Is it wrong to take an offset for Social Security benefits received by the children of a long term disability claimant? No, says a new decision.

Andjust because you reinstate benefits does not mean you have to provide Pannebecker payments…

Here’s the case of Jones v. Life Insurance of North America, 2016 WL 3257781 (N.D. Cal. June 14, 2016)(PDF).

FACTS: Jones worked for Merck and sought ERISA-governed long term disability benefits in 2001. The benefits were terminated in 2007 and Jones sued. Reinstatement was offered, but an offset was taken for dependent Social Security benefits (SSDI) received for her children.

DISTRICT COURT HELD:

  1. Under the plan terms, “any benefit payable under the Plan” is reduced by “Social Security benefits, effective at the time the Participant becomes entitled to benefits.” Op. at 3.
  2. Plaintiff argued that no offset should occur for SSDI benefits her children received because they were not yet born when Jones started getting benefits in 2001. “Plaintiff’s interpretation is nonsensical….’[A]s a practical matter, a participant continues to be eligible and entitled to benefits for each subsequent monthly or partial monthly period for which s/he is Totally Disabled.”  Op. at 13.
  3. Plaintiff also argued that her children are “entitled” to their dependent SSDI benefits. But the court noted: “[t]he plan defines Social Security benefits as including family benefits” and the dependent benefits are awarded here because of plaintiff’s disability. Also, the SSDI “family award notices” expressly designate Jones as the payee and authorize her to use the funds. Op. at 14.
  4. Mere reinstatement, without more evidence of erroneous claims handling, does not trigger Pannebecker. (The Ninth Circuit decision in Pannebecker requires payment of claims from the improper termination of benefits.) “While MetLife’s subsequent reinstatement of plaintiff’s LTD benefits implies the initial termination was a mistake, the court has no basis for a finding that MetLife was arbitrary or capricious in terminating plaintiff’s LTD benefits.”  Op. at 16. (Emph. added).
Print:
Email this postTweet this postLike this postShare this post on LinkedIn
Photo of Mike Reilly Mike Reilly

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 NewsweekCorporate Legal TimesSeattle TimesEmployee Relations Law JournalPuget Sound Business JournalCFO.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.