The claimant sues the ERISA plan for long term disability benefits, but refuses to reimburse Social Security repayments. What to do? Counterclaim.

Here’s the case of Bigda v Principal Life(D. Mass. February 3, 2011)(court allows plan administrator to pursue counterclaim for reimbursement).

FACTS: Bigda sought long term benefits under an ERISA plan. The administrator counterclaimed and asserted a constructive trust theory seeking reimbursement after Social Security issued benefits. (Bigda had signed a Reimbursement Agreement, promising to “to repay …within 30 days of the date the first money is received from social security.”) Bigda then moved to dismiss the counterclaim.

HELD: Motion to dismiss counterclaim DENIED.

  • The administrator presented the relevant contracts and paperwork confirming the agreement to repay benefits. These facts were sufficient for the plan to state a claim.
  • The Court rejected Plaintiff’s argument that the counterclaim was barred under 42 U.S.C. 407 which protects Social Security payments from being subject to legal process. The Court said: “[T]he funds…Principal is seeking are not the SSDI benefits….Although the amount in question happens to be the same as the amount of [Plaintiff’s] retroactive SSDI benefits, the funds [targeted] do not come from SSDI.“
Tags: Counterclaim, Long Term Disability Benefit, Social Security Repayments
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Mike Reilly is a nationally recognized labor, employment and employee benefits attorney, named one of the “Top 100 Most Powerful Employment Attorneys in the Nation” for the past five consecutive years by Human Resource Executive®. He has decades of experience providing strategic employment…

Mike Reilly is a nationally recognized labor, employment and employee benefits attorney, named one of the “Top 100 Most Powerful Employment Attorneys in the Nation” for the past five consecutive years by Human Resource Executive®. He has decades of experience providing strategic employment advice, and has represented clients in more than 75 jury trials, arbitrations, bench trials and claims before the EEOC and Washington State Human Rights Commission.

Small and large employers retain Mike for his strategic advice and decades of experience in employment issues and litigation, business decisions and litigation avoidance. Mike provides advice in claims involving discrimination, retaliation, wrongful discharge, disability accommodation, ERISA and non-ERISA employee benefit claims, and wage/hour claims. He served as lead counsel in an employee raiding/trade secret case as reported in the Wall Street Journal, and defends employers in class action claims.

Mike’s remarks on employment issues have been quoted in Newsweek, Corporate Legal Times, Seattle Times, Employee Relations Law Journal, Puget Sound Business Journal, CFO.com, and other professional journals and management publications. Chambers USA’s Guide to America’s Leading Lawyers for Businessrates Mike in the top ranking (band one) for his work in labor and employment law, and has described him as “one of Seattle’s top-rate attorneys” who is “truly phenomenal [with] superb legal instincts” and “an amazingly assertive litigator.” His clients include Nordstrom, Seattle Seahawks, Home Depot, KeyBank, Starbucks, Fred Hutchinson Cancer Research Center, Red Robin and Seattle Chamber of Commerce, among others.

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