Can Tennessee reject your Social Security disability claim just because you are also drawing unemployment?

Plain-English summary

Two government benefit programs sit in apparent tension. Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) require the claimant to show they are unable to engage in substantial gainful activity because of a medical condition. State unemployment compensation requires the claimant to certify they are able to work, available for work, and actively seeking work. Can someone be eligible for both at the same time?

Rep. Barrett Rich asked whether Tennessee's Department of Human Services Disability Determination Services (DDS) section, which evaluates SSDI/SSI claims under contract with the Social Security Administration, could categorically reject a disability claim solely because the claimant was applying for or receiving unemployment insurance benefits. The 2008-2010 recession had increased the volume of dual applications, and the question was whether DDS could use unemployment status as a shortcut to deny disability claims.

The AG's answer was no. Although Tennessee DDS contracts with the SSA to make initial disability determinations, the substantive standards are federal. Federal courts have repeatedly held that receipt of state unemployment compensation does not, in itself, prove the ability to work for SSDI/SSI purposes. The leading cases include:

• Lackey v. Celebrezze, 349 F.2d 76, 79 (4th Cir. 1965), the foundational case: a claimant is entitled to disability benefits where no showing was made that they actually represented to state authorities that they were able to work.

• Kinsella v. Schweiker, 708 F.2d 1058, 1066 (6th Cir. 1983) (Swygert, J., dissenting): "the mere receipt of unemployment insurance benefits does not prove ability to work."

• Roberts v. Callahan, 971 F. Supp. 498 (D.N.M. 1997): remanding for reconsideration of credibility where receipt of unemployment was the basis of denial.

• Alverio v. Chater, 902 F. Supp. 909, 928 (N.D. Iowa 1995): simultaneous receipt of unemployment and application for SSDI did not negate the disability claim or indicate substantial evidence of lack of credibility.

• Riley v. Heckler, 585 F. Supp. 278 (S.D. Ohio 1984): claimant awarded past-due disability benefits despite receiving state unemployment.

• Flores v. Dep't of Health, Educ. and Welfare, 465 F. Supp. 317, 322 (S.D.N.Y. 1978): ALJ's reliance "almost exclusively" on unemployment receipt was insufficient to support denial of claim; the receipt instead established a prima facie showing that the claimant could not work at his former occupation.

The structural reasoning across these cases is that the two programs measure different things. Unemployment compensation eligibility is tested at the state-law level under state rules about "able and available." SSDI eligibility is tested at the federal level under a more specific medical-vocational standard about "substantial gainful activity." A person may be able to do some work (qualifying for unemployment) but not the kind of work that would constitute substantial gainful activity (qualifying for SSDI). Or the claimant may have certified ability to work in good faith but in fact have a medical condition that prevents it. Or the certification standards in unemployment differ enough from the federal disability standard that they do not foreclose each other.

The AG's conclusion is narrow but clear: a categorical rule (reject any SSDI applicant who is on or applying for unemployment) is inconsistent with federal requirements. Receipt of unemployment compensation can be relevant evidence in the SSA/DDS credibility analysis, but it is not dispositive.

Currency note

This opinion was issued in 2010. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

The general federal rule (receipt of unemployment is not categorically disqualifying for SSDI) has remained settled, but SSA policy guidance and individual ALJ practice has continued to develop. The Social Security Administration's Hallex and POMS guidance specifically addresses the credibility analysis when a claimant receives unemployment. Anyone advising on a current Tennessee SSDI/SSI question should look at the current SSA policy and the current federal circuit case law.

Common questions

Q: What is the Social Security Disability standard?
A: A claimant is disabled if they are unable 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. The Social Security Administration uses a five-step sequential evaluation to apply this standard.

Q: What is the Tennessee unemployment compensation standard?
A: To collect unemployment, a Tennessee claimant has to be able to work, available for work, and actively seeking suitable work, in addition to having earned sufficient wages in covered employment and being out of work through no fault of their own. The state requires claimants to certify their ability and availability each week.

Q: Aren't those standards contradictory?
A: They can be, depending on the facts. A person whose medical condition prevents all work cannot in good faith certify ability to work for unemployment. But a person whose condition prevents some work (especially their former occupation) but might allow other work could plausibly be on unemployment while also having a viable SSDI claim. The standards are not strictly identical, and the federal courts have refused to treat them as automatically incompatible.

Q: What is the Tennessee Disability Determination Services?
A: A section of the Tennessee Department of Human Services that contracts with the Social Security Administration to make initial disability determinations for Tennessee SSDI/SSI applicants. The SSA pays DDS under the contract. DDS uses federal medical-vocational rules to decide whether a Tennessee claimant is disabled.

Q: Can a person actually receive both benefits at the same time?
A: In principle yes, though the practical likelihood of approval drops. SSDI has substantial back-end coordination (offsets, retroactive adjustments) that may apply. The administrative reality is that SSA/DDS may treat receipt of unemployment as evidence cutting against the credibility of the disability claim, even though it cannot be the sole basis for denial.

Q: Can DDS treat unemployment receipt as evidence at all?
A: Yes. The opinion concluded only that a categorical rejection based solely on unemployment receipt is inconsistent with federal requirements. It did not bar DDS from weighing unemployment receipt as one factor in the credibility analysis the federal regulations require. The opinion did not address how an individual claimant should manage dual applications.

Background and statutory framework

The SSDI program. Social Security Disability Insurance is financed with Social Security taxes paid by workers, employers, and self-employed persons. To be eligible, the worker must have earned sufficient credits through taxable work to be "insured" for Social Security purposes. Disability benefits are payable to blind or disabled workers, widow(er)s, or adults disabled since childhood, who are otherwise eligible.

The SSI program. Supplemental Security Income is financed through general federal revenues. SSI disability benefits are payable to adults or children who are disabled or blind, have limited income and resources, meet living-arrangement requirements, and are otherwise eligible.

The DDS contract structure. SSA does not directly determine disability in most cases. It contracts with state-level DDS agencies (in Tennessee, a section within the Department of Human Services) to perform medical-vocational evaluations of disability claims using federal standards. DDS makes initial determinations; SSA makes final eligibility decisions. Appeals go through the federal system, including ALJ hearings and federal court judicial review.

The unemployment compensation framework. Tennessee unemployment is administered by the Department of Labor and Workforce Development under Title 50, Chapter 7 of the Tennessee Code, against the backdrop of federal requirements under the Federal-State Unemployment Compensation Program. Claimants must be able to work, available for work, and actively seeking suitable work. Weekly certifications attest to these criteria.

The doctrinal tension and resolution. Federal courts have repeatedly addressed the SSDI-unemployment intersection. The pattern across the cases is consistent: receipt of unemployment is relevant but not dispositive evidence. A claimant's good-faith certification of availability for work for unemployment purposes does not, standing alone, defeat a disability claim. The reasons:

• The standards measure different things. Unemployment "able and available" is a present-tense self-certification under state law, often broadly interpreted. SSDI/SSI disability is a medical-vocational determination at the federal level under a more specific standard.
• Unemployment certification is often pro forma. Many claimants certify availability without rigorous medical evaluation.
• Real-world economic pressure leads people to claim unemployment while also pursuing disability. Cutting off SSDI for that reason alone would penalize people whose poverty forces them to seek any income source available.
• Credibility is one factor among many in the SSDI determination. Categorical rules short-circuit the multi-factor analysis the federal regulations require.

The Sixth Circuit context. Kinsella v. Schweiker, 708 F.2d 1058 (6th Cir. 1983), is the Tennessee circuit's leading case. The majority did not directly address the unemployment issue, but Judge Swygert's dissent noted that "the mere receipt of unemployment insurance benefits does not prove ability to work." The AG cited this language as the Sixth Circuit's view on the question.

What DDS can do. The AG opinion is narrow. It only forbids categorical rejection based solely on unemployment receipt. DDS can:

• Consider unemployment receipt as one credibility factor among many.
• Ask the claimant about the certification and how it is consistent with the disability claim.
• Weigh the claimant's explanation in the overall record.
• Apply the federal five-step sequential evaluation as required, considering all evidence including unemployment receipt.

What DDS cannot do is treat unemployment receipt as automatic grounds for denial. That, the AG concluded, would be inconsistent with federal requirements.

Citations and references

Cases:

• Lackey v. Celebrezze, 349 F.2d 76 (4th Cir. 1965)
• Kinsella v. Schweiker, 708 F.2d 1058 (6th Cir. 1983)
• Roberts v. Callahan, 971 F. Supp. 498 (D.N.M. 1997)
• Alverio v. Chater, 902 F. Supp. 909 (N.D. Iowa 1995)
• Riley v. Heckler, 585 F. Supp. 278 (S.D. Ohio 1984)
• Flores v. Dep't of Health, Educ. and Welfare, 465 F. Supp. 317 (S.D.N.Y. 1978)

Source

• Landing page: https://www.tn.gov/attorneygeneral/opinions.html
• Original PDF: https://www.tn.gov/content/dam/tn/attorneygeneral/documents/ops/2010/op10-106.pdf

Original opinion text

October 27, 2010

Opinion No. 10-106

Relationship Between Social Security Disability Claims and Unemployment Insurance Benefits

QUESTION

Does Tennessee or federal law, rule or regulation permit the Department of Human Services' Disability Determination Services section to reject a Social Security disability claim if the claimant is applying for or currently receiving unemployment insurance benefits?

OPINION

Based upon a number of federal court decisions, we conclude that a categorical rejection by the DDS of a Social Security disability applicant's claim of disability that is based solely upon the applicant's receipt of unemployment compensation would be inconsistent with federal requirements.

ANALYSIS

Claims for Social Security disability benefits, whether for SSDI (Social Security Disability Insurance) or for SSI (Supplemental Security Income), are governed by federal law, and are federally funded and federally administered. The Social Security Administration (SSA) makes decisions with respect to eligibility for SSDI and SSI benefits. In Tennessee, the SSA contracts with the Tennessee Department of Human Services' Disability Determination Services section (DDS) to perform certain functions connected with the programs. These functions include the determination of whether or not an applicant for benefits is disabled, as defined by federal law and regulations. DDS' disability determinations, as well as the SSA's final eligibility decisions, may be reviewed and appealed. These reviews and appeals are conducted through the federal system, and may include administrative hearings before federal administrative law judges and judicial review in the federal courts.

A number of reviewing federal courts have held that a Social Security disability claimant's acceptance of state unemployment compensation does not, in and of itself, prove an ability to work. See, e.g., Lackey v. Celebrezze, 349 F.2d 76, 79 (4th Cir. 1965) (claimant entitled to disability benefits where no showing made that claimant actually represented to state authorities that he was able to work or that he was aware of legal requirements for unemployment compensation); Kinsella v. Schweiker, 708 F.2d 1058, 1066 (6th Cir. 1983) (Swygert, J., dissenting) (noting that the mere receipt of unemployment insurance benefits does not prove ability to work); Roberts v. Callahan, 971 F. Supp. 498 (D.N.M. 1997) (although claimant had to state she was willing to work and that she applied for some jobs in order to receive unemployment benefits, case remanded to reconsider credibility determination); Alverio v. Chater, 902 F. Supp. 909, 928 (N.D. Iowa 1995) (finding that claimant's simultaneous receipt of unemployment insurance benefits and application for social security disability benefits did not negate her claim of disability or indicate substantial evidence of her lack of credibility); Riley v. Heckler, 585 F. Supp. 278 (S.D. Ohio 1984) (claimant entitled to award of past due disability benefits despite receiving state unemployment benefits); Flores v. Dep't of Health, Educ. and Welfare, 465 F. Supp. 317, 322 (S.D.N.Y. 1978) (record showing that administrative law judge relied almost exclusively on claimant's receipt of unemployment benefits failed to sustain denial of claim, but rather established that claimant made prima facie showing that he was unable to work at his former occupation).

Accordingly, we conclude that a categorical rejection by the DDS of a Social Security disability applicant's claim of disability that is based solely upon the applicant's receipt of unemployment compensation would be inconsistent with federal requirements.

[Footnote 1: Social Security Disability Insurance (SSDI) is financed with Social Security taxes paid by workers, employers, and self-employed persons. To be eligible for a benefit under the program, the worker must earn sufficient credits based on taxable work to be "insured" for Social Security purposes. Disability benefits are payable to blind or disabled workers, widow(er)s, or adults disabled since childhood, who are otherwise eligible. Supplemental Security Income (SSI) is a program financed through general revenues. SSI disability benefits are payable to adults or children who are disabled or blind, have limited income and resources, meet the living arrangement requirements, and are otherwise eligible.]

ROBERT E. COOPER, JR.
Attorney General and Reporter

CHARLES L. LEWIS
Deputy Attorney General

SUE A. SHELDON
Senior Counsel

Requested by:

The Honorable Barrett Rich
State Representative
204 War Memorial Building
Nashville, Tennessee 37243-0194