Disability insurers abuse Social Security with frivolous claims

   A lawsuit has been filed by a number of knowledgeable "whistleblowers", criticizing the practice of dumping private disability claimants on the Social Security Disability system, in an effort to avoid paying purchased disability benefits.

  Most private disability insurance plans pay benefits to anyone who cannot perform their current occupation for a number of months.  The Social Security Disability threshold is much higher:  claimants must show that they will be disabled for at least a year and that they are disabled from working ANY job--not just the one they were working when illness or injury struck.

  We have documented in prior blogs that the Social Security Disability system is currently overloaded and that numerous deserving claimants are denied benefits for years at a time while awaiting a meaningful decision on their claim.  The New York Times reiterated in its April 1, 2008 paper that the number of claimants awaiting decision has reached a record backlog twice as large as it was in 2000, while the average wait to decision before an administrative law judge has increased from 258 days to 512 days.

     Part of the reason for this absurd and unfair delay is a requirement in most disability policies that the disabled payee apply for Social Security Disability--even if the applicant considers that he or she is not eligible.  The Times summarized several cases where the private disability pay of people with short-term injuries--- or who were disabled from specialized jobs but not from the workforce entirely--was stopped in order to force them to seek SSD.  We encountered the same issue last year in the case of an airline pilot who could not meet the high medical standard for continuing to fly, but who was otherwise able and willing to work in most labor conditions.  He was forced through the motions of applying for SSD even though it was patently absurd to suggest that he was "totally disabled" and would remain so for 12 months:  he didn't meet the SSD standard even in the month he was forced to apply.

    The net effect of these required, frivolous, filings is to cost the Federal Government several thousand dollars for each claimant, and to delay the benefits of other deserving SSD claimants--all in order to enable the private insurers to harass claimants who are collecting benefits for a partial disability.  A spokesman for the SSA said that the Administration does not track which of the 2.5 million annual applicants are referred by insurers; he noted, however, that it is likely that a high percentage of the 18 percent of applicants who privately acknowledge that they are "unqualified"  for SSD are influenced to apply by the demands of private insurers.