Proof of Social Security Disability found Ambiguous in ERISA Plan
In Miller v. Monumental Life, the Tenth Circuit found that an ERISA plan requirement that an insured “present proof of a Social Security Disability Award” was ambiguous. After an accident, the insured had applied for Social Security disability under both Title II (insurance) and Title XVI (welfare). The court explains:
Although the Social Security Administration (SSA) administers both programs, the Supreme Court has outlined their distinctions: “Title II is an insurance program. Enacted in 1935, it provides old-age, survivor and disability benefits to insured individuals irrespective of financial need. Title XVI is a welfare program. Enacted in 1972, it provides [Social Security Insurance] benefits to financially needy individuals who are blind, or disabled regardless of their insured status.”
www.ca10.uscourts.gov/opinions/05/05-2247.pdf
Title II disability benefits were denied because Miller did not have sufficient quarters of coverage to confer disability insured status. Miller was granted disability under Title XVI. Monumental denied payment on the grounds that it was not a Social Security Disability Award. The trial court affirmed, but the Tenth Circuit reversed. First, the Tenth Circuit notes that the case must be decided under federal common law, not under New Mexico law.
The district court found that the “phrase [Social Security Disability Award] has a technical meaning that does not include [Social Security Income] payments” and refused to “go beyond the technical meaning of Social Security Disability Award.” The court emphasized “that the language in each of these places means what Monumental meant it to say when it wrote [the] definition.” The Tenth Circuit notes the definition of disability is the same under either Title II or Title XVI, and that a reasonable person could conclude that a finding of disability under either title was sufficient. The court rejected Monumental’s claim that since the Title XVI benefits would cease when Monumental began paying Miller, that such payments were not sufficient under the policy, finding that the argument placed Miller in a classic Catch 22. The court found the term ambiguous. It also found that any extrinsic evidence should have been presented in the summary judgment motions, but was not. The Court adopted the rule of contra proferentem in cases of ambiguous language with a de novo standard of review, which means that terms are construed against the drafter. The court then held that Miller’s receipt of Title XVI benefits satisfied the plan requirements. It remanded the case, however, to rule on an issue the trial court did not reach – whether Mr. Miller’s accident was the “sole cause” of his disability.
The decision is remarkable in several respects. First, it reverses a trial court’s ruling on summary judgment on a plan determination. It should be noted that the plan did not give the administrator the authority to interpret ambiguous provisions, therefore, the court had de novo review. Second, it finds that the term social security disability is ambiguous, as it could apply to any finding of disability under the social security laws. Third, it specifically adopts the contra proferentem rule in ERISA cases in the Tenth Circuit, joining the majority of courts which have considered the issue. Finally, the court notes that it has never construed a term against an ERISA beneficiary, which would be against the policies of ERISA.
