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Auto Insurance Companies Overloading Social Security Administration

April 22, 2008 by Steven M. Gursten

On April 1st, 2008 the New York Times reported on the practice of automobile and disability insurance companies overloading the Social Security Administration by forcing people to apply for Social Security Disability. It is a practice that Michigan social security disability lawyers and lawyers who help people injured in car accidents already know too well.

If someone is injured in a car crash in Michigan, the first party no fault insurer (the insurance company responsible for paying your no fault PIP insurance benefits) can literally force a person to repeatedly apply for social security disability (SSD), and they can suspend and even terminate no fault insurance benefits if that person refuses to apply or refuses to continually appeal the disability determination.

The public policy underlying this is terrible. Automobile insurance companies do not care if they are burdening an already overwhelmed system, saddling it with tens of thousands of questionable claims that cost the government millions of dollars to screen. And insurance companies do not care if they are requiring people to apply for SSD who are not qualified to even receive disability benefits, or people who feel that being forced to apply is unfair because they themselves feel they can work another job or are not permanently disabled.

Insurance companies force people injured in car accidents to apply for SSD because if that person is approved, the automobile insurance company can save money by shifting the responsibility for payment of benefits to you (taxpayers who pay into the Social Security Fund). Insurance companies are entitled to coordinate no fault insurance payments, when possible, under Michigan insurance laws with other sources such as social security or workers compensation. If a car accident victim’s SSD is approved, any amount received by the victim will reduce for, or even be repaid to the automobile insurance company.

While this process is saddling the Social Security Administration and taxpayers with huge costs, it also is terrible for the injured people who are being forced to apply for SSD. An injured person is almost always rejected for SSD, as the doctors who perform the medical evaluations for Social Security tend to be very conservative. These doctors also are screening using a much higher and more stringent standard for approval than that which is required under Michigan’s auto-tort law. However the insurance lawyers defending these cases can still use these SSD medical reports and even take the trial depositions of these SSD doctors to use against someone who was forced to apply to use against them for trial.

If someone who was injured in a car accident is approved for SSD, they still lose. That is because if a case is pending against the negligent driver who caused the accident, the defendant is entitled to an offset as well. The person who caused a car crash can reduce from any economic loss awarded by a jury that amount that may be paid by Social Security over the course of that person’s lifetime.

The sad irony is that people in Michigan are forced to pay expensive premiums to insurance companies to be protected if they are injured in automobile accidents. These insurance companies charge a lot of money and in return promise to pay benefits to these people if they are ever hurt. However, once they are hurt, the insurance company can demand that people apply and continuously re-apply for Social Security. If these people are approved, the insurance company is allowed to transfer a large chunk of the financial burden onto all of us – the taxpayers who fund social security, while they keep the premiums and profits.

The New York Times story can be read in its entirety at:

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