The Social Security Administration’s Policies Can Affect Employee Rights to Pension Disability Benefits

Yarelyn Mena and Owen H. Laird, Esq.

Many employees might be surprised to learn that a determination by the Social Security Administration (“SSA”) can affect their right to benefits from a private pension plan. The Second Circuit has allowed pension plan administrators, depending on the language of the plan, to do just that.

In July 2005 Francy Ocampo applied for disability benefits under the Social Security Act after herniated disks prevented her from working. Ms. Ocampo worked as an office cleaner for more than 20 years, and was a member of the Services Employees International Union (“SEIU”), Local 32BJ. In December 2006, an SSA administrative law judge determined that Ms. Ocampo was disabled by the definition in the Social Security Act, defined as “an inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months,” and thus was eligible to receive disability benefits. In March 2007, the SSA notified Ms. Ocampo that she would receive disability benefits for five months.

The SSA periodically assesses claimants to determine whether they are still eligible to receive disability benefits; in other words, the SSA ensures that disabled claimants are still unable to work due to the disability. The time intervals between each assessment conducted by the SSA are dependent on the severity of the claimants’ disability. If the disability is considered likely to improve a claimant is assessed from 6 to 18 months, if the disability is not considered permanent, a claimant is reassessed every three years, and if the disability is considered permanent it is assessed every 5 years.

Despite recovering SSA disability benefits, Ms. Ocampo was assigned a triennial disability evaluation. Ms. Ocampo was nevertheless denied a disability pension by the Board of Trustees for the SEIU 32-BJ Pension Plan. The Board of Trustees weighs two factors when determining whether applicants are eligible to receive a disability pension: if the participant is awarded disability benefits from the SSA for a disability that started when they were covered by the pension plan during employment, and if the Trustees “determine, in their sole and absolute discretion” that the participant is permanently disabled. The Board of Trustees determined Ms. Ocampo was ineligible for disability benefits under the pension plan because a triennial assessment by the SSA indicates that her disability is not permanent.

Ms. Ocampo sued The Board of Trustees for denying her application alleging that its rationale, dependent on the fact that she was assigned an SSA assessment every 3 years as opposed to 5, was “arbitrary and capricious.” The United States District Court for the Southern District of New York granted the defendants’ summary judgment. On appeal, the Second Circuit found Ms. Ocampo’s arguments unwarranted. The court ruled that the terms of the pension plan give express authority to the Trustees to administer and apply pension policies. Moreover, those policies allow for the Trustees to adhere to SSA’s determinations about the severity of applicants’ disabilities. The SSA’s periodic assessments emphasize information pertaining to the severity of a disability, the same information that the Trustees are tasked with considering for applicants like Ms. Ocampo. As a result, the court found that SEIU 32-BJ’s decision to deny Ms. Ocampo’s disability pension based on the SSA’s assessment of her disability was not arbitrary and capricious.

If you believe your employer illegally discriminated of your disability, please contact The Harman Firm, LLP.