LESSARD v. METROPOLITAN LIFE INS. CO.
12/28/1989
Plaintiffs Lucille G. Lessard and Robert F. Daniels, named plaintiffs in a class action suit, appeal an order of the Superior Court (York County, Lipez, J.) granting summary judgment in favor of defendant, Metropolitan Life Insurance Company (Metropolitan), on counts I, II, IV, V, VI, VII and VIII, and denying plaintiffs' cross-motion for summary judgment on counts I, II, IV, V and VI of plaintiffs' eight-count complaint. At issue is Metropolitan's practice of recouping overpayments created by the award of retroactive Social Security Disability Income Benefits (SSDIB) by withholding future long term disability benefits otherwise due disabled workers under a Long Term Disability Plan underwritten by Metropolitan. On appeal, plaintiffs contend that the motion justice committed various errors of law. We affirm the Superior Court's order respecting all counts but count VI. We vacate the judgment entered on count VI and direct the entry of judgment in favor of plaintiffs on the issue of liability only.
As reported by the Superior Court, the facts are as follows:
This controversy arises out of a group health and welfare
plan instituted by Borden, Inc. [Borden], for the benefit of
its employees. At issue here is the Long Term Disability
Benefits Plan portion of the overall health and welfare
package. The basic facts are not in dispute.
Since 1964 Borden has continuously maintained a long term
disability benefits plan for its employees. The Borden Benefits
Committee, which was charged with the administration of the
Borden Long Term Disability Benefits Plan (the Plan or the LTD
Plan), procured a group insurance policy from Metropolitan in
1969 to provide Plan benefits. The group policy was drafted
under the direction of Borden and mirrors the Plan language.
Although both the Plan and the policy were amended from time to
time during the duration of the group policy, the
provisions of the Plan that are here at issue have remained
fundamentally the same since 1972.
In 1974 Congress enacted the Employee Retirement Income
Security Act, 29 U.S.C. § 1001 to 1461 (1985 & Supp. 1987)
(ERISA) (effective January 1, 1975). With only certain
exceptions, this Act pre-empted all state laws relating to
employee health, welfare and pension plans and replaced them
with a comprehensive federal scheme designed to ensure the
proper handling of funds held in trust for those plans. The Act
requires that plan participants and beneficiaries be adequately
informed of their rights and duties under those plans, and it
protected their interests in vested benefits and pensions. See
29 U.S.C. § 1001 (Congressional findings and declarations of
policy).
The Borden LTD Plan fell within the ambit of this broad
employee benefits scheme. Pursuant to these new ERISA
requirements, the Benefits Committee named itself as the Plan
Administrator
The provisions at issue here concern the integration of Plan
benefits and benefits from other sources. The Plan worked as
follows: When a plan participant became disabled, he or she
would initially be entitled to short term disability benefits.
After 27 weeks of disability, short term disability benefits
would expire and the participant would become eligible for long
term disability benefits under the Plan. A claim would be
submitted to Borden, which was forwarded to Metropolitan.
Metropolitan then made the determination of eligibility or
non-eligibility and informed Borden of its decision. In cases
of eligibility, Metropolitan began issuing benefit checks to
the disabled participant.
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