Monday, March 28, 2016

Study Suggests Changes to Representative Payee System

As a Social Security Disability Lawyer I have handled many cases in which the relatives of the disabled person have asked that a family member be appointed to manage the claimant's funds.  This request is usually made because the relatives feel that the claimant's disabling condition prevents him or her from adequately managing their benefits.  A person who is appointed to receive and manage the funds of a claimant is called "a representative payee". 
Unfortunately, there appears to be no clear cut rule used to appoint a representative payee.   For example, there are no effective guidelines used to determine whether a person can manage his or her funds or whether the third party being appointed is trustworthy and knowledgeable enough to do the job properly.  Just a few days ago, a study from the Institute of Medicine of the National Academies of Sciences, Engineering and Medicines raised concerns about the manner in which the Social Security Administration is handling the representative payee process.  (For a copy of the report click here.)  
At present time, approximately 3.5 million of the 16 million adults receiving SSDI benefits have a representative payee.  The report found that too few beneficiaries have a representative payee to ensure that funds are used properly.  Other problems were also identified, for example the report found that in some cases beneficiaries who receive both SSI and SSDI have a representative for one program but not the other.  Consequently, the study recommends that new rules be implemented by the Social Security Administration regarding the representative payee program. 

Monday, March 21, 2016

1st Circuit: LTD Denial Letters Must State Time Period to File Suit

Last week, the First Circuit Court of Appeals held that a plan administrator must include the time period for filing a lawsuit in its denial of benefits letter.  In Santana-Díaz v. Metro. Life Ins. Co., 2016 U.S. App. LEXIS 4670 (1st Cir. P.R. Mar. 14, 2016, a disability claimant failed to commence a legal action within the three year limitation period set forth in the long term disability policy.  The final termination of benefits letter sent to the claimant made him aware that he had the right to bring legal action but did not specify the time period to file the lawsuit.  The Court of Appeals held that Defendant MetLife's failure to state the specific time period in the letter violated the requirements of ERISA regulations.  (29 C.F.R. § 2560.503-1(g)(1)(iv)).
Furthermore, the Court held that due to MetLife's failure the comply with ERISA regulations, the three year limitation period was inapplicable to Mr. Santana-Diaz's claim.  The Court of Appeals was not persuaded by MetLife's argument that the plaintiff had received notice of the three year limitation period by receiving a copy of the disability policy.  The First Circuit's decision is consistent with opinions from the Third and Sixth Circuit Court of Appeals.  See Mirza v. Insurance Administrator of America, Inc., 800 F.3d 129 (3d Cir. 2015) and  Moyer v. Metropolitan Life Insurance Co., 762 F.3d 503 (6th Cir. 2014).
Interestingly, in the District of Connecticut, Judge Janet Bond Arterton appears to have issued a decision which is contrary to Santana-Diaz, Mirza and Moyer.  See Heimeshoff v. Hartford Life& Accident Ins. Co., 2012 U.S. Dist. LEXIS 6882, 2012 WL 171325 (D. Conn.Jan. 16, 2012).  (Note that Connecticut is within the Second Circuit Court of Appeals.)  Judge Arterton held that even though the Hartford failed to state in the denial letter that there was a three year limitation for filing a lawsuit, the limitation period applied because it was stated in the summary plan description documents. 

Monday, March 14, 2016

Social Security Presents "CARES" Initiative to Reduce Disability Case Backlog

The number of disability claimants waiting for a hearing before an Administrative Law Judge (ALJ) has now reached 1.1 million.  By the end of 2015, the average waiting time for a hearing was 512 days.  Just a few weeks ago, the SSA's Office of Disability Adjudication and Review (ODAR) unveiled a new plan to help alleviate this backlog.  The plan has been called "Compassionate And REsponsive Service (CARES).  If successful, the SSA believes that CARES will reduce average processing times to 270 days.
One major problem with CARES is that it will only be successful if Congress provides the SSA with the funding needed to implement it.  Nonetheless, even if CARES is implemented, the backlog will not be reduced in the near future.  It is expected the backlog will continue to climb in 2016.
Many a the initiatives of the CARES plan have been used before.  Here is a summary of some of the components of CARES:
  • Hire more ALJ's and ODAR staff.
  • Use Administrative Appeal Judges (AAJ's) instead of ALJ's to decide non-disability cases such as over payment appeals and claims involving retirees and survivors.
  • Expanding the teams of agency lawyers who pull cases from around the country to consider them for favorable on the record decisions.  
  • Have more pre-hearing conferences with senior attorneys from ODAR.
  • Provide "More Robust Case Screening" of cases that have a high probability of favorable decisions.  Apparently, under this part of the plan, cases will be sent back to DDS for additional review.  The SSA has given very few specifics about this part of the plan.
  •  Create more hearing office space, particularly for video hearings.   
  • Allow claimants to file electronic appeals to the Appeals Council. 
Of all the proposals made in the plan, the only one that will make a significant impact is the initiative to have more agency lawyers pull cases from around the country to consider them for fully favorable decisions.  This initiative worked well in the past but for reasons that are not entirely clear, it was discontinued.   

Monday, March 7, 2016

The Obligation to Exhaust Administrative Remedies in ERISA LTD Lawsuits

Once your Long Term Disability clam is denied, you have a period of 180 days to file an administrative appeal.  If your disability plan is governed by the Employment Retirement Income Security Act of 1974 ("ERISA"), the denial letter that you have received, --in all likely hood--, states that you must file an appeal within this time period.  It is imperative that you complete this appeal, otherwise you will loose your right to contest the denial.  
The legal principle that requires you to file an administrative appeal before being able to go to court is known as the "Exhaustion of Remedies" doctrine.  In essence, this doctrine precludes a party from contesting a matter in court until the issue in dispute has been presented before at a lower administrative forum.  Very recently, the 5th Circuit Court of Appeals had the opportunity to consider an ERISA LTD case dealing with this doctrine.  In Moss v. Unum, (Click here for a copy of the unpublished decision.), the Court of Appeals considered whether a phone call from a claimant's lawyer to a disability insurance company (Unum) was sufficient to constitute an exhaustion of administrative remedies. According to the decision, the claimant's attorney called Unum and verbally informed them that he disagreed with their decision to deny his client benefits.  However, he did not file a formal written appeal.  Instead, shortly thereafter, he filed a lawsuit.  
The 5th Circuit ruled that the telephone call to Unum did not constitute an administrative appeal. Furthermore, the Court explained: "[A]llowing informal attempts to substitute for the formal claims procedure would frustrate the primary purpose of the exhaustion requirement."  
Moss v. Unum, shows the importance of writing a formal appeal letter in an ERISA LTD case. Although, it is possible that other Circuit Courts may allow for more informal appeal methods such as a phone call, it is never a good idea for a claimant to take any risks when filing an administrative appeal.  
The plaintiff in Moss also argued that an administrative appeal in his case was not required because the denial letter stated: "Unless there are special circumstances, the administrative appeal process must be completed before you begin legal action..."  Moss argued that since there had been bad faith by Unum in denying the claim, the "bad faith" constituted "special circumstances".  The Court rejected this argument also.  It stated that under such an argument virtually anyone could make a claim of bad faith and circumvent the requirement of filing an administrative appeal.