U.S. ex rel. Loughren v. Unum Group
(1st Cir. (Mass.) July 29, 2010)
Patrick J. Loughran, as relator, brought a lawsuit under the qui tam provisions of the False Claims Act, alleging that Unum Group (“Unum”) had burdened the Social Security Administration (“SSA”) by knowingly causing people to file baseless applications for Social Security disability insurance. Unum allegedly had information in its claims files that the applicants had capacity for work under the SSA, but Unum still required them to apply for Social Security benefits.
Unum argued in part that its practice of requiring people to apply for benefits was no different than what the Federal Employee Retirement System and comparable state programs require before granting benefits. The lower court prohibited Unum from offering this evidence at trial, however.
The United States Court of Appeals for the First Circuit ruled that the lower court abused its discretion in excluding this evidence. The court found that such evidence could support Unum’s argument that an applicant’s statement on his application that he believes he is unable to work is not material to the SSA’s decision whether to approve or deny benefits, but it can influence the agency. The court held that since the SSA knows that all federal employees are required to apply, and it cannot distinguish Federal Employee Retirement System applicants from other applicants, SSA must assume that any given applicant is applying only because he is required to do so, not necessarily because he has a good faith belief that he is entitled to benefits. A jury could reasonably conclude that the SSA has no reason to believe that any applicant is implying that he may be eligible for benefits. By excluding evidence of the SSA’s knowledge of the requirement by the Federal Employee Retirement System and comparable state programs that all claimants apply for benefits without regard to potential eligibility, the lower court prevented the jury from considering evidence “that was highly relevant to the essential element of materiality.”
Accordingly, the appeals court ordered a new trial so a jury could consider the improperly excluded evidence.
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Toni Frain and Jonathan Kuller