Veterans Service Connected Disability And Total Disability

This article discusses the current (2009) rules of compensation for service connected disabilities as they relate to total disability and when compensation should begin.

Veterans disability compensation is like playing golf.  With golf there are two requirements of a good  stroke … hit the ball straight and hit it the desired distance.  With veterans benefits the amount should be as much as allowed (straight) and it should begin as soon as possible (distance).  Veterans usually don’t want what is not theirs but typically want no less than what is rightfully theirs.  In many cases this determination entails a detailed look at numerous records and for this reason thousands of service connected veterans have likely left millions on the table in under compensated benefits.

This article addresses situations in which a veteran has an established service-connected disability and is unable to work because of that disability and is not receiving full (100%) monthly benefits from the Veterans Administration (VA) OR has received a full benefits decision but the beginning date is later than it should be.  Any veteran who is unable to work or unable to keep a job because of his or her service- connected disabilities and who is either not receiving full benefits, or who has reason to believe that the benefit date (called effective date by VA) should be earlier, should consider an appeal.  Time limits apply so do not delay in filing a written appeal.

The Amount

For purposes of compensation veterans are considered unable to work generally when, due to the service-connected condition,  his or her earned annual income is less than the poverty threshold.  Details of poverty thresholds can be found at the U.S. Census Bureau website, i.e., www.census.gov/hhes/www/poverty.  For example in 1980 the threshold was $4,190; in 2009 it was $10,991.  Veterans are also considered unable to work based on other factual situations, even when earning more than the poverty level, such as when the veteran is employable only in a family business or in a sheltered environment.  Other situations, although rare, can result in a finding of total disability even if the veteran is actually working.

The most important criteria with respect to an inability to work is this: it results in a full (100%) rating.  A full rating yields far more compensation than a partial rating.  For example, currently a 70% rating yields $1,228 per month, 90% yields $1,604, and a 100% rating yields $2,673.

So much for the amount, i.e., hitting the golf ball straight in my analogy.

The Start Date

Clearly the earlier the veteran’s total disability rating begins, the more he or she will receive.  This is the distance factor in my golf analogy.  For example, if the veteran applied for and received a rating (less than 100%) shortly after discharge in 1993, because she was unable to work due to post traumatic stress disorder (PTSD), and applies for and receives an upgrade to 100% in 2009, she might still be owed  16 years of under-compensation.  The answer can only be determined by a careful page by page analysis of the veteran’s early record, as well as medical treatment records.  After the record analysis the determination is further complicated by subjective factors with regard to the status of the condition at any given time.  Finally, the decision itself is fraught with subjectivity, assuming the issue of an earlier effective date is  properly presented by appealing the 2009 decision.  Various  adjudicators will see the situation differently depending upon his or her own particular viewpoint, whether biased or not.  The best time to catch and correct the situation described in the example is as soon after the 2009 decision as possible.

Conclusion

Hitting the ball straight (the amount of the claim), while not easy, is a much lesser involved process than hitting the ball the correct distance (the start date).  But the result is obviously worth the exercise; even a few additional years of compensation at the full rate can be thousands left on the table.

The Metropolitan Life Insurance Company v. Glenn case (“Glenn”), decided in the spring of 2008, keeps spinning off some interesting decisions on the abuse of discretion standard of review of ERISA long term disability benefits denials by insurance companies.  One  recent case within the Fifth Circuit is Merrell v. The Hartford Insurance Company, a case in the Southern District of Texas, Corpus Christi Division (Judge Janis Jack) was decided on September 4, 2009 (“Merrell”)

In the Merrell case the Plaintiff claimed that the insurance company was not paying him the full amount due under the long term disability plan; there was no dispute as to Merrell’s disability.

The Hartford acknowledged that it was both the insurer of the plan and the administrator.  Prior to Glenn the district courts within the Fifth Circuit would consistently treat that situation, without additional proof by the Plaintiff,  which is impossible, as only a deminimus conflict of interest.  The courts would “determine” the amount of deference to afford, under the Fifth Circuit’s abuse of discretion standard, by a so-called “sliding scale”.  Typically that standard would then be used in a summary judgment proceeding to analyze the insurance company’s finding on the issue of disability, i.e., not disabled.  Not surprisingly, by using this standard the district courts in the Fifth Circuit rarely find a genuine issue of material fact.  The result is almost always a summary judgment in favor of the insurance company, often even though the Plaintiff is clearly disabled and has been found to be so by a United States Administrative Law Judge in a Social Security hearing.

The Glenn case is certainly not going to be a solution for claimants covered by employee long term disability plans.  The Glenn case gave the Supreme Court an opportunity to abandon the abuse of discretion standard in review of claims decisions made by insurance companies that decide whether it will or will not pay benefits.  (If the insurance company will have to pay the benefits, and  it’s sure that no court will reverse its decision, and even then it will not have to pay punitive damages, how likely will it decide to pay?)  But in a 7 to 2 decision (the dissent was on another issue) the Court continued the abuse standard, although with some modification.  So short of repeal of ERISA* claimants will continue to be faced with an impossible burden, with no meaningful help from federal courts,  in actually obtaining benefits that they had assumed to be available in case of emergency.  Put another way: don’t bank on actually receiving any money from your long term disability policy.  That’s the bad news.

To her credit, Judge Jack, following Glenn’s treatment of the dual role of insurer and administrator as in itself a substantial conflict, a fact that had seemed obvious to other circuit courts for years, the Corpus Christi court placed some of the evidentiary burden on the conflicted insurance company to prove how much weight the court should give to the conflict of interest in its review of a denial of benefits.  Prior to Judge Jack’s analysis courts in the Fifth Circuit have been consistent for decades in placing all of that burden on the plaintiffs.  Her specific holding on this issue is quoted below for convenience.  She found facts in controversy which precluded either party from a summary judgment.  In addition she found, citing Glenn, as to the conflict of interest …

“Defendant has not presented evidence to demonstrate that it has taken steps to ‘reduce potential bias and to promote accuracy’ by ‘walling off claims administrators from those interested in firm finances, or by imposing management checks that penalize inaccurate decision making irrespective of whom the inaccuracy benefits’.  There is little, if any, evidence in the record that would allow the Court to determine how to weigh the conflict of interest in this case.  In light of the new standard announced in Metropolitan Life [called Glenn herein], the lack of evidence on this issue alone counsels against granting summary judgment in favor of Defendant.”

*  This would provide a fair opportunity to hold the insurer responsible but would require a change by Congress.