In August of 2019, the next of kin for a man currently incarcerated in Florida State Prison reached out to our firm as his relative had been denied receipt of continued long term disability benefits. As it turns out, the imprisoned individual had been receiving Long Term Disability (LTD) Insurance Benefits since October 7, 1994 from Aetna and later Hartford (as Hartford purchased Aetna’s Group Life and Disability Insurance business in 2017) due to a myriad of reasons including bipolar disorder, chronic fatigue syndrome, chronic pain, HIV diagnosis (and related conditions) as well as cognitive issues. With these issues, in 1994 Aetna/Hartford found this individual to be disabled and benefits continued through July of 2019.
SSDI Benefits Were Approved and Offset by Hartford
During the pendency of his claim, an interesting thing happened. As one can expect, after being approved for LTD benefits, Aetna/Hartford required that the disabled man apply for Social Security Disability Income (SSDI) Benefits. Following the terms of the policy, the disabled man applied for and was ultimately approved for SSDI benefits by the Social Security Administration. Following approval of SSDI benefits, Aetna/Hartford rightfully offset the SSDI benefits and correctly paid the disabled man at a reduced amount due to his receipt of the SSDI income. This is typical of most group LTD policies.
In 2008, the disabled man was convicted of a crime and sentenced to life in prison. While the governing LTD policy with Aetna/Hartford did not contain any language preventing the disabled individual from continuing to receive LTD benefit from Aetna/Hartford despite his incarceration, the Social Security Administration stopped paying benefits as SSDI benefits are not payable if a person is convicted of a criminal offense and sent to jail or prison for more than 30 continuous days. As such, the disabled man’s LTD benefits with Aetna/ Hartford continued while his receipt of SSDI benefits ended.
Hartford Fails to Stop Offsetting for Benefits He Was Not Receiving
Following the termination of his receipt of SSDI benefits, Hartford was eventually notified of such (as far back as 2015) and the disabled man requested that Hartford once again pay the full gross monthly benefit as the SSDI benefit should no longer be an offset. The man argued this as the terms of the governing policy did not allow Hartford to offset for benefits he was not receiving.
In July of 2017, a Director at Aetna/Hartford stated that she had “discussed this matter with our legal team and since the contract does not mention incarceration as an exclusion to ongoing payment, we should continue to issue benefits. Also, we should calculate any underpayment due to SS (social security) and issue that amount to EE (the claimant).”
Following this decision by the Director, Aetna/Hartford then stated that it required a letter from the Social Security Administration showing that the receipt of SSDI benefits had ceased and why. Why this information was needed is unknown as it a known rule of SSA to not pay benefits of incarcerated individuals. The requirement of a letter from SSA certainly seemed like a stall tactic.
Eventually, on May 24, 2018, Aetna/Hartford did receive a correspondence from the Social Security Administration (SSA) dated July 14, 2008 which stated that the SSA could not pay the claimant because he was “imprisoned for the conviction of a crime.”
This letter provided that Aetna/Hartford had incorrectly reduced the amount it had paid since July 2008 through 2018. It also meant that Aetna/Hartford owed a lot of money to the disabled man.
Hartford Agrees to Stop Withholding but Fails to Pay Previously Improperly Withheld Benefits
Three months after receiving the July 14, 2008 correspondence from the SSA, Hartford agreed to remove the ongoing SSDI offset for the period of September 2018 forward, but stated that it needed further time to review for any potential underpayment owed to the claimant.
Unfortunately, prior to Hartford making a decision on any underpayment being owed due to the imprisoned man, Hartford made a determination that the claimant was no longer disabled under the terms of the policy. This was conveyed via a July 26, 2019 denial letter. In this letter, Hartford stated that it had “terminated benefits effective 07/27/2019 and your Social Security offset will remain in place.” Yes, following nearly 25 years of finding the man to be disabled, Hartford had now made the determination that he had recovered and was now able to work. Thus it had denied his further receipt of LTD benefits. Furthermore, in the denial letter, Hartford stated that the man’s “Social Security benefits are still available under the Social Security Act; however they are not being paid… Therefore, the Social Security benefits available under the Social Security Act are being offset from your LTD benefits.”
Thus, Hartford denied further receipt of LTD benefit and refused to repay wrongfully withheld benefits for the period of July 2008 through August 2018. 121 months of under payment…
Following this denial, the friends and family of the disabled man reached out to our firm and spoke with Attorney Alexander Palamara. Hearing the history of the claim and Hartford’s refusal to pay back the overpayment owed made Attorney Palamara skeptical of Hartford’s rationales for denying the claim and failing to pay back a large sum of money owed.
Administrative Appeal was Timely Filed
Following a review of the administrative record provided by Hartford as well as updated medical documentation regarding the claimant, a timely appeal was filed challenging Hartford’s previous decision to deny additional benefits and refusal to pay the underpayment owed. The appeal pointed to the history of the claim and updated records showing that the claimant had not recovered. Furthermore, arguments were made utilizing the terms of the governing policy to show that Hartford improperly offset money and owed a sizeable amount of money from 2008 through 2018.
Hartford Agrees that it Improperly Withheld Money
Within 90 days of our appeal being filed, Hartford sent a letter indicating that it was agreeing with its earlier decision to deny benefits beyond July 2019. Somehow Hartford still concluded that the claimant was not disabled under the terms of the policy. A lawsuit will be filed to challenge this incorrect decision.
Fortunately, our appeal did have a level of success. Following our appeal and arguments with policy language, Hartford has agreed that “the plan language does not support the continued reduction of (the claimant” LTD benefits for SSD beginning July 1, 2008. His claim is being returned to operations for processing of this underpayment.” Thus, Hartford has agreed to pay the sizeable underpayment owed. The claimant’s family is ecstatic about this especially in light of the challenging economic times we find ourselves in due to the Covid-19 pandemic. Although the claimant and his family are disappointed that continued benefits are not yet being paid, they are confident that Dell & Schaefer and Attorney Palamara will do whatever it takes to win the lawsuit against Hartford.
If Hartford or any insurance company has improperly offset your long term disability benefit, please do not hesitate to contact Attorney Palamara and Dell & Schaefer for a free consultation.