In lawsuits challenging an ERISA plan’s denial of long-term disability benefits, can claimants who have qualified for Social Security disability benefits use that as evidence in their case? Or, to put it another way, can a decision from the Social Security Administration (SSA) on a claimant’s disability status be a factor in a court’s overall analysis of whether an ERISA plan improperly denied long-term disability benefits?
The answer to both questions is “yes,” although with caveats. Courts are mindful that the standards for determining disability under the Social Security requirements may vary considerably from the standards for determining disability under a private ERISA plan. However, as noted by the district court in Gellerman v. Jefferson Pilot Fin. Ins. Co. (S.D.Tex.2005) “no court has held that an SSA determination is completely irrelevant” in an ERISA dispute over disability benefits.
In Glenn v. Metlife (2006), the Sixth Circuit found that the insurer’s failure to give any weight to the claimant’s SSA disability determination was “perplexing” and a “significant factor” in its analysis of the claimant’s claim for long-term disability benefits. (The Sixth Circuit includes the federal district courts in Tennessee.)
In Glenn, the claimant qualified for the first phase of long-term disability benefits under her ERISA plan after she showed that she could not complete the material duties of her regular job. In order to reduce the amount of disability payments it had to make to the claimant, the insurer hired a law firm to help her with her disability claim with the SSA. The claimant then qualified for total disability benefits through the SSA, and the insurer deducted those government benefits from the disability payments that it was obliged to pay, as provided for under the policy. (All long-term disability policies this author has seen and is aware of allow the insurance company a credit for Social Security benefits.)
After receiving long-term disability benefits for two years, the claimant then had to meet the more difficult standard in phase two of her disability plan. Now, she had to show that she could not perform the material duties of any gainful occupation, as opposed to the specific material duties of her prior job. Despite receiving repeated and detailed correspondence from her physician supporting her claim, the insurer determined that she failed to meet the “any gainful occupation” standard and terminated her benefits. The claimant filed a lawsuit in district court challenging the decision, and the district court ruled in favor of the insurer. She then appealed her case to the Sixth Circuit.