District Court Rejects Aetna’s Interpretation of ERISA Plan Provision Requiring Social Security Disability Award for Continued Receipt of Long-Term Disability Benefits

In Robinson v. Aetna Life Insurance Company, et al., No. 20-CV-4670, 2023 WL 2058310 (N.D. Ill. Feb. 16, 2023), Illinois Northern District Judge Rebecca R. Pallmeyer found that Aetna abused its discretion in terminating Plaintiff’s LTD benefits solely because she had not met her plan’s precondition of an award of Social Security Disability Insurance (“SSDI”) benefits by the date when the plan’s definition of disability changed from “own occupation” to “any occupation.”

Plaintiff ceased working as a utility machine operator for snack food company, Mondelez Global LLC due to several serious cardiac conditions. Aetna approved LTD benefits on October 26, 2016, and instructed Plaintiff to apply for Social Security Disability (“SSDI”) benefits, stating that in order to be considered for LTD benefits beyond 24 months, she must be receiving SSDI benefits.  The Social Security Administration denied Plaintiff’s initial SSDI application on August 22, 2017, and Plaintiff continued to pursue all appeals with the SSA. On October 30, 2018, Aetna terminated LTD benefits because Plaintiff had not satisfied the “Any Occupation” SSDI precondition under the Plan. In two appeals to Aetna, Plaintiff requested that Aetna toll the appeal period pending a decision from the SSA stating that the decision was “crucial to her entitlement to LTD benefits.” Aetna twice refused and upheld its decision on both Plaintiff’s first and second level appeals. Plaintiff then submitted a third “voluntary appeal”.  However, on March 4, 2020, Aetna confirmed that it would take no further action on Plaintiff’s claim, stating that she had exhausted her administrative remedies. On March 27, 2020, the SSA awarded Plaintiff SSDI benefits “with a retroactive effective date of October 1, 2016.” When Aetna learned of the award, it determined it was entitled to, and recovered from Plaintiff an overpayment of $41,193.67.  But Aetna refused to reinstate Plaintiff’s LTD claim and she filed suit.

As an initial matter, the court held that Plaintiff’s suit was timely. “In the end, Robinson did not receive clarification that Aetna would take no further action on her appeal until March 4, 2020.” The Court reasoned, “[e]ven looking to the facts in the light most favorable to Aetna, it is clear that [Plaintiff] diligently pursued her internal appeal rights up until March 4, 2020…. This suit – filed in July 2020, within six months of the date on which Aetna clarified that she had exhausted her appeal rights – is therefore timely.”

As for the merits of the action, the Court held that Aetna’s interpretation of the Plan terms inconsistently “conditions a claimant’s long-term eligibility on whether the SSA renders a favorable determination in an arbitrary timeframe, but permits Aetna to recoup an overpayment for retroactive SSDI awards received at any later date.”  It found that Aetna’s interpretation, which “effectively assigns different meanings to the effect of retroactive SSDI awards in two different parts of the Plan” was arbitrary and capricious.  Moreover, the Court noted that Aetna’s failure to assist with Plaintiff’s application for SSDI benefits and its disregard of “her later-obtained favorable SSDI award, constituted a failure on the part of Aetna to discharge its duties solely in the interests of the participants and beneficiaries.” The Court granted summary judgment to Plaintiff but remanded the claim to Aetna to determine whether Plaintiff remained disabled due to her cardiac health issues as of October 2018.

As this case demonstrates, an insurer’s improper interpretation of policy or plan terms may place your disability claim in jeopardy.  If your insurer has denied your disability insurance claim, contact us for assistance.