Is Social Security Disability Relevant When Making a Long-Term Disability Claim Under ERISA?

Social Security disability and disability under a long- or short-term disability policy are not the same. To receive Social Security disability benefits, an individual must have worked jobs covered by Social Security and have a medical condition that meets Social Security’s strict definition of disability. However, under an ERISA disability benefit plan, whether an employee is disabled depends on whether they meet the definition of disability as defined in the plan. 

An employee recently sued her long-term disability insurer, Prudential, because the insurer wrongfully denied her disability benefits.  See Logan v. Prudential Ins. Co., No. 2:20-01742, 2022 WL 16836642 (E.D.Cal. Nov. 9, 2022).  In Logan, an employee, a claims adjuster, injured her ankle and knee after falling off a ladder. Her doctor concluded that due to the severity of her injury and her limitations, she was unable to spend extended time sitting, standing, walking, driving or working.  This was a problem because as a claims adjuster, the employee sat for long periods of time and had to travel to attend mediations, settlement conferences, client meetings and trials. 

Prudential denied the employee’s claim, arguing that the employee may have needed time off from work for a limited amount of time, but eventually the employee should return to work. After filing a lawsuit, a federal judge reviewed the record evidence to determine if the employee was disabled under the Prudential policy.

One of the issues the court had to decide was whether it could consider a letter from the Social Security administration confirming that the employee had been awarded Social Security disability benefits. Prudential argued that the letter should not be part of the record considered by the court and the court agreed with Prudential. Significantly, despite ruling it would not consider the Social Security letter, the court nevertheless ruled in favor of the employee and found she was entitled to disability benefits under her employer’s plan. 

The court explained that it was not necessary to consider the Social Security letter. The letter did not provide additional information regarding the employee’s condition or treatment, nor does it explain the evidence the Social Security Administration considered or explain the basis for the Administration’s decision. The court did note, however, that Social Security decisions may be relevant in other situations. Scenarios such as when a court considered the findings of an administrative law judge who, when considering Social Security benefits, heard testimony from the claimant, evaluated the medical record and then made “a well-reasoned disability determination.”

The court also noted other cases where courts have relied on the findings of the Social Security Administration even though the Administration’s definition of disability may differ from, and was not binding on, the underlying ERISA disability plan. 

This decision highlights an important issue. Social Security Disability Insurance benefit decisions are not binding on ERISA insurers; however, in certain situations, courts may consider the Social Security benefit determination if doing so is relevant to the pending case.