By: Eric Buchanan, Chattanooga, Tennessee. eric@buchanandisability.com
If you regularly represent clients in social security disability claims, but do not regularly help your clients with LTD issues, there are several issues that you should be concerned about. Even though you may not be representing a client in an LTD claim, what you do on the social security case could have a significant effect on the ability of your client to win or keep LTD benefits.
1. Ask if your client has LTD coverage.
Surprisingly, some attorneys don’t even ask their clients if they are receiving long-term disability benefits, or if they have such a policy and need to apply, or if they have been denied.
If your clients have not applied for LTD, you should usually encourage them to do so. While there are offsets between social security and LTD, there are many advantages to a person applying for both types of benefits. Often, if the LTD claim is successful, those benefits come through much faster than many social security cases. Also, even though LTD benefits typically are offset for social security benefits, the LTD benefits do not offset for social security COLAs and usually do not offset for social security attorneys’ fees. Additionally, because many disabled people are in difficult financial situations, applying for both social security benefits and LTD benefits gives them two chances to get some income coming in. Also, in some, but not all, cases, employers provide certain collateral benefits to employees who are found disabled under a company LTD plan, such as continued health insurance, pension contributions, etc.
There are time limits that may limit a person’s ability to apply for LTD benefits, so if they are not thinking about applying, you can encourage them to do so. Also, sometimes our clients misunderstand, and think they have to win their social security cases before they can apply for LTD; this is almost never the case, and you can point that out to them.
If they have already applied for LTD and are receiving it, you should be aware of that, so that your representation in the social security case does not adversely affect the social security case, for one of the reasons I will explain below. Also, if your client is receiving LTD benefits, they may be mad at you when the LTD company wants a repayment when the person wins SSA benefits, if you don’t explain to the person up front what may happen.
If your client is denied LTD benefits, and you are not going to help them appeal that denial, you are still in a crucial position, because you can advise them about the importance of seeing an experienced LTD attorney as soon as possible, before they take any other action that might jeopardize the LTD claim.
2. Understand how amending the social security onset can affect your client’s LTD claim.
Even though a favorable social security decision is not binding on the LTD insurance company, a favorable decision is evidence that the LTD insurance company should consider. While it is very common for an LTD insurance company to deny the claim of someone who has been found disabled by the Social Security Administration, it is also common for LTD insurance companies to look for any ammunition they can find in a social security decision to support the denial of a claim.
One common argument LTD insurance companies use to deny a claim is when the person’s social security onset date does not match the date the person stopped work for the employer that provided LTD coverage.
LTD coverage is different from the concept of insured status for social security claims. In social security cases, a person can be covered under Title II of the Social Security Act for insured benefits if he or she becomes disabled whenever they have worked enough to earn credits for 20 out of the last 40 quarters; if the person works steadily, he or she is covered for five years after stopping work. Because of that rule, if a claimant is found disabled under the Social Security Act a year or two after they stop working, it is usually no big deal; they still get paid “insured” benefits.
However, most LTD policies only provide coverage while a person is working. The coverage usually ends the last day they work, or the first day after they stop working. Thus, to win LTD benefits, an LTD claimant must prove that he or she became disabled at the time he or she stopped working.
When the claimant amends his or her onset in a social security disability case to some date after he or she stopped working, this becomes ammunition for the LTD insurance company to argue that the person admitted he or she was not disabled until after LTD coverage ended.
3. Understand that many LTD policies limit benefits to 24 months, and sometimes even 12, for “mental and nervous” conditions, so you need to be careful over-emphasizing your client’s mental disability in the social security case.
LTD insurance companies look for any ammunition they can use to deny benefits, or to limit the benefits that are paid. Almost all LTD policies limit benefits if a disability is “caused or contributed to” by a mental or nervous disorder; typically, that limit is 24 months, but it can vary. Also, the language varies; sometimes the person can still be paid ongoing LTD benefits if he or she is disabled independently for a physical reason, while other policies allow the insurance company to argue that if mental impairments contribute even a small portion of limitations that make the person disabled, then the 24-month limit can apply. This is a frequent area of ERISA litigation.
Because of this common clause, if you are helping your client with a social security case, and you know the client is also receiving or applying for LTD benefits, you should be aware that overemphasizing mental limitations can help the insurance company limit benefits.
I also represent clients in social security cases, and I understand that it is our job as social security attorneys to zealously represent our clients and do the most we ethically can to help them win their benefits. But, I have also experienced cases where the social security decision-maker focuses on mental limitations as the easiest way to pay a claim.
My advice is to keep this issue in mind when your client has both an LTD case and a social security disability case. If you are fortunate enough to have a sympathetic ALJ, maybe you can explain this problem to the judge, so the judge can understand how important basing the decision on physical limitations can be. In any case, you should try your best to emphasize your client’s physical limitations.
4. Be aware how the LTD/social security offset works, so your clients are not mad at you if they are told they have to repay all of their social security benefits.
If your client has been receiving LTD benefits, the LTD insurance company will usually want to offset its payments for any social security benefits your client is paid, and will even want your client to pay back LTD benefits for past months, based on the amount the LTD insurance company will claim is “overpaid” once your client receives social security benefits.
Even if you are not representing your client in the LTD case, your client still might be calling you to ask some tough questions about whether he or she has to pay the LTD company back, and if he or she does, then why did he or she pursue the social security case in the first place.
If you are aware that your client is receiving LTD benefits, you can have a conversation with your client early on to explain how this will work, so they are not mad or surprised later.
Your advice can be very helpful to your client. For example, it is very common for LTD insurance companies to ask for all of your clients’ back social security money once it is received, but if you or your client asks, the insurance company will often agree not to try to recover the amount your client paid in social security attorneys’ fees, or expenses related to the social security case.
Additionally, there are some arguments that can be made that your client does not have to pay the money back at all. For example, the LTD insurance company can only collect from your client if the ERISA plan or insurance policy expressly allows them to do so, because an ERISA administrator’s only cause of action is to enforce the terms of the plan under ERISA § 502(a)(3) (29 U.S.C. § 1132(a)(3)). Also, there are arguments that your client cannot be forced to hand over social security benefits under 42 U.S.C. § 407.
5. Work with the LTD attorney if your client is denied LTD benefits.
If your client is denied LTD benefits, and you are not going to represent your client in that case, the best advice you can give your client is to talk to an LTD attorney as soon as possible. Because courts almost never allow new evidence to be submitted after the insurance company denies the claim on appeal, the most help an LTD attorney can give your client is during the appeals process before the insurance company.
Unless you are very comfortable appealing and litigating ERISA LTD cases, you should be very careful before giving the client advice or “helping out” a little by working on the case just enough to be involved without helping with your client’s full appeal. For example, one of the worst things an inexperienced attorney will do is to send an appeal letter to the insurance company asking them to change their mind, with little or no supporting evidence. Filing that appeal letter gives the insurance company permission to conduct their review and issue their next denial, which often ends the appeal process. Once the appeal process ends, the record closes. But, because the appeal is not well-supported with evidence, the record may not be adequate to take to court later. Do not appeal for your client unless you are willing to learn all the ins-and-outs of LTD work and are willing to work up the file and submit a full stack of medical records, opinions of restrictions and limitations, and other evidence of disability. But, at the same time, do not let your client miss an appeal deadline, because that can also be a reason that the client loses the case and has no right to appeal later, or ever take it to court.
You can also be very helpful to your client if you share your records and development with the LTD attorney and ask the LTD attorney to do the same for you. Typically, much of the development you do for the social security case will be helpful in the LTD case, and vice versa. If you obtain a good RFC or medical opinion form, share it with the LTD attorney. Conversely, ask the LTD attorney to share with you any good reports, letters, or sworn statements he or she obtains.
Also, it really helps if you can find out your client’s social security PIA and auxiliary benefits amount (if any) as soon as possible. Not only will this help you understand how much your client is fighting for in the social security case, but it also allows the LTD attorney to determine how much the net LTD benefits will be after the social security offset. Unfortunately, many LTD cases are reduced to such a small amount of net benefits that there is no practical way an attorney can afford to help with the LTD case.