Plaintiffs seeking recovery of group disability benefits under ERISA-governed plans routinely argue that claim fiduciaries failed to adequately consider and/or account for decisions by the Social Security Administration (SSA) to award Social Security Disability Insurance (SSDI) benefits. As a result, federal courts are regularly tasked with evaluating the substance and sufficiency of discussions of SSDI awards (that are made a part of the administrative record) in adverse benefit determination letters.
Of course, “an ERISA plan fiduciary is not bound by an SSA disability determination when reviewing a claim for benefits under an ERISA plan.” Seiser v. UNUM Provident Corp., 135 Fed. App’x 794, 799 (6th Cir. 2005). Federal courts universally recognize that there are “critical differences between the Social Security disability program and ERISA benefit plans,” Black & Decker Disability Plan v. Nord, 538 U.S. 822, 832-833 (2003), resulting in “the eligibility criteria for Social Security benefits differ[ing] from the eligibility criteria under the Plan.” Burell v. Prudential Ins. Co. of Am., 820 F.3d 132, 139 (5th Cir. 2016). As the Tenth Circuit noted, SSA “proceedings are entirely different and separate from a claim under ERISA, with different parties, different evidentiary standards, and different bodies of law governing their outcomes.” Wagner-Harding v. Farmland Indus. Inc. Employee Ret. Plan, 26 Fed. App’x. 811, 816 (10th Cir. 2001). Consequently, plaintiffs may find themselves in scenarios in which the SSA approves SSDI benefits under a uniform set of federal criteria, while a claim fiduciary denies or terminates their private disability benefits under the unique terms and conditions of an employer-sponsored plan.
Courts often look to claim fiduciaries to identify some degree of consideration of SSA disability awards in their adverse benefit determinations when the SSA award was made a part of the administrative record. With respect to claims filed on or after April 1, 2018, the Department of Labor’s (DOL) ERISA claims procedure regulation requires that adverse benefit determination notifications set forth “a discussion of the decision, including an explanation of the basis for disagreeing with or not following … a disability determination regarding the claimant presented by the claimant to the plan made by the [SSA].” 29 C.F.R. §2560.503-1(g)(1)(vii)(A)(iii). With respect to claims filed prior to April 1, 2018 (which precede enactment of the foregoing regulatory mandate), federal courts have generally discouraged claim fiduciaries from altogether ignoring SSDI awards that were made a part of the administrative record, as the federal common law permitted courts to weigh a fiduciary’s failure to consider SSA awards as a factor in finding procedural unreasonableness. Metropolitan Life Insurance Co. v. Glenn, 554 U.S. 105, 118 (2008); see also Hobson v. Metro. Life Ins. Co., 574 F.3d 75, 92 (2d Cir. 2009) (“We encourage plan administrators, in denying benefits claims, to explain their reasons for determining that claimants are not disabled where the SSA arrived at the opposite conclusion: Doing so furthers ERISA’s goal of providing claimants with additional information to help them perfect their claims for subsequent appeals.”). Accordingly, plaintiffs have for years accused claim fiduciaries of not giving sufficient weight to SSA awards, or of failing to explain why a fiduciary’s conclusion differed from that of the SSA—an issue that potentially implicates the standard of review in actions to recover plan benefits under 29 U.S.C. § 1132(a)(1)(B).
The Third Circuit’s recent decision, Addington v. Senior Vice President Human Resources Consol Energy, Inc., et al., 2020 WL 7774952 (3d Cir. Dec. 30, 2020), offers clarification as to the scope of discussion necessary to distinguish a fiduciary’s adverse benefit determination from a favorable SSDI decision by the SSA—at least for claims filed prior to April 2018 and litigated within the Third Circuit.
In Addington, the Third Circuit ruled that a claim fiduciary’s statement “that its review [of the plaintiff’s claim] included vocational and medical assessments that were not considered by the SSA [Social Security Administration]” in awarding Social Security disability benefits was sufficient, and “did explain … why [the fiduciary] was taking a different position from the SSA.” Addington, 2020 WL 7774952, at *3.
The relevant text of the adverse benefit determination appeared in the lower court’s decision:
In our review of [Plaintiff’s] claim, Liberty Life did fully consider the Social Security Administration’s ruling to approve Social Security Disability Income benefits. It should be noted, however, that while we fully considered the Social Security Administration’s ruling, the decision by the Social Security Administration does not determine entitlement to benefits under the terms and conditions of the Consol Energy Inc.’s Group Disability Income Plan. Moreover, Liberty Life has obtained and considered medical and vocational assessments that were not considered by the Social Security Administration in its determination process.
Addington v. Senior Vice President-Human Res., Consol Energy, Inc., No. CV 17-444, 2019 WL 3416098, at *8 (W.D. Pa. Mar. 15, 2019), report and recommendation adopted, No. CV 17-444, 2019 WL 3414285 (W.D. Pa. July 29, 2019), aff’d, No. 19-2959, — Fed. Appx. —, 2020 WL 7774952 (3d Cir. Dec. 30, 2020).
Notably, in finding this explanation to be sufficiently detailed, the Third Circuit in Addington explicitly rejected the plaintiff’s argument that the fiduciary’s statements were mere “boilerplate language,” as well as his contention that the fiduciary acted arbitrarily and capriciously by ‘“fail[ing] to explain why it is taking a position different from the SSA.” Id. (quoting Bennett v. Kemper Nat. Servs., Inc., 514 F.3d 547, 554 (6th Cir. 2008)).
The sufficiency of fiduciary discussions of SSA awards in adverse benefit determinations will continue to be challenged in litigation, particularly with the DOL’s 2018 enactment of 29 C.F.R. §2560.503-1(g)(1)(vii)(A)(iii). While Addington’s applicability to this (relatively) new regulation is yet to be tested, the decision clarifies that, with respect to claims filed prior to April 2018, a fiduciary’s statement that its review “included vocational and medical assessments that were not considered by the SSA” constitutes a sufficiently detailed explanation for which a fiduciary should not be penalized or prejudiced when litigating in the Third Circuit.