LESSARD v. METROPOLITAN LIFE INS. CO.
12/28/1989
crutiny.
The court applied the standard articulated by the United States Court of Appeals for the Fifth Circuit in Denton v. First National Bank of Waco, 765 F.2d 1295 (5th Cir. 1985). The standard involves a two-step process: First, the court must determine for itself the legally correct interpretation of the plan provisions at issue; second, it must compare its interpretation with that of the plan administrator. Id. at 1304. When the plan administrator's interpretation is incorrect, the court considers various listed factors to determine whether the plan administrator acted in an arbitrary and capricious manner. Id. (Such factors include the internal consistency of the plan under the plan administrator's interpretations as well as the good faith of the administrator). Thus, if the two interpretations agree, the inquiry ends and the overpayment and recoupment issues are decided; if the plan administrator's interpretation is incorrect, the court proceeds to the second step of the analysis.
After reviewing the relevant Plan documents, the SPD and the group policy, the Superior Court ruled that "the only logical and reasonable interpretation is that a retroactive SSDIB award would result in an overpayment of Plan benefits." Among the documents cited were the following provisions of the Plan:
4.1 The amount of monthly benefit payable for each full month
of Total Disability during the period specified in Section 3.4
shall be the excess, if any, of the amount determined in
accordance with the benefit formula in the applicable schedule
of the Appendix to the Plan [listed there at 60%], over the
amount of Other Income Benefits determined in accordance with
Section 4.2.
4.2 The amount of Other Income Benefits, for each month or
portion thereof for which a monthly benefit is payable in
accordance with Section 4.1, shall be the aggregate of the
following amounts available to the Covered Employee for such
month or portion thereof:
(b) The monthly rate of any Social Security Benefits to which
the Covered Employee and any dependent of the Covered Employee
is (or upon timely and proper request and submitting due proof
would be) entitled by reason of the Covered Employee's
disability. . . .
On the basis of the above and similar language in other Plan documents, as well as in the policy, the court concluded that " he SPD, the Plan and the policy all make clear that LTD benefits will be integrated with other benefits, including social security benefits, on a monthly basis. A retroactive SSDIB award is nothing more than the aggregate monthly benefits due from the first day of eligibility until the day that SSDIB are finally approved."
With respect to Metropolitan's practice of offsetting future benefits to recoup overpayments created by a retroactive SSDIB award, the Superior Court ruled that the Plan Administrator had the right, as well as the duty, to utilize the offset device. At issue in this portion of the Superior Court's Order is the legally correct interpretation of ยง 6.1 of the Plan. That section provides as follows:
6.1 No benefit payable under the Plan shall be subject in any
manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, or charge, and any action by way of
anticipating, alienating, selling, transferring, assigning,
pledging, encumbering, or charging the same shall be void and
of no effect; nor shall any such benefit be in any manner
liable for or subject to the debts, contracts, liabilities,
engagements, or torts of the person entitled to such benefit.
The Superior Court ruled that the abo
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