Social Security and Long Term Disability under ERISA

Prior to the Supreme Court’s decision Black & Decker Disability Plan v. Nord, 538 U.S. 822, 123 S.Ct. 1965, 155 L.Ed.2d 1034 (2003), the Ninth Circuit applied the treating physician rule in ERISA disability cases. SeeRegula v. Delta Family-Care Disability Survivorship Plan, 266 F.3d 1130 (9th Cir.2001), vacated, 539 U.S. 901, 123 S.Ct. 2267, 156 L.Ed.2d 109 (2003). Under this rule, the opinions of a claimant’s treating physician are given special deference and may be disregarded only for clear and convincing reasons based on substantial evidence in the record. In Nord, the Supreme Court rejected this rule, holding that ERISA and the Secretary of Labor’s regulations implementing the statute do not command plan administrators to credit the opinions of treating physicians over other evidence relevant to the claimant’s medical condition.Nord 538 U.S. at 825, Following the rejection of the treating physician rule in ERISA cases,  planadministrators almost uniformly ignore the favorable decision by the SSA when denying applications for disability benefits under ERISA.

The Supreme Court of United States revisited this question in Metropolitan Life Insurance Co. Et al. V. Glenn, 554 U.S. 105 2008. Respondent Wanda Glenn was initially found disabled by Metlife because she could not perform the material duties of her own job. MetLife demanded that Claimant file for federal Social Security disability benefits so that Metlife can receive an offset to the plan benefits paid.  In April 2002, an Administrative Law Judge found that Glenn’s illness prevented her not only from performing her own job, but also from performing any jobs for which she could qualify existing in significant numbers in the national economy. Glenn herself kept none of the backdated benefits: three-quarters went to MetLife, Despite the SSA decision, MetLife denied Glenn her disability benefits because it determined that she was capable of performing full time sedentary work.

The Court of appeals held for Glenn and the Supreme Court affirmed. The Glenn Court held: “In particular, the court found questionable the fact that 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 (the remainder going to the lawyers it recommended), and then ignored the agency’s finding.”  Chief Justice Roberts, concurring in part, added: “MetLife’s failure to account for the Social Security Administration’s finding of disability after MetLife encouraged Glenn to apply to the agency for benefits; MetLife’s emphasis of favorable medical reports and de-emphasis of unfavorable ones; and MetLife’s failure to provide its internal experts with all the relevant evidence of Glenn’s medical condition. See ante, at 11-12. These facts simply prove that MetLife abused its discretion in failing to consider relevant, expert evidence on the question of Glenn’s disability status.”

Post Nord and Glenn, the Ninth Circuit established further standards as to how the weight of a favorable decision by the SSA shall affect the decision in an ERISA disability in Montour v. Hartford Life & Acc. Ins. Co., 582 F.3d 933 (9th Cir., 2009. In Montour, the Court held that while ERISA plan administrators are not bound by the SSA’s determination, complete disregard for a contrary conclusion without so much as an explanation raises questions about whether an adverse benefits determination was “the product of a principled and deliberative reasoning process.” See MetLife I, 461 F.3d at 674; see also MetLife II, 128 S. Ct. at 2352; cf. id. at 2361 (Scalia, J., dissenting). In fact, not distinguishing the SSA’s contrary conclusion may indicate a failure to consider relevant evidence. See MetLife II, 128 S. Ct. at 2355 (Roberts, C.J., concurring in part and concurring in the judgment).

The Montour Court held, ”Unlike the SSA, the insurance carrier under ERISA is not bound by the treating physician rule, which accords “special weight” to the opinions of a claimant’s treating physician. Black & Decker Disability Plan v. Nord, 538 U.S. 822, 825, 831, 834 (2003) (holding that while ERISA administrators may not arbitrarily ignore a treating physician’s opinion, that opinion also is not entitled to any “special deference”). However, this distinction alone does not provide a basis for disregarding the SSA’s determination altogether. In Montour, the Court ordered LTD benefits to be paid because the insurance carrier failed to review and consider the SSA decision.  The Court held: “because in some cases, such as this one, the SSA deploys a more stringent standard for determining disability than does the governing ERISA plan.” See, e.g., MetLife I, 461 F.3d at 668 & n.1; Calvert v. Firstar Fin., Inc., 409 F.3d 286, 294 n.4 (6th Cir. 2005). The Court noted that the SSA’s standard are more strict than the standards employed by ERISA policies, defining “disability” as the “inability to engage in any substantial gainful activity by reason of any medically determinable physical . . . impairment” that is of “such severity that [the claimant] . . . cannot, considering his age, education, and work experience, engage in any other kind of substantial gainful work which exists in the national economy, regardless of whether such work exists in the immediate area in which he lives.” 42 U.S.C. § 423(d)(1)(A), (2)(A). “

The Court was also critical of Hartford’s failure to grapple with the SSA’s contrary disability determination. The Plan requires claimants to apply for social security disability benefits from the SSA. In facts very similar to Glenn where Hartford benefitted from this award significantly, as it received a dollar-for-dollar financial offset, nearly halving its liability.  Yet, the plan administrator made no mention of the SSA’s contrary determination in its initial termination decision. In its decision denying Montour’s appeal, Hartford acknowledged the SSA’s decision but did not articulate why the SSA might have reached a different conclusion. See MetLife I, 461 F.3d at 671 n.3 (noting that there is a distinction between mentioning a contrary determination and discussing it).

The Montour Court noted: “Ordinarily, a proper acknowledgment of a contrary SSA disability determination would entail comparing and contrasting not just the definitions employed, but also the medical evidence upon which the decision makers relied. See, e.g., MetLife I, 461 F.3d at 668.Ultimately, Hartford’s failure to explain why it reached a different conclusion than the SSA is yet another factor to consider in reviewing the administrator’s decision for abuse of discretion, particularly where, as here, a plan administrator operating with a conflict of interest requires a claimant to apply and then benefits financially from the SSA’s disability finding. See MetLife II, 128 S. Ct. at 2352 (“This course of events [is] not only an important factor in its own right (because it suggest[s] procedural unreasonableness), but also would . . .justif[y] the court in giving more weight to the conflict (because [Hartford]’s seemingly inconsistent positions were both financially advantageous).”

 

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