Does my insurance company have to consider my SSDI award if I received the award after my ERISA appeal was denied?

Claimants often ask if their award of SSDI benefits means that their LTD claim will be approved by their insurance company. As we have discussed in other articles and videos, an SSDI award does not guarantee that your LTD claim will be approved by your insurance company. However, in reviewing your claim, the insurance company should consider the SSA decision and the information relied on by the SSA. In fact, the failure of an insurance company to fully consider the SSA decision often results in a finding by a reviewing court that the insurance company’s decision to deny benefits was “arbitrary and capricious.” (Such a finding can result in an award of benefits to the claimant or a demand by the court that the insurance company review the claim again taking into account the SSA decision.)

Sometimes the SSA can take years before awarding SSDI benefits. So what happens if your claim is denied and the SSA approves your SSDI claim years after your LTD claim was denied by your insurance company and beyond the timeframe in which you could appeal the LTD claim denial?

In a recent case out of the Tenth Circuit, the claimant argued that she was approved for Social Security disability income benefits subsequent to Aetna’s final denial and that, as a result, Aetna, as a claim fiduciary, should have reopened her record and considered the Social Security determination and related documents. The reviewing courts rejected the argument.

Ms. Nelson worked for Bank of America as a premier accounts manager and was a participant in her employer’s Long Term Disability Program which was insured by Aetna. On March 3, 2009, Ms. Nelson left work due to a number of ailments including fibromyalgia, anxiety, fatigue, depression, and pain in the back, neck, and pelvis. Ms. Nelson filed a disability claim which was initially approved by Aetna. Aetna paid benefits to April 20, 2009 but denied beyond that date stating there was “no objective medical reason [Ms. Nelson] could not perform her job.”

Ms. Nelson appealed Aetna’s denial, but Aetna denied the appeal by letter dated July 24, 2009 forcing Ms. Nelson to file suit in federal court. On November 1, 2010, after the filing of the lawsuit against Aetna, Ms. Nelson received notice of a fully favorable decision from the Social Security Administration on an application for Disability Benefits she had filed in April 2009. The SSA found she had been disabled since March 4, 2009, one day after she stopped working at Bank of America. Ms. Nelson then asked the court to supplement the administrative record with the SSA’s decision or, in the alternative, to remand the matter back to Aetna so it could consider the SSA’s decision.

The court pointed out that “in reviewing a plan administrator’s decision under the arbitrary and capricious standard, the federal courts are limited to the administrative record.” The general restriction would apply to any extra-record materials sought to be introduced that relate to a claimant’s eligibility for benefits. Because the SSA decision concerned Ms. Nelson’s eligibility for benefits Ms. Nelson was prohibited from introducing it.

In ERISA cases reviewed under the arbitrary and capricious standard of review, the reviewing court is limited to the administrative record. Claimants are restricted from introducing more information after the administrative record has closed, which typically occurs after appeals have been exhausted and a lawsuit is filed. The appeal is therefore the last chance to supplement the administrative record and anything relating to a claimant’s eligibility for benefits, including the SSA decision, cannot be introduced. This is usually the case even if the SSA decision is made after the record closes.

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