UNUM Life Insurance Company of America v. Alamos

Filing 19

MEMORANDUM OPINION and granting 12 MOTION for Summary Judgment filed by UNUM Life Insurance Company of America. Signed by Honorable Jimm Larry Hendren on January 16, 2014. (tg)

IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF ARKANSAS
FAYETTEVILLE DIVISION
UNUM LIFE INSURANCE COMPANY
OF AMERICA
v.

PLAINTIFF

Civil No. 13-5099

VINCENTE M. ALAMOS

DEFENDANT
MEMORANDUM OPINION

Now

on

this

16th

day

of

January

2014,

comes

on

for

consideration plaintiff's Motion for Summary Judgment (document
#12). The Court, being well and sufficiently advised, finds and
orders as follows with respect thereto:
1.

On May 16, 2013, plaintiff Unum Life Insurance Company

of America (Unum) brought this action against defendant Vincente
M. Alamos (Mr. Alamos) pursuant to 29 U.S.C. § 1132, seeking
equitable

relief

to

enforce

the

terms

of

a

group

long-term

disability policy.
2.

Unum filed its motion for summary judgment on September

5, 2013, arguing that it is entitled to restitution of an amount
overpaid to Mr. Alamo due to Social Security benefits he received
in addition to disability payments under the policy.
3.

Mr. Alamos contests the motion and asserts there remain

genuine issues of fact for trial.
FACTS
4.

These are the undisputed material facts:

(a)

Unum issues, administers, and underwrites long-term

disability policies governed by the Employment Retirement Income
Security Act of 1974 (ERISA).
(b)

Mr. Alamos was covered under a Unum group long-term

disability

policy

("the

policy")

during

his

employment

with

Reliable Insurance Company.
(c)

The policy was governed by ERISA.

(d)

Specifically, the policy provided benefits equal to 60%

of a claimant's basic monthly earnings reduced by certain income
benefits such as Social Security, workers' compensation, and
pension.
(e)

The policy explained how a claimant's monthly benefit

was figured:
We will follow this process to figure your payment:
1.
2.
3.

Multiply your monthly earnings by 60%.
The maximum monthly benefit is $1,500.
Compare the answer from Item 1 with the maximum
monthly benefit. The lesser of these two amounts
is your gross disability payment.
Subtract from your gross disability payment any
other income benefits.

4.

The item figured in Item 4 is your monthly payment.
*

*

*

WHAT ARE OTHER INCOME BENEFITS?
Unum will subtract from your gross disability payment
the following other income benefits: . . .
3.

The amount that you, your spouse and your children
receive or are entitled to receive as disability
payments because of your disability under:
-The United States Social Security Act . . .
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(f)

If Unum determined that a claimant qualified for a

deductible source of income, Unum would estimate the amount of the
deductible source of income and reduce a claimant's monthly
benefit by that amount until an award or denial was made.
(g)

However, Unum would not reduce a claimant's monthly

payment if a claimant applied for disability benefits under a
deductible source of income and the claimant chose to forego an
estimated monthly reduction.
(h)

Social Security benefits were a deductible source of

income under Mr. Alamos' policy.
(i)

Mr. Alamos became disabled in May 2006.

(j)

Between September 20, 2006, and September 19, 2011, Mr.

Alamos received long-term disability benefits under his policy in
the amount of $1,500 per month, which amounted to 60% of his basic
monthly earnings.
(k)

On December 25, 2006, Mr. Alamos signed a Disability

Payment Options/Reimbursement Agreement form. However, Mr. Alamos
did not select either the option to forego deductions for other
sources of income or the option to have Unum reduce his monthly
long-term disability benefit based on an estimate of his other
sources of income. According to the form, when no option is
selected, the default option is for Unum to estimate other sources
of income and deduct those amounts from the long-term disability
benefits.
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(k)

Unum did not initially make any deductions from its

disability payments to Mr. Alamos.
(l)

During the time Mr. Alamos received long-term disability

benefits through Unum, he applied for and was awarded Social
Security benefits dating back to December 1, 2006.
(m)

When Unum learned that Mr. Alamos had received an award

of Social Security disability benefits, Unum notified Mr. Alamos
of overpayment and indicated his options for repayment. Despite
repeated requests, Unum was never reimbursed for the overpayment
to Mr. Alamos.
(n)

Unum filed this action under 29 U.S.C. § 1132 to recover

$49,218.33

in

overpaid

benefits

and

now

moves

for

summary

judgment.
(0)

Mr. Alamos denies that Unum is entitled to any judgment.
DISCUSSION

5.

Summary judgment is appropriate only where there is no

genuine dispute as to any material fact and the moving party is
entitled to judgment as a matter of law. Fed. R. Civ. P.56(a).
Once

the

moving

identifying

those

party

has

portions

satisfied
of

the

its

initial

pleadings,

burden

discovery,

of
and

affidavits which demonstrate the absence of a genuine issue of
material fact, the nonmoving party must go beyond the pleadings
and, by its own affidavits or discovery, set out specific facts
showing a genuine issue for trial. Celotex Corp. v. Catrett, 477

-4-

U.S. 317, 323 (1986). If the nonmoving party fails to do so, the
moving party is entitled to judgment as a matter of law. Id.
Under 29 U.S.C. § 1132(a)(3), a fiduciary of an ERISA-

6.

governed plan may bring a civil action seeking equitable relief to
redress violations or enforce provisions of ERISA or the terms of
the plan. A claim for equitable relief must seek recovery through
a

constructive

trust

or

equitable

lien

on

a

specifically

identified fund in the defendant's possession. See Sereboff v. Mid
Atlantic Med. Servs., Inc., 547 U.S. 356, 362–63 (2006). A claim
for reimbursement of overpayments resulting from payment of Social
Security

benefits

constitutes

a

claim

for

equitable

relief.

Dillard's v. Liberty Life Assurance Co., 456 F.3d 894, 901 (8th
Cir. 2006).
7.

In this case, Unum seeks reimbursement of overpayments

made to Mr. Alamos as a result of Social Security benefits he
received during the time he received benefits under the policy.
Thus, Unum's claim is considered equitable in nature and is
appropriate under ERISA.
8.

In addressing the merits of its motion, Unum relies on

two cases.
(a)

Dillard's, cited above, is presented for its proposition

that Unum's claim for reimbursement constitutes a claim for
equitable relief under ERISA. The facts of Dillard's are similar
to the facts of this case, and ultimately, the Eighth Circuit
-5-

affirmed

the

overpayments

district
resulting

court's
from

the

award
receipt

of

restitution

of

Social

for

Security

benefits. In discussing that issue, the Eighth Circuit addressed
only whether the relief sought was equitable in nature.
(b)

Unum also cites an unreported case from the Eastern

District of Kentucky, Unum Life Ins. Co. v. Miller, No. 2:11-129DCR, 2012 WL 3099997 (E.D. Ken. July 30, 2012), with facts nearly
identical to the facts of this case. In that case, Miller was a
participant in a group disability insurance policy under Unum when
he became disabled. Miller, 2012 WL 3099997 at 1. Unum approved
Miller's claim for disability benefits and began making payments.
Id. Miller submitted a benefit payment option/reimbursement form
regarding his pending Social Security claim in which he requested
that Unum estimate the amount of deductible benefits he would
receive

and

reduce

his

disability

benefit

accordingly.

Id.

However, because Miller had indicated that he was denied Social
Security benefits, Unum continued to make full payments. Id.
While

receiving disability benefits from

Unum,

Miller's

Social Security claim was approved, and he received two lump sum
payments for retroactive benefits. Id. Upon notification of the
award, Unum demanded reimbursement for its overpayment, but Miller
refused. Id. Unum then sought equitable restitution. Id. The
Court, finding that the reimbursement agreement was not a binding
contract, determined that Unum was entitled to reimbursement for
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the overpaid benefits. Id. at 6.
9.

Mr. Alamos first argues that the cases Unum relies on

are inapplicable.
(a)
because

First, he contends that Dillard's is distinguishable
it

dealt

with

other

issues,

including

whether

the

defendant was actually disabled.
Notwithstanding the other issues addressed in Dillard's, the
case clearly conveys that Social Security benefits constitute a
separate

fund

from

which

a

fiduciary

can

claim

equitable

restitution for overpayment. As that is the proposition for which
Unum cited the case, the Court finds Mr. Alamos's argument on this
point without merit.
(b)

Mr. Alamos also argues that Miller does not control the

instant case because the decision was not from the Eighth Circuit.
While he is correct that the case law is not binding on this
Court, Miller can be considered as persuasive authority. The Court
notes that neither party has cited an Eighth Circuit case with
issues so similar to this case.
10.

Mr. Alamos goes on to argue that Unum is precluded from

seeking reimbursement because it failed to deduct an estimated
amount from its payments, as indicated on the reimbursement
agreement. However, he cites no authority for this contention.
11.

The policy clearly states that "Unum has the right to

recover any overpayments due to fraud; any error Unum makes in

-7-

processing a claim; and [the participant's] receipt of other
income benefits." (Policy, Ex. A at LTD-CLM-2, document #12-1).
While the reimbursement form allows an employee to indicate the
method of reimbursement he wants Unum to use, it does not purport
to supercede the language of the policy. Thus, Mr. Alamos was on
notice at all times that he would be required to reimburse Unum
for any Social Security benefits that were not deducted from
Unum's disability payments.
A

court

in

the

Eastern

District

of

Arkansas

recently

addressed the same issue and came to the same conclusion. In
Anderson v. Unum Life Insurance Company, No. 5:12-cv-208-SWW, 2014
WL 130490 (E.D. Ark. Jan. 14, 2014), Anderson -- an employee
receiving

disability

benefits

from

Unum

--

sued

for

a

determination that Unum was not entitled to reimbursement for
overpayment resulting from Social Security benefits, and Unum
counterclaimed, seeking equitable restitution. Anderson, 2014 WL
130490 at 1. Anderson had signed a reimbursement agreement,
choosing to allow Unum to deduct an estimated amount of future
sources of other income. Id. However, Unum did not do so, and when
it later learned that Anderson received Social Security benefits
for the time Unum paid benefits, it demanded reimbursement. Id. at
2.
Anderson argued that, by not deducting an estimated amount
from her payments, Unum had breached a contractual duty and slept
-8-

on its rights, thereby prejudicing her. Id. at 3. The court
disagreed, citing Miller and finding that Unum did not represent
that it was contractually bound to reduce Anderson's payments if
she selected that option. Id. at 4. Accordingly, the court entered
judgment in favor of Unum for the amount of its overpayment. Id.
12.

Based on the facts and case law presented in Unum's

motion, the Court finds that Unum has satisfied its burden of
demonstrating the absence of a genuine issue of material fact.
Because Mr. Alamos has failed to meet proof with proof, Unum is
entitled

to

judgment

as

a

matter

of

law

in

the

amount

of

$49,218.33.
Unum

also

requests

pre-

and

post-judgment

interest,

attorney's fees, and costs, but it has not briefed those issues or
set forth appropriate calculations to make such awards. Unum may
file an appropriate motion addressing those issues if it so
chooses.
IT IS THEREFORE ORDERED that Unum's Motion for Summary
Judgment (document #12) is hereby granted. Judgment in the amount
of $49,218.33 will be entered under separate order.
IT IS SO ORDERED.

/s/ Jimm Larry Hendren
JIMM LARRY HENDREN
UNITED STATES DISTRICT JUDGE

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