Sep 23, 2015

Allsup Gets Sued For Breach Of Fiduciary Duty

     A lawsuit has been filed in St. Clair County, Illinois against Allsup, a large non-attorney group that represents Social Security disability claimants, as well as Aetna Life Insurance Company. The lawsuit alleges "breach of fiduciary duty, fraudulent misrepresentation and concealment—failing to disclose conflicts of interest and material facts, and striving to reduce or eliminate the plaintiff’s bargaining power, as well as failing to refund" money owed the plaintiff.
     Allsup does most of its work for Social Security disability claimants at the behest of large insurance companies like Aetna. These companies write Long Term Disability (LTD) insurance policies which are mostly provided as part of an employee benefits program. LTD policies always contain an offset for Social Security disability benefits. This gives a big incentive for LTD insurers to demand that LTD recipients file Social Security disability claims and pursue them aggressively with representation, with providers such as Allsup.
     If a claimant who has been drawing LTD is approved for retroactive Social Security disability benefits, the claimant's LTD is reduced not just for the future but also retroactively. The LTD insurer wants to recoup some or all of the money it has already paid the claimant.
     The insurance company has a problem in collecting money out of the claimant's retroactive Social Security disability benefits. The Social Security Act forbids attachment of Social Security benefits for this reason. Allsup came up with a plan to get around this obstacle. They would use their representational relationship to cajole claimants into allowing their back benefits to be deposited into a bank account. In theory, it was a joint account but as a practical matter Allsup has complete control over the account. Allsup would quickly siphon off the money owed to the LTD insurer as soon as the deposit came in from Social Security. Allsup is so proud of this scheme that they patented the idea! Social Security has acquiesced in this dubious practice even though the Federal Deposit Insurance Company (FDIC) has found that a bank which participated in a similar scheme was engaging in an "unsafe and unsound bank practice." It's not hard to figure out why LTD insurers like Allsup far more than law firms. Law firms wouldn't engage in this sort of behavior. At least, I hope they wouldn't!
     Michael Garavalia of Flynn, Guymon & Garavalia in Belleville, IL is representing the plaintiff.

19 comments:

Anonymous said...

Don't they have to disclose the entire LTD file to SSA now?

Anonymous said...

Had a client this happened to. He was seriously ill and they took his back benefits. There wasn't any money left to bury him. Filed a complaint but no response

Anonymous said...

Allsup has had this coming for a long time

Anonymous said...

At the outset, let me say that I despise Alsup, not only for their lack of ethics, but their lousy representation of claimants. I also do not approve of how the LTD is taken from them out of their back check. However, these claimants have an LTD policy that specifically states they are responsible to reimburse the insurance company if they get SSA benefits. So, why are we to feel sorry for them when they are held to the contract they agreed to and signed?

Anonymous said...

1:10 PM With all due respect, this is not about feeling sorry for anyone but rather about fiduciary duty and conflict of interest.

Putting aside this case and speaking generally: When you represent someone, you are suppose to put THEIR INTEREST FIRST. If and when the client reimburses the LTD Insurance Company are two decisions the CLIENT is entitled to make in his/her best interest. A representative should not be in the business of serving as a collection agency for the client's creditor, especially where the representative has a business relationship with the creditor and is hoping to get future clients referred by that creditor. This is a conflict of interest.

Anonymous said...

I've seen plenty of Alsup fee agreements/representative agreements and I am very curious to see if what they put in those agreements is enough notice/disclosure to survive these claims.

Anonymous said...

I knew when I got LTD that I had to pay Met Life back, they treated me good on every thing. When it was all over I got to keep 10,000 dollars of the settlement, For Attorney fees and offset that they owed me. The settlement was 50000 dollars for 2 and a half years. If I didn't have LTD I would have gone bankrupt.

Anonymous said...

2:56

I am not advocating that the rep withhold the money. I actually agree with everything you said. When I have these situations, I tell the LTD carrier that I will advise the client they owe the money but that it is between them and me. Why get involved in that kind of liability anyway. Alsup is and always has been, scum

Anonymous said...

I meant them and my client - I stay out of it

Anonymous said...

The LTD carriers are often enough taking more than they are owed. I have had several cases where the LTD carrier tried to get all the back pay including aux benefits paid to children for months and months ahead of the point where they initially paid benefits. Many times you have a client who has been out of work for months at a time, using up all the sick pay, vacation, FMLA etc to try and keep that job before going on short term disability. LTD typically kicks in after that first 6 months of short term and means the job is now gone...but if there has only been intermittent UWA, you may have a back pay (if you file it right!) that goes back a year or more prior. LTD carriers will try and grab it ALL. They do not get to take $$ for months they did not pay. Watch them. And make sure that the client knows that the case expenses also come off the payback. If you need an expensive doc's opinion and the client paid....that comes off what your client pays back to LTD.

Anonymous said...

Whether or not this agreement will remain legal is yet to be determined, I guess. AS stated above, LTD companies have been know to try to take more than their fair share for reimbursement. We also know that if clmt doesn't immediately pay back the reimbursement amount then their LTD benefits get suspended. That's a shame, because it's leaving them in a worse position than before the SSDI award in many cases. If Allsup mismanages the transaction, then that's horrible and illegal on a number of levels - no question.

But assuming Allsup is legitimately overseeing this transaction fairly and objectively, then this seems like a service to the claimant on those two levels. I don't see any issue here as long as SSA has deemed this to be allowed and the claimant has the right to opt out of this assistance prior to the processing of a case.

Anonymous said...

I am sorry but in my opinion if the receiving party paid in any amount for this benefit. It should be illegal for the insurance co. To be reimbursed. I life ins policy does not get reimbursed nor a medical. Why should this be an exception.

Anonymous said...

Ihad great results from ALLSUP and I recommend them to all I know that are struggling get ss. I was approved in less than 5 monthes.

Anonymous said...

Anonymous said...
I am sorry but in my opinion if the receiving party paid in any amount for this benefit. It should be illegal for the insurance co. To be reimbursed. I life ins policy does not get reimbursed nor a medical. Why should this be an exception.
7:37 PM, October 13, 2015

I AGREE 100,000 % (Also prefer to remain Anonymous)

Anonymous said...

I paint 26.00 every 2 weeks for 8 years are they gonna give me that money back.?

Shannon Green said...

I just started the SSID process today with Allsup. I read tons of negative reviews about them. Your post was the only good comment about them. Any advice for me?

Anonymous said...

Allsup keeps losing my paperwork. Most importantly they keep asking for the paper with all my bank account info - they've apparently lost that twice. What does that say? Meanwhile, they tell me NOT to contact SSI, but I have to do all the work giving SSI all my info and SSI says they have not been in contact with Allsup. Back in April 2016, Allsup left me a voicemail saying that SSI approved my claim. When I contacted SSI they said this was not the case. May 2016, Allsup also claimed that I had not submitted my SSI forms, which I spent hours filling out online; SSI also confirmed I had submitted my forms in February 2016. Can I fire them now?

Anonymous said...

Thank you Anonymous 1:21, September 02, 2016 I am so sorry to hear about your situation! I was just going to try to sign up with them. I wish I could help you..but your commenting on this forum helped me from getting involved with a company I can't trust! Thanks again & I wish all the best!

Christine Kennedy said...

Our long-term disability (Matrix) is trying to have us use Allsup without really explaining why other than to say we'll receive more money. Reading the comments on here, it doesn't look like that's the case and looks like we should avoid them. Is there any benefit at all to using Allsup?