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LESSARD v. METROPOLITAN LIFE INS. CO.12/28/1989
ve language does not prevent Metropolitan from employing the offset device. In reaching this conclusion, " he court recognized that ERISA had incorporated the common law of trusts to define the rights, duties and obligations of ERISA fiduciaries."
Specifically, the court referred to § 254 of the Restatement (Second) of Trusts, which states the general rule that in the course of administering a trust, a trustee can properly recover overpayments made to a beneficiary by withholding future amounts due the beneficiary. Restatement (Second) of Trusts § 254 (1959). Further, the court decided that § 6.1 did not alter the general rule because § 6.1 was, in effect, a spendthrift clause. See Restatement (Second) of Trusts § 152(2) (defining trust that by its terms imposes a valid restraint on voluntary or involuntary transfer of beneficial interest as spendthrift trust); § 254, Comment (c) (general rule applicable even where interest of beneficiary subject to spendthrift clause, as long as settlor has not manifested a different intention). See also IIIA Scott on Trusts § 254 (W. Fratcher 4th ed. 1988) ("Even though by the terms of the trust or by statute the interest of the beneficiary is not assignable by him and cannot be reached by his creditors, the trustee is entitled to withhold the amount of the overpayment to the beneficiary from his share under the trust.").
Plaintiffs contend that the Plan Administrator's interpretation was not the legally correct one and that therefore summary judgment should be granted in their favor. Specifically, plaintiffs argue that under the terms of the Plan the payments that plaintiffs received were absolutely due them at the time they were received, and that therefore the creation of an overpayment, which in plaintiffs' view means "a payment mistakenly or erroneously made to a person in an amount greater than was due," could not have occurred. Plaintiffs further contend that because the Plan's offset provision defines the amount of "Other Income Benefits" to be subtracted from each monthly benefit as "the aggregate of the following amounts available . . . for such month," a retroactive lump sum SSDIB payment cannot be subject to the offset beyond the amount equivalent to one month's benefit and therefore does not create an overpayment. See Borden Plan § 4.2, supra at 496. (emphasis added). Finally, plaintiffs argue that § 6.1 precludes Metropolitan's recoupment practice. See supra at 496. In support of this last contention plaintiffs allege that the Superior Court's application of trust principles was erroneous, stating that " t is doubtful that trust law principles have any application to this case."
With regard to the overpayment issue, similar arguments were made unsuccessfully in Stuart v. Metropolitan Life Ins. Co., 664 F. Supp. 619 (D.Me. 1987), aff'd, per curiam, 849 F.2d 1534 (1st Cir. 1988), cert. denied, ___ U.S. ___, 109 S.Ct. 496, 102 L.Ed.2d 533 (1988). There, the court granted summary judgment in favor of defendant, explaining:
The fact that the word `retroactive' is not used in the Plan or
SPD language does not eliminate the fact that the clear
language of those documents anticipates reductions in Plan
benefits upon the receipt of Social Security benefits. A
disabled insured would be required to accept such a reduction
upon the immediate payment of Social Security benefits; it
would be illogical to construe the contract language to mean
that, because Social Security payments were delayed and then
paid in a lump sum, the insured would be entitled to full Plan
benefits and the Social Security payment.
Id. at 623-4. See also, e.g., Barklage v. Metropolitan Life Insurance Co., 614 F. Supp. 51, 59
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