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Differences: SSDI and LTD

LTD & ERISA Lawyers: Riverside, Orange & San Bernardino Counties

Differences and Similarities Between SSDI and ERISA

There are some similarities and some important differences between the long-term disability (LTD) provisions under the Social Security Act (SSA) and an-employer-provided group long-term disability plan (ERISA).

Similarities Between the Two Programs

The first similarity is that the SSA and ERISA are both important, comprehensive, and long-standing federal programs that were established to protect the rights of disabled workers, when they could no longer work.

Another similarity is that the disability claims, whether they are paid by Social Security Disability (SSDI) or by ERISA plans, frequently arise out of the same set of medical facts and findings. In other words, the medical records that are used to determine your entitlement to SSDI benefits are frequently the same medical records that are used to determine your eligibility for disability benefits under an ERISA plan.

There may also be some similarity in the definitions of “disability” used by SSDI and an ERISA plan, as to “your own occupation” or “any other occupation,” for which you are reasonably suited by education, training or experience. However, there may be important differences in the definitions or in how these definitions are applied.

Entitlement to long-term disability benefits, under both SSDI and ERISA, is determined administratively, which means that the documentation in your medical records (the “administrative record”) will determine whether you are entitled to disability benefits. Extrinsic evidence (outside the administrative record) is generally not allowed (except in certain limited circumstances) in both SSDI and ERISA cases.

Discovery of evidence, by deposition, interrogatories, request for admissions, or by way of a demand for documents, is typically not allowed in either SSDI or ERISA cases.

Deadlines are very strictly enforced in both SSDI and ERISA claims. If you miss a “drop dead” deadline, you are generally out of luck and may lose your opportunity to purse your disability claim.

With both SSDI and ERISA, you give up your Seventh Amendment right to a jury trial. Your right to LTD benefits will be decided by a judge. In the case of SSDI claims, it's an Administrative Law Judge (ALJ) that adjudicates the claim, and in an ERISA case, it's a federal district court judge (“bench trial”).

In either case, a judge is the trier of fact, and he/she adjudicates your claim based on what's in your administrative record.

If you receive a denial of benefits, you may appeal. In SSDI cases, you may appeal to the Appeals Council, and if you are unsuccessful, you may further appeal to the federal district court, the federal court of appeals, and (in theory) up to the United States Supreme Court. In ERISA cases, you similarly have the right to appeal your benefit-denial decision to the federal court of appeals and to the United States Supreme Court.

Differences Between the Two Programs

An immediate difference between SSDI and ERISA is that in ERISA cases, there is a private insurance company that determines and pays benefits. In SSDI cases, it's the federal government. The federal government may be more objective or “fair” in deciding your disability claim than a private insurance company, which has an inherent conflict of interest when it simultaneously decides and pays claims.

Another important difference is that SSDI cases are non-adversarial, while ERISA claims are aggressively and vigorously defended by the insurer. For example, during an ALJ hearing, an ALJ may call in a “consultative physician” to clarify the medical issues involved in the claim, but not for the purpose of advocacy. On the other hand, in an ERISA claim, the insurance carrier defending the claim, often hires highly experienced doctors and pays them handsomely to prepare comprehensive reports as to why a claimant is not disabled and not entitled to benefits.

In accordance with the non-adversarial nature of an SSDI claim, while a claimant in an SSDI case may have an attorney prepare the claim and represent the claimant at an ALJ hearing, the government in SSDI cases does not employ attorneys during the administrative phase, and there is no government attorney that will be present at an ALJ hearing.

This is in sharp contrast to ERISA claims, where highly experienced attorneys represent the insurance carrier and can be expected to be zealous advocates for the insurer.

While the playing field is pretty “level” in SSDI cases, it is not at all level in an ERISA case. For example, at an ALJ hearing, the standard of proof in an SSDI case is a “preponderance of the evidence” standard, which means that if an ALJ determines the evidence in favor of granting a disability award outweighs the evidence against it, then the ALJ will grant benefits.

On the other hand, the standard of proof in an ERISA case is an “abuse of discretion” standard, which means a judge cannot reverse an insurer's benefit denial decision, absent a definite and firm conviction that the insurer committed a clear error of judgment. The court must give “deference” to the insurer's decision, which will not be overturned unless there has been an “abuse of discretion” or the decision is found to be “arbitrary and capricious.”

Accordingly, an insurer's benefit denial decision may be factually “wrong,” but so long as it is not “unreasonable,” meaning it is not an “abuse of discretion” or “arbitrary and capricious,” the court will uphold it and refuse to overturn it.

In an ERISA case, a denial of benefits must be supported by “substantial evidence,” which the court has defined is the sort of evidence that a reasonable mind would accept as sufficient to support a conclusion. Adamson v. Unum Life Ins. Co. of America, 455 F.3d 1209, 1212 (10thCir. 2006). Courts have held that the “substantial evidence” test is a higher standard and more difficult to meet than a “preponderance of the evidence” standard.

However, there is hope that new legislation will help level the playing field in ERISA cases in the form of California Insurance Code § 10110.6 that prohibits discretionary clauses in long-term disability plans, which the court in Orzechowski v. Boeing Co. Non-Union LTD Plan, No. 14-55919, 856 F.3d 686 (9th Cir. 2017) held applied equally to ERISA cases. [See: “Discretionary Clauses After Cal. Ins. Code § 10110.6.”]

In ERISA cases, in lieu of litigation, claimants and insurers can settle, often through mediation. However, there are no “settlements” available to claimants for SSDI benefits.

Another difference between SSDI and ERISA claims is that when an attorney refers a client to a doctor for evaluation or treatment, under 20 C.F.R. Section 404.1740(b)(5), that attorney must disclose the nature of the referral to the Social Security Administration, if the referral is "to a doctor who provided an opinion on the claimant's abilities and limitations." This disclosure could be construed by the ALJ as calling into question the objectivity of the doctor and his/her opinion. ERISA does not require a similar disclosure.  

A grant of SSDI benefits does not automatically entitle you to LTD benefits under an ERISA plan, and vice versa. That's because the criteria for disability benefits can be different between Social Security and the ERISA plan. Accordingly, courts have held, as in Black & Decker Disability Plan v. Nord, 538 U.S. 822 (2003), that a determination by the Social Security Administration to approve disability benefits was not binding on the long-term disability plan's benefit decision.

While under Nord, a favorable SSA determination is not binding, it should not be ignored, and it is certainly relevant to a plan's decision whether to award disability benefits. In other words, the SSA's determination should at least be considered by the plan in making its own benefit decision.

Under an ERISA policy, there is usually a 2-year Mental Illness limitations clause that limits paying benefits to no more than two years for disability based on emotional, psychological, or psychiatric conditions. Accordingly, an ERISA insurance carrier may try to limit disability benefits to only 2 years by claiming that they fit the definition of a Mental Illness exclusion in the policy. However, under SSDI, there is no Mental Illness limitation for disability based on emotional, psychological, or psychiatric conditions. An applicant who is applying for SSDI benefits need not be concerned that his/her SSDI benefits will be terminated in 2-years. SSDI benefits for emotional, psychological, or psychiatric disability continue if the applicant remains disabled.

How We Can Help

Our medical experts will review your case and get to know the variations of your condition. This translates into helping the legal experts know how to argue your case and fight for the benefits you deserve.