It’s not unusual for a long-term disability insurance company to ask a claimant to apply for Social Security Disability Income (SSDI) benefits. Why? When claimants receive SSDI benefit payments, the disability insurance company will offset the monthly benefit payment paid to the claimant by the amount of money the claimant receives from SSDI.
Most disability insurance companies hire a third-party to help the claimant obtain SSDI – especially if the claimant is experiencing difficulty obtaining Social Security disability income benefits alone.
In what appears the win–win–win situation for the claimant, the ultimate winner is the disability insurance company because they end up saving money in this well-calculated business decision.
Here is an example of what can happen.
Due to unspecified disabling conditions that precluded her from working on her own and, presumably, any occupation, Anita James of Kentucky was able to receive the maximum amount of short-term disability benefit payments from Prudential Insurance Company of America (Prudential). Ms. James also received long-term disability benefit payments during the first two years of her being completely and totally disabled. After that, however, Prudential terminated Ms. James’ disability benefit payments.
With the help of a Kentucky disability lawyer, Ms. James filed a civil complaint against Prudential in United States District Court in the Western District of Kentucky, the Louisville Division for terminating her long-term disability benefits governed by ERISA.
Under the terms of the policy, if the claimant is approved for Social Security disability income, Prudential can subtract the amount the claimant receives as SSDI from the amount Prudential pays in disability benefit payments to the claimant. In Ms. James’ case, Prudential hired and paid a company named Allsup, whose main focus is to assist disability claimants with SSDI claims, to obtain SSD I benefits for her stating, "[she] was totally disabled from any gainful occupation."
According to the civil complaint, "Prudential compensated Allsup for obtaining the SSDI benefit (which resulted in a reduction in Prudential’s LTD benefit payments to Ms. James – the substantial financial savings) and for obtaining reimbursement of prior LTD payments (which resulted in an additional financial windfall to Prudential)."
Shortly after receiving SSDI Benefits, Prudential decided to terminate Ms. James’ long-term disability benefit payments. This comes on the heels of Allsup successfully obtaining Social Security disability income payments for Ms. James at Prudential’s request.
Prudential’s decision to terminate Ms. James’ LTD benefit payments, according to Ms. James and her disability lawyer, stemmed from "Prudential’s internal policy of requiring claims personnel to follow the recommendations of its own physician recommendations, without regard to the participants treating physicians, precludes any participant from receiving a full and fair review."
In conjunction with that conclusion, Ms. James and her disability lawyer state that Prudential:
- disregarded the recommendations of Ms. James’ treating physicians, Allsup, Social Security findings, and Ms. James’ medical records
- did not question the recommendation of medical experts who did not examine Ms. James
- gives claims personnel incentives foreclosing claims including terminating LTD benefits
- enjoyed and benefited from the financial gain from the reimbursement of Ms. James’ long-term disability benefit payments to them
- employs these practices regularly
For her relief, Ms. James seeks the following:
- for Prudential to disgorge itself of all profits gained on the long-term disability benefit payments
- long-term disability benefit payments she is due under the terms of the policy
- prejudgment interest
- attorney’s fees
- all other costs associated with litigation
About the author: Gregory Michael Dell is an attorney and managing partner of the disability income division of Attorneys Dell & Schaefer. Mr. Dell and his team of lawyers have assisted thousands of long-term disability claimants with their claims against every major disability insurance company. To request a free legal consultation call 800-411-9085.