Supreme Court Declines Review Of How Much Weight To Give To SSA Disability Determinations When Insurers Make Benefit Determinations

The U.S. Supreme Court has denied an insured’s request for review of whether it is “procedurally unreasonable” not to give weight to the disability determination by the Social Security Administration (SSA) when the disability standards employed by the agency and the long-term disability insurance plan administrator are functionally equivalent. The case is Nugent v. Aetna Life Insurance Company (Docket No. 13-1182).

Background. Susan Nugent had received long-term disability benefits for her colorectal cancer and the residual effects of the disease and surgery from the Aetna Life Insurance Company, which provided the disability coverage as an employer-sponsored plan. During her period of disability, the insurer encouraged and assisted Nugent in applying for Social Security Disability insurance (SSDI) benefits. Aetna was able to reduce its benefit payment by the amount of SSDI benefits Nugent received. Aetna terminated her benefits after two years, concluding that she no longer met the definition of “disabled.” Nugent filed a lawsuit against the insurer, but the trial court ruled that the insurer’s determination was not arbitrary or capricious.

Definitions of disability. The Aetna plan defined a long-term disability, as it applied to Nugent, as being “not able to work at any reasonable occupation solely because of: disease; of injury.”

The SSA definition of disability is: “Inability to engage in any substantial gainful activity by reason of any medical, determinable, physical or mental impairment or combination of impairments that can be expected to result in death or that has lasted or can be expected to last for a continuous period but not less than twelve months.”

Fifth Circuit ruling. Nugent appealed the trial court’s ruling, but the Fifth Circuit affirmed the determination. The appellate court stated that Nugent’s argument contained “two fatal flaws”: (1) that the appellate court only requires that a claim administrator address a contrary SSA decision as a factor; and (2) that the insurer afforded the SSA determination little weight because of the technical differences between the insurer’s and SSA’s definitions of “disabled.”

Case law in the Fifth Circuit held that a plan administrator must address an SSA disability determination in its own benefits evaluation and failure to do so renders the administrator’s determination “procedurally unreasonable.” However, plan administrators are not obligated to afford the SSA determination any specific weight and may conclude, after considering the SSA determination, that medical evidence supporting a benefits denial is more credible.

The Fifth Circuit explained that Aetna’s termination of benefits was based on Nugent’s cancer being in remission and her overall improved condition. Nugent argued that she still suffered from neuropathy from the chemotherapy, but the Fifth Circtui concluded that that information made the determination debatable—not arbitrary and capricious. The Fifth Circuit also pointed out that the SSA determination was based on older medical evidence of Nugent and, thus, her suggestion that the insurer’s termination was based on the difference in “disability” definitions ignored the fact that there was ample evidence to show that the SSA determination did not reflect Nugent’s condition at the time Aetna terminated benefits.

Petition for certiorari. Nugent, in her petition for certiorari to the U.S. Supreme Court, argued that the precedent upon which the Fifth Circuit based its ruling was not consistent with the Supreme Court’s decision in Metropolitan Life Insurance Company v. Glenn and asked the High Court to provide guidance as to whether ERISA plan administrators should be required to afford significant weight to SSA determinations when the SSA standards are more stringent or are functionally equivalent to an employer-sponsored long-term disability insurance plan’s definition of “disability.”

Nugent argued that the SSA’s finding of disability was highly probative as to her eligibility of long-term disability benefits under Aetna’s policy because the definition used by SSA is stricter than that used by Aetna. She asserted that it was procedurally unreasonable for Aetna to hold the position that its policy required a higher degree of disability than that of the Social Security Administration in light of the fact that the definition used by SSA is stricter than that used by Aetna. Nugent maintained that the terms of the SSA definition are consistent with those of the Aetna policy, yet Aetna provided no specifics as to why the standards are different or conducted its own vocational opinion. Nugent acknowledged that her cancer was in remission, but contended that there was no medical evidence that her residual functional capacity—for which she was granted SSDI—has improved.

According to Nugent, as supported by the evidence in the record, Aetna’s structural conflict of interest motivated the benefits termination. Nugent asserted that Aetna took inconsistent positions regarding the SSA disability determination to receive credit for benefits it paid to Nugent, but used the artificial distinction in disability standards to justify its termination of benefits. The Fifth Circuit’s “wooden” application of its precedent that no particular weight be given the SSA’s disability determination and the appellate court’s refusal to assess whether the disability standards were either “functionally equivalent,” or that the SSA standard was more stringent, was not consistent with Glenn or the Seventh Circuit ruling on point with the case at bar that interpreted Glenn.

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