Pushing Private Insurance Liabilities Off Onto Social Security
Dean Baker praises an article by Mary Williams Walsh:
The NYT has an article on two whistleblower lawsuits directed against insurers for requiring beneficiaries to apply for Social Security disability, even when they would not qualify, as a condition of being paid benefits. This can both mean unnecessary harassment for beneficiaries and also excessive paperwork demands on Social Security. This is the sort of reporting that newspapers are supposed to do.
A few excerpts from Mary’s article:
The Social Security system is choking on paperwork and spending millions of dollars a year screening dubious applications for disability benefits, according to lawsuits filed by whistle-blowers. Insurance companies are the source of the problem, the lawsuits say. The insurers are forcing many people who file disability claims with them to also apply to Social Security — even people who clearly do not qualify for the government program. The Social Security Administration defines “disabled” much more stringently than the insurers generally do, so it rejects most of the applications, at least initially. Often, the insurers then tell their claimants to appeal, the lawsuits say, raising the cost. The insurers say that requiring a Social Security assessment is a standard practice and that there is nothing wrong with it. The policies they sell allow them to coordinate their benefit payments with others to make sure no one is paid twice. Thus, if a disabled person can get benefits from somewhere else — like workers’ compensation, a disability pension or Social Security — the insurance company can reduce the benefit check by that amount. The flood of referrals, however, is making it hard for Social Security to respond to people who are truly disabled, said Kenneth D. Nibali, the former top administrator of the Social Security disability program. “Anybody who is forced to come into this system, and who doesn’t need to be there, is affecting someone else,” said Mr. Nibali, who retired in 2002 and is serving as an expert witness for the plaintiffs. “They’re holding up cases for the people who have been waiting for months and years, who in many cases are much worse off.” Already, the disability program is in much worse shape financially than the old-age portion of Social Security. It is projected to run out of money in 2026, 16 years ahead of the old-age trust fund.
I find it interesting that the administrative law judges who hear these cases see an attorney who is allegedly representing the individual but who is really being paid by the private insurance company. Take for example the case of Jessica Ortiz:
The Social Security Administration is not an active participant in the lawsuits and declined to comment on them. A spokesman, Mark Lassiter, said Social Security does not keep track of how many of its roughly 2.5 million annual applicants for disability are referred by insurance companies. But he cited academic research showing that 18 percent acknowledged privately that they were unqualified, because they could still work. “It is probable that many of these claimants were required to apply,” Mr. Lassiter said. Jessica Ortiz, a 27-year-old gas station attendant in San Diego, said that was what happened to her. Her disability insurer, the Unum Group, called more than 10 times after she was hurt in a car crash, insisting that she apply for Social Security and asking repeatedly where her application stood. Unum was paying her only $50 a month under her policy, she said, which seemed a small amount to merit so much attention. She did not need or want money from Social Security, and did not think she was entitled to it. Her doctors had told her she would recover, and Social Security is limited to people whose disabilities are total and permanent. But she applied because Unum insisted, she said. Ten months after her accident, Ms. Ortiz returned to work. Social Security turned her down, as she had expected. People who can work are by definition unqualified for disability pay from the government. But when she told the Unum representative what had happened, he told her she could still appeal. “If I were the government, I’d be pretty upset,” she said. “No wonder the pot could run out of money.”When the circumstances of Ms. Ortiz’s case were described, a spokesman for Unum said he could not comment without reviewing her case file. The spokesman, Jim Sabourin, said the company believed that it always had valid reasons for telling people to apply for Social Security.
One has to wonder whether the administrative law judge even knew that the attorney that was purportedly representing Ms. Ortiz was really working on behalf of the Unum Group. This scam has been going on for years – and I’m glad that Mary Williams Walsh is beginning to bring it to light.