LESSARD v. METROPOLITAN LIFE INS. CO.
12/28/1989
PRE> Benefits under the Plan were limited to a maximum of 60% of
the participant's pre-disability income. If the participant was
receiving no other benefits, Metropolitan would pay the entire
60%. However, pursuant to the integration of benefits
provision, if the disabled participant was receiving disability
benefits from some other source, such as a Workers'
Compensation fund, the benefits payable under the Plan would be
reduced by the amount of the other benefit, so that the total
amount of disability benefits paid to the participant would not
exceed 60% of pre-disability income.
In many instances, disabled participants would be eligible
for Social Security Disability Income Benefits (SSDIB). After
determining that a participant was eligible for Plan benefits,
Metropolitan would urge the disabled participant to apply for
SSDIB, if the participant had not done so already. Borden, and
Metropolitan as the fiduciary for claims administration,
claimed the right under the Plan to reduce benefits payable to
the disabled participant by the amount of SSDIB that
Metropolitan projected that the participant was entitled to
receive. The Plan allowed Metropolitan to employ this
"carve-out" device even if the participant did not apply for
SSDIB. Disabled participants whose Plan benefits were reduced
by a carve-out had a strong motivation to apply for SSDIB.
Many participants applied for SSDIB and were denied these
benefits at the initial stage of the application process. After
further appeal and review within the Social Security
Administration, many of these initial denials were later
reversed and SSDIB awarded to the applicant. Although this
Court does not have an authoritative figure, Metropolitan
states that as many as 80% of the SSDIB applications that are
initially denied are later approved on appeal. Plaintiffs do
not challenge this estimate.
When an initial denial of SSDIB was reversed on appeal and
SSDIB were awarded, this determination resulted in prospective
eligibility for SSDIB and, in addition, the disabled applicant
would receive a lump sum figure for retroactive SSDIB for the
time that the application was pending. The longer the process,
and the more stages that an applicant had to pursue until a
final determination of eligibility for SSDIB, the greater the
retroactive SSDIB amount.
All of the plaintiffs in this class action applied for and
were initially denied SSDIB. Although Metropolitan claimed the
right under the Plan to continue a carve-out of Plan benefits
even after an
Full Plan benefits were often paid for long periods while the
SSDIB appeal proceeded. At varying points in time, all of the
plaintiffs succeeded in winning SSDIB on appeal. The award of
SSDIB included a retroactive award. When notified of the SSDIB
award, Metropolitan would request that the disabled participant
reimburse Metropolitan for the amount by which the retroactive
SSDIB combined with the previously paid Plan benefits exceeded
60% of the participant's pre-disability earnings.
If a participant did not or could not reimburse the
overpayment on request, and Metropolitan failed to reach
agreement on reimbursement with the participant, Metropolitan
would withhold current Plan benefits owed to the disabled
participant and apply this amount to the outstanding
overpayment balance. Although Metropolitan might in some
instances only withhold part of the participant's Plan benefit
check, in the cases of the plaintiffs it appears that
Metropolitan withheld the entire monthly
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