Robinson v. Aetna Life Ins. Co – Qualifying for LTD Benefits

Robinson v. Aetna Life Ins. Co., 2021 WL 4206785 (N.D. Ill. September 15, 2021).  Some disability plans require plaintiffs to receive Social Security benefits within 24 months of initially qualifying for long-term disability benefits or no further benefits are payable. This ruling, obtained by DeBofsky attorneys William Reynolds and Matthew Maloney, addressed such a plan.

The plaintiff, Laverne Robinson, alleged she was disabled due to severe cardiovascular impairments for which she had undergone multiple surgeries.  Robinson claimed her condition required her to stop working for Mondelez as a machine operator in April 2016; and she was unable to resume work in any capacity after that date. Despite the severity of her condition, although she received short-term disability benefits and long-term disability benefits for the next 24 months, additional benefit payments were denied based on the following provision:

After 30 Months of Disability

“Any Occupation” Disability (applies after the end of the “Own Occupation” disability period)

After you have been determined by the [Disability Claims Administrator (DCA), here Aetna] to have been disabled under the LTD Plan for 30 months, (the 6 month [STD] period followed by the initial 24 months of LTD) you will be considered disabled for LTD Plan purposes if, due to a physical impairment caused by an Injury or Sickness the DCA determines that:

  • You are continuously unable to engage in Any Occupation that provides you with a salary of at least 60% of your Pre-Disability Earnings, and exists within your geographic area

AND

  • You are not Gainfully Employed, except for partial disability or rehabilitative employment for which you have Disability Earnings AND
  • You must be receiving Social Security Disability Income (SSDI) benefits by the end of the 24th month of LTD in order to be considered disabled beyond the first 24 months of LTD.

Although Robinson had made a timely application for SSDI benefits, her application remained pending when her long-term disability benefits ran out, although she ultimately qualified for benefits retroactive to when she stopped working.

After Robinson initially filed for Social Security disability benefits, Aetna referred her file to a vendor, Allsup, to see if they would represent her.  Allsup declined, but Aetna did not notify Robinson of that fact after she advised Aetna that she had applied for benefits on her own.  Later, however, Allsup agreed to represent Robinson and assisted her in filing a new application for benefits.  While that claim was pending before the Social Security Administration, though, Aetna notified the plaintiff that her benefits were expiring.  Despite multiple requests by Robinson to toll her appeals pending the outcome of her Social Security disability claim, Aetna refused and upheld the benefit denial since Robinson failed to qualify for SSDI benefits before her LTD benefits expired.

Robinson then filed suit claiming an entitlement to benefits and also alleging that Aetna breached its fiduciary duties by not giving her adequate time to obtain a Social Security determination and by refusing to reopen her claim when the retroactive Social Security award was issued.  The defendants (Aetna and Mondelez) moved to dismiss the case on the ground that Robinson failed to meet the requirement that she be approved to receive SSDI before her benefits expired.  The court denied the motion to dismiss.

While the court acknowledged that the terms of an ERISA-governed plan are generally required to be enforced as written, the court found the terms ambiguous because the requirement that a claimant “must be receiving” SSDI when benefits expire, “[t]he provision is silent as to the effect of retroactive SSDI awards on eligibility for LTD benefits.” The court concluded that even under a deferential standard of review, the “Defendants’ interpretation of the Plan’s eligibility requirements for LTD benefits was not reasonable” because it “would deny Plaintiff benefits to which she was otherwise entitled for a reason over which she had no control: the fact that the SSA took more than 24 months to process her claim.” Thus, the court concluded that while “the Plan’s terms make receipt of SSDI benefits dispositive, plan administrators may not turn a blind eye to a favorable award that comes after the Plan’s file is closed.”

The court also addressed the plaintiff’s argument that her appeal should have been tolled pending the outcome of the Social Security proceedings.  While the tolling provisions in the ERISA claim regulations give plan administrators the right to toll a decision on appeal while awaiting additional information rather than permitting the claimant to seek tolling, the court was troubled by Aetna’s conduct.  The court found the plan administrator is not barred from “waiv[ing[a claimant is unable to meet.”  Without deciding whether “administrators have a fiduciary duty to toll deadlines indefinitely pending a disability determination from the SSA,” the court ruled the retroactive award from Social Security satisfied the plan requirement.

The court also rejected the defendants’ argument that Robinson’s claim was time-barred because it was not filed within one year after her appeal was denied.  The court agreed with the plaintiff that the time limitation was tolled while Robinson pursued voluntary appeals that were offered to her based on the ERISA regulation that states “any statute of limitations or other defense based on timeliness is tolled during the time that any such voluntary appeal is pending.” 29 C.F.R. § 2560.503-1(c)(3)(ii).  The court did, however, find that Mondelez was not a proper party and dismissed it from the lawsuit.

Discussion: The court’s ruling appropriately recognized that provisions requiring Social Security approval, such as the one in this plan, are problematic.  Since Social Security disability claim proceedings could take years, the court’s reading of the plan to deem a subsequent retroactive award of benefits compliant with the plan terms was an interpretation of the plan that was consistent with its goals and ERISA’s purposes.

The discussion of whether Mondelez was a proper party was more extensive than as presented in this summary.  However, since Aetna acknowledged that it was the party responsible for satisfying a judgment, Mondelez’s ongoing participation in the litigation was unnecessary.

This ruling also illustrated that time limits in benefit plans can be very slippery, but an alternate conclusion that would have also saved the case from being time-barred was offered by another judge within the Northern District of Illinois.  In Hewitt v. Lincoln Financial Corp., 2021 WL 353884 (N.D. Ill. February 2, 2021), the court determined that the failure of the claim administrator to include in the appeal denial decision the date the limitations period was calculated to expire barred enforcement of a contractual limitations period contained in a benefit plan.