Eleventh Circuit Decides ERISA Requires Consideration of SSA Application When Evaluating a Disability Claim

In Melech v. Life Insurance Company of North America, No. 12-14999 (Jan. 6, 2014) the Eleventh Circuit considered whether, under the Employee Retirement Income Act (“ERISA”) of 1974, 29 USC §§ 1001-1461, a life insurance company evaluating a disability claim may ignore the results of the Social Security Administration’s (“SSA”) decision on a disability claim once it initially determines that claimant provided insufficient evidence to support his/her claim under the company’s insurance policy.

The appellant submitted a claim for long-term disability benefits under her insurance policy with the Life Insurance Company of North America (“LINA”) when she was diagnosed with degenerative disc disease in her cervical spine.  Pursuant to her policy, appellant also applied for Social Security Disability Income with the SSA that same month. A few months later, LINA denied the appellant’s claim while her claim with the SSA was still pending. The SSA later granted the appellant’s application after asking the appellant to visit two new physicians. The appellant informed LINA of this, however LINA denied two administrative appeals without considering the SSA’s decision or any evidence relating to the decision.

The Eleventh Circuit held that, under ERISA, LINA had an obligation to consider the evidence presented to the SSA in evaluating the appellant’s claim. One important reason for this conclusion was that applicants were required to apply for disability income with the SSA under LINA’s policy. However, LINA only considered the SSA application when it served their interests and ignored any evidence relating to the application when it did not. Also, LINA’s approach was procedurally unfair because it failed to meet the requirement that an administrator’s decision to deny benefits be made upon a complete administrative record when it basing its decision on a record not containing the information from the appellant’s SSA file.

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