allowed to disregard contrary SSDI judgments without explanation. This is particularly so because insurance companies recoup benefits paid to the insured from the proceeds of the insured’s SSDI award.

Further, Federal District Courts should always keep in mind that SSDI judges have no conflict of interest. Both sets of judges are sworn to uphold the law of the United States.

Insurance companies, on the other hand, have a definite conflict of interest. Why should such a conflicted party have the ability to ignore an unconflicted judge’s finding without having its feet held to the fire?

It makes no sense.


Less Than 30%

 A recent article on reported that Social Security disability claims are increasing rapidly. The article says that the nation’s economic downturn and arrival of the baby boomer generation at the peak years of disability are the causes of this stark upturn.

To get this benefit (commonly known as SSDI), claimants must prove they are unable to work because of a medical condition that is expected to sideline them for at least one year or is expected to result in death. Almost two-thirds of first SSDI applications are rejected by the Social Security Administration, benefits being provided only in the most obvious cases, such as terminal cancer, etc.

The next step after rejection of a first application is a request for reconsideration which is a review of the initial decision. These requests are dealt with, usually within a few months, and approximately 14% of those requests to overturn the adverse decision on the first application, are granted.

The next step for those who pursue SSDI benefits is to file for an in-person hearing before an administrative law judge. At this hearing new evidence may be introduced and the judge, who will make the decision, actually sees and evaluates the claimant. About 55% of these hearings result in a turnaround with SSDI benefits being granted.

The big problem with these hearings by a judge is that it can take up to 2 years from filing for such a hearing to the date of hearing. And, during that wait, the claimant may not have any income on which to live.

What it all boils down to is that fewer than 35% of claimants ever win entitlement to SSDI payments. Not only is the number cut by the findings in the proceedings, but the number is whittled down further by the “wimp”  factor, a pervasive tendency among claimants to give up because of their personality or their attitude that “you can’t fight City Hall”.

Which leads us to wonder – the number of SSDI applications has soared. Will the number of those who get benefits do likewise?




Let's Share the Cake


Federal judges are quickly wising up to the tricks of the trade used by insurance companies to deny disability income claims. The penchant of many insurance company medical examiners to disregard valid first-hand evidence of disability, while themselves relying on medical reports and other “long-distance” diagnoses in making decisions, is receiving less and less support from the courts.


One trick the courts seem to really have caught onto is the Social Security Disability “scam”. While flooding Social Security with practically every group long term disability claim on their books, insurers consistently disregard the Social Security findings of disability whenever it suits them.

The way it works is that the insurance company will force a disabled group policyholder to file for SSDI benefits with the Social Security Administration by threatening to cut off their disability benefits if they don’t. The insurer will even supply an attorney to handle the claim for its policyholder. Seems like a generous move, eh?

Not so. If the SSDI claim is successful, the insurance company gets to deduct the amount of the SSDI payments from the claimant’s insurance company benefit payments, a definite plus for the insurer. But, does this affect how the insurance company looks at the claimant’s benefits claim? In a great many cases, not at all!

In reviewing and deciding disability under the terms of its own policy, companies many times pay little or no attention whatsoever to the SSDI decision (while accepting the benefits of reducing their claims payments). In other words, they are saying, “We’ll accept the SSDI judgment that the claimant is disabled (and take the money), but not when we have to decide if the claimant is disabled under the terms of our policy”.

However, since the decision in Metropolitan Life Insurance Company, et al v. Glenn, 128 S. Ct. 2343 (2008), recognizing the inherent conflict of interest when an administrator who makes the decision in a  disability case is the same entity which would have to pay the claim, courts are more and more giving weight to the SSDI decision in determining whether an insurance company refusal of disability benefits was proper.

Insurance companies have had their cake and ate it for far too long. It’s time disabled policyholders get their fair share.

For recent decisions on this issue:

          Barteau v. Prudential Insurance Co.,2009 WL 1505193 (C.D.,Cal.) 


         MacNally v. LINA, 2009 WL 1458275 (D.Minn.)