I Received Social Security, So Why Did They Deny My Long-Term Disability Claim?
When fighting to receive long-term disability benefits, many people (including lawyers) are surprised to learn that a long-term disability claim is denied even though the Social Security Administration has made a determination of disability from any gainful occupation. Even worse, many times the claimant may receive long-term disability benefits for a while but then after receiving Social Security benefits suddenly have their claim terminated. That termination often comes right after the claimant pays overpayment funds back to the long-term disability insurer.
The obvious practical reasons for this are that the insurer feels emboldened because it paid benefits while the claimant was pursuing Social Security benefits. The insurer often says that because the Social Security back paid benefits, the long-term disability benefit was overpaid. Therefore, the claimant needs to pay the lump sum back benefits from the Social Security Administration to the long-term disability insurer. After it receives those monies, the claim is terminated. We will tackle that problem another day. At this point, we’ll address the inconsistency between the two different positions.
It would seem that obtaining Social Security disability benefits would be more difficult because one must prove disability as to any gainful occupation. Often that amounts to proving the inability to earn what amounts to poverty wages. While obviously, the Social Security standards are different, they don't appear to be more easily satisfied than most long-term disability policy standards. The facts supporting the disability are the same. So how do courts justify what appears to be inconsistent determinations by two different federal judges?
A recent case out of the Fifth Circuit is a great example. In Calkin v. U.S. Life Ins. Co., civil action no. 4:20-cv-00035, 2021 WL 1700771 (S.D. Tex. Apr. 29, 2021), the claimant who was a systems analyst in his 60s, had problems with his shoulder which required rotator cuff surgery. While the surgery was successful it left the claimant with impingement syndrome and tendinitis in his left shoulder. He also had epicondylitis in his right elbow, degenerative disc disease with stenosis in his lumbar spine, and a left knee arthroscopy for problems. While his job was sedentary or a "desk job", he had pain that distracted him from performing it. His doctors completed the attending physician statement forms and provided their opinion that he was impaired. He was awarded Social Security disability benefits, but American International Group, Inc. (“AIG”), the long-term disability insurer, refused to pay the claim.
AIG hired an occupational physician who said the claimant could work full time and had no restrictions. The plaintiff challenged that finding. AIG had an orthopedic surgeon review the file. That surgeon also opined the claimant could work full-time without any restrictions. Never once did either see the claimant. The judge also disregarded the Social Security determination because it uses a different standard. In that case, the judge found that the claim record did not have sufficient information demonstrating anything relating to functional limitations during the 182-day elimination period. Thus the court had no difficulty finding that AIG was correct, regardless of the fact that its decision was inconsistent with the Social Security decision. “The Court is of the opinion, based on the administrative record, that, during the elimination period, Calkin was not unable to perform all the material and substantial duties of his regular occupation due to his sickness or injury.” There is really no getting around the fact that the Social Security Administration found the claimant did have functional restrictions during that same 182-day elimination period. AIG actually sought attorney's fees against the claimant for filing his lawsuit. Fortunately, the court did not award fees.