Brutvan v. CIGNA Life Insurance Company of New York et al
MEMORANDUM-DECISION AND ORDER denying 22 Motion for Summary Judgment; granting 23 Motion for Summary Judgment: ORDERS that Defendants motion for summary judgment is DENIED; and the Court further ORDERS that Plaintiffs motion for summary judgmen t is GRANTED; and the Court further ORDERS that the parties counsel shall be available for a telephone conference on Friday, October 18, 2013 at 10:00.am. to discuss setting a trial date on the issue of damages and attorneys fees. Defendants counsel shall initiate the call using a professional teleconferencing service; and the Court further ORDERS that the Clerk of the Court shall serve a copy of this Memorandum-Decision and Order on all parties in accordance with the Local Rules. Signed by U.S. District Judge Mae A. D'Agostino on 9/27/2013. (ban)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
MICHAEL J. BRUTVAN,
CIGNA LIFE INSURANCE COMPANY
OF NEW YORK, CORNELL UNIVERSITY,
AND CORNELL LONG-TERM DISABILITY
PLAN WITH CIGNA,
MCKAIN LAW, PLLC
136 E. State Street
Ithaca, New York 14850
Attorneys for Plaintiff
CARLA N. MCKAIN, ESQ.
WILSON, ELSER, MOSKOWITZ,
EDELMAN & DICKER LLP
3 Gannett Drive
White Plains, New York 10604
Attorneys for Defendants
EMILY A. HAYES, ESQ.
ABIGAIL RUBIN, ESQ.
Mae A. D'Agostino, U.S. District Judge:
MEMORANDUM-DECISION AND ORDER
Plaintiff Michael J. Brutvan brought this action pursuant to the Employee Retirement
Income Security Act of 1974, 29 U.S.C. §§ 1001 et seq. (“ERISA”), for reimbursement of
Dependent Social Security Disability (“DSSD”) benefits which were offset by Defendant CIGNA
Life Insurance Company of New York (“CIGNA”) against Plaintiff’s long-term disability
(“LTD”) benefits. See Dkt. No. 1. Currently before the Court are the parties’ cross-motions for
summary judgment. Dkt. Nos. 22, 23. For the reasons stated herein, Defendants’ Motion for
Summary Judgment is denied and Plaintiff’s Motion for Summary Judgment is granted.
Plaintiff is a resident of Ithaca, New York and a former employee of Defendant Cornell
University (“Cornell”). See Dkt. Nos. 1 at ¶ 4; 23-7 at ¶ 2. Defendant Cornell is the employer
sponsor of Defendant Cornell Long Term Disability Benefits Plan (s/h/a Cornell University Long
Term Disability Plan with CIGNA) (“Plan”) – an employee benefit plan subject to ERISA –
which is insured by Defendant CIGNA. See Dkt. No. 23-7 at ¶ 6.
Plaintiff was employed by Defendant Cornell until on or about December 23, 2001, at
which time he left his employment due to medical issues that later resulted in a multiple sclerosis
diagnosis. At the time he left his employment at Cornell, he was covered under the Plan. See
Dkt. No. 1 at ¶¶ 14-16; CLICNY 0836-70.1 In July 2002, Plaintiff applied for LTD benefits under
the Plan, and on September 25, 2002, Plaintiff was granted LTD benefits retroactive to June 22,
2002. See CLICNY 0869-70; CLICNY 0742-43; Dkt. No. 23-7 at ¶ 17.
In August 2002, Plaintiff also applied for Social Security Disability Income (“SSDI”)
benefits. See Dkt. No. 23-7 at ¶¶ 20-21. On February 18, 2004, Plaintiff was awarded SSDI
benefits retroactive to December 24, 2001. See id. at ¶ 22. At that time, the Administrative Law
Judge for the Social Security Administration found that “[b]ecause there is evidence that the
claimant may have difficulty in managing his benefits, the undersigned recommends that the
component responsible for effectuating this decision determine whether the appointment of a
Both parties have placed before the Court excerpts of the administrative record, bearing
the prefix CLICNY, in support of their respective motions for summary judgment. See Dkt. Nos.
22-7, 23-6. For ease of reference, the Court will cite directly to the administrative record.
representative payee is warranted.” Dkt. No. 1-1, Ex. B at 5;2 see also CLICNY 0634 (“We have
determined that you need help managing your payments. We will be selecting a qualified person
to receive your payments. We call this person a representative payee. It will be your payee’s
duty to manage your Social Security payments for you and use them for your needs.”).
Thereafter, on April 13, 2004, Plaintiff’s minor daughter was awarded DSSD benefits, to be paid
to Plaintiff’s ex-wife as representative payee for Plaintiff’s daughter. See Dkt. No. 23-7 at ¶ 23.
Plaintiff’s daughter was paid retroactively in the amount of $15,906.00 for the period of June
2002 through March 2004 and awarded a prospective payment of $738 per month, beginning in
April 2004. See CLICNY 0950-52.
The Plan’s Provisions
The Plan defines the “Disability Benefit” for plan participants as “[t]he lesser of 60% of
an Employee’s monthly Covered Earnings rounded to the nearest dollar or the Maximum
Disability Benefit, reduced by any Other Income Benefits. ‘Other Income Benefits’ means any
benefits listed in the Other Income Benefits provision that an Employee receives on his or her
own behalf.” See Dkt. No. 1-1, Ex. A at 10. The Plan further defines the Other Income Benefits
(“OIB”) that may be offset against any LTD benefits payable under the Plan:
While an Employee is Disabled, he or she may be eligible for
benefits from other income sources. If so, the Insurance Company
[CIGNA] may reduce the Disability Benefits payable by the amount
of such Other Income Benefits. The extent to which Other Income
Benefits will reduce any Disability Benefits payable under the
Policy is shown in the Schedule of Benefits. Other Income Benefits
Citations to page numbers of documents identified by docket entry number are to the
numbered pages on the original document, rather than to the pagination assigned by CM/ECF
when a document is filed electronically with the Court.
2. a. any Social Security disability benefits the Employee or any
third party receives (or is assumed to receive*) on the Employee’s
* See the Assumed Receipt of Benefits provision.
Assumed Receipt of Benefits
The Insurance Company will assume the Employee is receiving
Other Income Benefits if he or she is eligible to receive them.
These assumed benefits will be the amount the Insurance Company
estimates the Employee may be eligible to receive.
The Insurance Company will not assume receipt of, nor reduce
benefits by, any elective, actuarially reduced, or early retirement
benefits under such laws until the Employee actually receives them.
Id. at 21-22 (“OIB Provision”). An “Employee” under the Plan is defined as follows: “For
eligibility purposes, an Employee is an employee of the Employer in one of the ‘Classes of
Eligible Employees.’ Otherwise, Employee means an employee of the Employer who is insured
under the Policy.” Id. at 30.
The Plan also has a “Survivor Benefit” provision which sets forth the method by which
LTD benefits will be paid should the covered employee die while receiving benefits:
The Insurance Company will pay a Survivor Benefit if an Employee
dies while Monthly Benefits are payable. . . .
Benefits will be paid to the Employee’s Spouse. If there is no
Spouse, benefits will be paid in equal shares to the Employee’s
surviving Children. If there are no Spouse and no Children,
benefits will be paid to the Employee’s estate.
“Spouse” means an Employee’s lawful spouse. “Children” means
an Employee’s unmarried children under age 21 who are chiefly
dependent upon the Employee for support and maintenance. The
term includes a stepchild living with the Employee at the time of his
or her death.
Id. at 24.
At the time Plaintiff applied for SSDI benefits in August 2002, he signed a
Reimbursement Agreement with Defendant CIGNA which affirmed CIGNA’s right to offset
certain OIB. See CLICNY 0599 (“I understand that under the terms of the STD/LTD policy
Benefits may be reduced by any amounts that I or my dependents, if applicable, receive or are
assumed to receive including, but not limited to: . . . Social Security disability or retirement
benefits”). The Reimbursement Agreement made it so that rather than CIGNA exercising its right
under the Plan to immediately offset estimated assumed benefits, Plaintiff could receive full
benefits under the Plan, subject to certain conditions, until such time as he actually received those
OIB. See id. (“I also understand the Insurance Company has the right to immediately reduce
benefits by an amount it estimates will be received, but by signing this agreement and complying
with its terms the Insurance Company will not reduce my benefits”).
Offset of DSSD Benefits
In April 2004, Defendant CIGNA calculated that it had overpaid Plaintiff beginning in
June 2002 by $1,426 per month for his SSDI benefits,3 and $713 per month for his daughter’s
DSSD benefits,4 for a total overpayment of $44,919. See Dkt. No. 23-7 at ¶¶ 27-29. Thereafter,
Defendant CIGNA offset Plaintiff’s SSDI benefits, as well as Plaintiff’s minor daughter’s DSSD
benefits, against Plaintiff’s prospective LTD benefits payable under the Plan. See id. at ¶¶ 29-30.
Beginning in or about November 2008, Plaintiff contacted Defendant CIGNA to dispute
the offset for his daughter’s DSSD benefit payments. CIGNA’s representatives informed Plaintiff
Plaintiff does not dispute that CIGNA was entitled to reduce his LTD benefits by the
amount of SSDI benefits he received.
The record before the Court is unclear as to the precise amount of DSSD benefits that
were offset against Plaintiff’s LTD benefits. It is undisputed that the amount of overpayment was
recalculated several times by CIGNA. See Dkt. No. 23-7 at ¶¶ 30-31. Plaintiff’s daughter’s
DSSD benefit payment was $738, but the parties agree that the offset for this benefit was
originally calculated at $713 per month. See CLICNY 0628-29. The DSSD offset was later
calculated at $409 per month. See CLICNY 1722-28. The Court need not resolve this issue since
the precise amount of the DSSD offset is not relevant to the parties’ cross-motions for summary
judgment and the issue of damages is not presently before the Court.
that they would need documentation showing that his child support payments had not been
decreased as a result of his minor daughter’s DSSD benefits in order to reverse the offset. See
CLICNY 0085, 87. Plaintiff then submitted documentation which showed that he did not have
access to his daughter’s benefits, that her primary residence was with her mother (Plaintiff’s exwife), and that the amount of Plaintiff’s child support payments, which was set by a percentage of
his income, had not changed. See Dkt. No. 23-7 at ¶ 34; CLICNY 0959-64.
By letter dated December 4, 2008, CIGNA informed Plaintiff that the documentation he
had submitted was insufficient: “In order for us to discontinue the deduction of Dependent SSDI
from the Disability Benefit, you must provide court documents which document the following:
the child or spouse do not share the same primary resident as you, the Dependent SSDI monies
are received by the eligible child or spouse at the separate residence, and the Dependent SSDI is
being paid above and beyond the prior and current child support agreement or divorce decree[.]”
CLICNY 0322-33. On February 3, 2009, Plaintiff wrote Defendant CIGNA through counsel and
requested “a sample of the required documentation, along with a policy statement that outlines
why the information that has been provided to you by my client is inadequate to discontinue the
deduction of Dependent SSDI from his disability benefits.” CLICNY 0937. Defendant CIGNA
responded to Plaintiff’s letter the following day, but did not provide any of requested information:
“Unfortunately, we are not attorneys and are unable to provide specifics in this area. . . .
Unfortunately, as I understand Mr. Brutvan’s situation, his separation was an amicable one where
there was no formal support orders, either prior to or after his disability. Because of this I am
unsure if there is any way to generate the paperwork we need to justify removing the offset.”
CLICNY 1315-16. Thereafter, Plaintiff and Defendant CIGNA exchanged additional rounds of
fruitless correspondence in March 2009 and June 2011. See Dkt. No. 23-7 at ¶¶ 55-56, 59-60.
Plaintiff then appealed the determination to offset his daughter’s DSSD benefits by letter
dated August 10, 2011, which appeal was denied on September 29, 2011. See Dkt. No. 1-1, Exs.
I, J. Plaintiff filed the instant action on April 6, 2012, challenging Defendants’ determination
with respect to the DSSD offset. See Dkt. No. 1.
Summary Judgment Standard
A court may grant a motion for summary judgment only if it determines that there is no
genuine issue of material fact to be tried and that the facts as to which there is no such issue
warrant judgment for the movant as a matter of law. See Chambers v. TRM Copy Ctrs. Corp., 43
F.3d 29, 36 (2d Cir. 1994) (citations omitted). When analyzing a summary judgment motion, the
court “‘cannot try issues of fact; it can only determine whether there are issues to be tried.’” Id. at
36-37 (citation omitted). Moreover, it is well-settled that a party opposing a motion for summary
judgment may not simply rely on the assertions in its pleading. See Celotex Corp. v. Catrett, 477
U.S. 317, 324 (1986) (citing Fed. R. Civ. P. 56(c), (e)).
In assessing the record to determine whether any such issues of material fact exist, the
court is required to resolve all ambiguities and draw all reasonable inferences in favor of the
nonmoving party. See Chambers, 43 F.3d at 36 (citing Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 255 (1986)) (other citations omitted). Where the non-movant either does not respond to the
motion or fails to dispute the movant’s statement of material facts, the court may not rely solely
on the moving party’s Rule 56.1 statement; rather, the court must be satisfied that the citations to
evidence in the record support the movant's assertions. See Giannullo v. City of New York, 322
F.3d 139, 143 n.5 (2d Cir. 2003) (holding that not verifying in the record the assertions in the
motion for summary judgment “would derogate the truth-finding functions of the judicial process
by substituting convenience for facts”).
Standards of Review Applicable to ERISA Actions
When considering an ERISA claim alleging improper denial of benefits, the Court must
first determine the appropriate standard of review to conduct its analysis of the ERISA plan
administrator’s decision to deny benefits. In general, a de novo standard of review will apply to
the plan administrator’s determination, unless the plan grants authority to the administrator to use
his or her discretion to construe the terms of the plan and determine eligibility for plan benefits.
See Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). In Firestone, the
Supreme Court held that “a denial of benefits challenged under [ERISA] § 1132(a)(1)(B) is to be
reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary
discretionary authority to determine eligibility for benefits or construe the terms of the plan.” Id.
Under a de novo standard of review “the Court will review ‘all aspects of [the]
administrator’s eligibility determination, including fact issues, de novo.’” O'Hara v. National
Union Fire Ins. Co. of Pittsburgh, PA, 697 F. Supp. 2d 474, 476 (W.D.N.Y. 2010) (internal
quotation marks omitted), vacated on other grounds, 642 F.3d 110 (2d Cir. 2011). When a court
engages in de novo review, plan terms are “given their plain meanings,” Wickman v.
Northwestern Nat'l Ins. Co., 908 F.2d 1077, 1084 (1st Cir. 1990), and ambiguities in plan
language are to be construed in favor of the claimant, see Masella v. Blue Cross & Blue Shield of
Conn., Inc., 936 F.2d 98, 107 (2d Cir. 1991) (citations omitted); Rudolph v. Joint Industry Bd. of
Elec. Industry, 137 F. Supp. 2d 291, 300 (S.D.N.Y. 2001). Under a de novo standard of review,
no deference is given to the plan administrator’s interpretation of the plan. See Katzenberg v.
First Fortis Life Ins. Co., 500 F. Supp. 2d 177, 193-94 (E.D.N.Y. 2007) (citation omitted).
Indeed, “the fiduciary must show that the claimant’s interpretation is unreasonable and that its
own interpretation is the only one that could fairly be placed on the policy.” Rudolph, 137 F.
Supp. 2d at 300 (citing Alfin, Inc., v. Pacific Ins. Co., 735 F. Supp. 115, 119 (S.D.N.Y. 1990)).
If a benefits plan grants the plan administrator discretionary authority to determine
eligibility for benefits, however, an arbitrary and capricious standard of review will be applied to
the administrator's determination. See Kinstler v. First Reliance Standard Life Ins. Co., 181 F.3d
243, 249-52 (2d Cir. 1999). Under the arbitrary and capricious standard, a denial of benefits
“may be overturned only if the decision is ‘without reason, unsupported by substantial evidence
or erroneous as a matter of law.’” Id. at 249 (quoting Pagan v. NYNEX Pension Plan, 52 F.3d
438, 442 (2d Cir. 1995)) (other citation omitted); see also Fuller v. J.P. Morgan Chase & Co.,
423 F.3d 104, 107 (2d Cir. 2005). To establish that a plan administrator’s decision is supported
by “substantial evidence,” the decision must be supported by “‘such evidence that a reasonable
mind might accept as adequate to support the conclusion reached by the [administrator.]’”
Celardo v. GNY Automobile Dealers Health & Welfare Trust, 318 F.3d 142, 146 (2d Cir. 2003)
(quoting Miller v. United Welfare Fund, 72 F.3d 1066, 1072 (2d Cir. 1995)). There must be more
than a “scintilla” of evidence to support the decision, but there need not be a preponderance of the
evidence, provided the evidence relied upon by the administrator is reliable. See id.
“‘[A] plan under which an administrator both evaluates and pays benefits claims creates
the kind of conflict of interest that courts must take into account and weigh as a factor in
determining whether there was an abuse of discretion, but does not make de novo review
appropriate.’” Hobson v. Metropolitan Life Ins. Co., 574 F.3d 75, 82–83 (2d Cir. 2009) (quoting
McCauley v. First Unum Life Ins. Co., 551 F.3d 126, 133 (2d Cir. 2008)). Rather, a “showing
that the administrator’s conflict of interest affected the choice of a reasonable interpretation is
only one of several different considerations that judges must take into account when review[ing]
the lawfulness of benefit denials.” Id. at 83 (alteration in original) (internal quotation marks
omitted). “No weight is given to a conflict in the absence of any evidence that the conflict
actually affected the administrator’s decision.” Durakovic v. Bldg. Serv. 32 BJ Pension Fund,
609 F.3d 133, 140 (2d Cir. 2010).
Since the Plan does not contain discretionary language, the parties agree that the de novo
standard of review should apply here. See Dkt. Nos. 22-3 at 9; 23-8 at 10.
The Parties’ Positions
1. Plaintiff’s position
Plaintiff claims that pursuant to ERISA § 502(a)(1)(B) he “is entitled to recoup all of the
DSSD benefits offset by CIGNA against Plaintiff’s disability benefits under the Plan, . . .” Dkt.
No. 1 at ¶ 56. Plaintiff asserts that the Plan language is clear and unambiguous and only permits
the offset of Social Security benefits paid to him (or his representative payee) and does not permit
the offset of DSSD payments to his minor daughter, who lives with his ex-wife. In the
alternative, Plaintiff contends that Defendants should have reversed the offset based upon the
evidence he submitted which showed that (a) his daughter did not live with him; (b) the DSSD
payments were paid directly to his ex-wife as representative payee for his daughter; (c) he did not
have possession, custody, or control of the DSSD payments; and (d) the DSSD payments did not
reduce his child support obligations. Defendants’ requirement of court documentation, Plaintiff
argues, is unsupported by the Plan language and is therefore an unauthorized interpretation.
Plaintiff also argues that, in the event the Court finds the Plan language to be ambiguous, it
should be construed against Defendant CIGNA, which drafted the Plan, and the Court should
consider certain extrinsic evidence outside the administrative record which supports his
2. Defendants’ position
First, Defendants argue that the plain language of the Plan provides that CIGNA is entitled
to the DSSD offset. Defendants note that the Plan states that Defendant CIGNA may offset
“Social Security disability benefits the Employee or any third party receives . . . on the
Employee’s behalf.” Since it is undisputed that Plaintiff’s minor daughter received the DSSD
benefits because Plaintiff was found to be disabled by the Social Security Administration,
Defendants observe that she would not have received the benefits otherwise. Thus, Defendants
assert that the DSSD benefits were received on Plaintiff’s behalf, a position which Defendants
contend is supported by the Social Security Administration’s regulations. See Dkt. No. 22-3 at
10-11. Second, Defendants state that the documentation submitted by Plaintiff was insufficient to
show that the DSSD payments did not mitigate Plaintiff’s child support payments. See id. at 1113. Last, Defendants contend that the 2002 reimbursement agreement obligates Plaintiff to
reimburse CIGNA for Social Security disability benefits received by his dependents. See id. at
Analysis of the Plan Language
The parties have agreed on nearly all of the facts relevant to this motion. The point of
disagreement is whether the Plan language permits the offset of Plaintiff’s daughter’s DSSD
benefits against his LTD benefits. Since the parties agree to the basic facts, the question of
whether this ERISA plan allows for a set off for DSSD benefits is a question of law. Thus, to
determine the rights of the parties, this Court must look to the contractual language of the Plan.
Under ERISA, “[a] civil action may be brought . . . by a participant or beneficiary . . . to
recover benefits due to him under the terms of his plan, to enforce his rights under the terms of
the plan, or to clarify his rights to future benefits under the terms of the plan.” 29 U.S.C. §
1132(a)(1)(B). Section 1132(a)(1)(B) “provides contractual relief to individual beneficiaries.”
Dobson v. Hartford Fin. Servs. Group, Inc., 389 F.3d 386, 397 (2d Cir. 2004). “In claims under
[Section 1132(a)(1)(B), courts] apply federal common law . . . in interpreting the beneficiary's
entitlements.” Lifson v. INA Life Ins. Co., 333 F.3d 349, 352 (2d Cir. 2003). “[Courts] apply
familiar rules of contract interpretation in reading an ERISA plan.” Id. at 353. “Such familiar
canons of contractual interpretation include . . . considering the terms of the contract with an eye
toward the entire document so as not to render any provision superfluous or nugatory, . . .” Huff
v. Cruz Contracting Corp., 643 F. Supp. 2d 344, 361 (S.D.N.Y. 2009). Courts “interpret ERISA
plans in an ordinary and popular sense as would a person of average intelligence and experience.”
Critchlow v. First UNUM Life Ins. Co. of Am., 378 F.3d 246, 256 (2d Cir. 2004) (citations and
“[U]nambiguous language in an ERISA plan must be interpreted and enforced in
accordance with its plain meaning. Language is ambiguous when it is capable of more than one
meaning when viewed objectively by a reasonably intelligent person who has examined the
context of the entire integrated agreement.” Gibbs ex rel. Estate of Gibbs v. CIGNA Corp., 440
F.3d 571, 578–79 (2d Cir. 2006) (internal quotation marks omitted). “Where contract language is
ambiguous, summary judgment is not appropriate,” except that “a court may look to extrinsic
evidence to resolve ambiguity in an ERISA plan, but only when the extrinsic evidence is itself
unambiguous.” Eastman Kodak Co. v. Bayer Corp., 576 F. Supp. 2d 548, 550 & n.2 (S.D.N.Y.
2008), aff'd sub nom. Eastman Kodak Co. v. STWB Inc., No. 08–4722, 344 Fed. Appx. 702 (2d
Cir. 2009). “Whether language is ambiguous is a question of law to be resolved by reference to
the contract alone.” Id. at 551.
If there are ambiguities in an ERISA plan, they are to be construed against the insurer,
which is a “hornbook rule of contract interpretation . . . incorporated into the federal common law
governing ERISA-regulated plans . . . .” Critchlow, 378 F.3d at 256; see also Hugo Boss
Fashions, Inc. v. Federal Ins. Co., 252 F.3d 608, 616 (2d Cir. 2001) (noting that “the contra
proferentem does not come into play unless [the] court first determines that the contract is, in fact,
With these considerations in mind, the Court turns to the Plan language. It is axiomatic
that where the language of a contract is unambiguous, the parties’ intent is determined within the
four corners of the contract, without reference to external evidence. See United States v. Liranzo,
944 F.2d 73, 77 (2d Cir. 1991). The Court finds as a matter of law that the Plan language at issue
manifests a plain and unambiguous intent to provide LTD benefits without offsets for DSSD.
The Plan language in the OIB Provision is explicit in providing for each kind of offset.
Specifically, the OIB Provision provides that CIGNA may reduce LTD benefits payable under the
Plan in the amount of “any Social Security disability benefits the Employee or any third party
receives . . . on the Employee’s behalf.” It makes no reference to the Employee’s family, spouse,
children, or dependents. The Plan defines “Employee” but does not otherwise define or elaborate
upon what is meant by the phrase “the Employee or any third party receives . . . on the
Employee’s behalf.” On their face, these words mean benefits the Employee or someone on the
Employee’s behalf receives. They do not mean benefits which the Employee or his dependents
receive. The Court interprets the Plan language as it is used in the ordinary sense. Benefits
received on behalf of the employee are those benefits belonging to the employee, paid to another
as his agent or representative. See Oxford English Dictionary Online (3d ed. 2012) (“behalf, n. 1.
on behalf of: . . . c. On the part of (another), in the name of, as the agent or representative of, on
account of, for, instead of. (With the notion of official agency.)”).
If Defendant CIGNA had intended for DSSD benefits to be offset against LTD benefits, it
could have done so, but it did not. “It is a simple task of draftmanship to specify which offsets
are applicable in any particular plan.” In re Unisys Corp. Long-Term Disability Plan ERISA
Litigation, 97 F.3d 710, 715 (3d Cir. 1996). Not only does the Plan language fail to specify that
DSSD payments to Plaintiff’s family may be offset against his LTD benefits, its explicit mention
of offsets for SSDI benefits that he (or a third party on his behalf) receives creates the impression
that this silence was intentional. Therefore, the Court declines to look for outside evidence of
Plan terms. See, e.g., W.W.W. Assoc., Inc. v. Giancontieri, 77 N.Y.2d 157, 162 (1990)
(“Evidence outside the four corners of the document as to what was really intended but unstated
or misstated is generally inadmissible to add to or vary the writing”).
This interpretation is consistent with the language used throughout the Plan. For example,
“Employee” means the participant, and when spouses and dependent children are discussed, as in
the Survivor Benefits provision, the reference is explicit. See Dkt. No. 1-1, Ex. A at 24
(“‘Spouse’ means an Employee’s lawful spouse. ‘Children’ means an Employee’s unmarried
children under age 21 who are chiefly dependent upon the Employee for support and
maintenance. The term includes a stepchild living with the Employee at the time of his or her
death.”). In addition, the Plan’s Schedule of Benefits defines OIB as “any benefits listed in the
Other Income Benefits Provision that an Employee receives on his or her own behalf.”
Defendants argue that Plaintiff’s daughter would not have received the DSSD benefits
‘but for’ Plaintiff’s disability and, therefore, those benefits were received on Plaintiff’s behalf.
As discussed above, the Plan language and common sense do not support such an interpretation.
Moreover, there are two types of Social Security disability benefits at issue here – those awarded
directly to the disabled person (SSDI) and those awarded to the disabled person’s dependents
(DSSD). Dependents are granted their benefits directly by statute, which provides that they “shall
be entitled” as individuals in their own right to such benefits. See 42 U.S.C. § 402(b), (d). These
payments are the property of the dependent and cannot be said to be received on the disabled’s
Defendants further contend that such an interpretation would render superfluous the phase
“or any third party receives . . . on the Employee’s behalf.” But this language, on its face, is
clearly intended to address the not uncommon situation where, as here, SSDI payments are made
to a representative payee (a third party) on behalf of the disabled individual. Indeed, Plaintiff has
not contested CIGNA’s right to offset his own SSDI payments, even though the record indicates
that those payments (at least initially) were made to a third-party. Thus, the Court’s interpretation
of the Plan language would not render the “third party” provision meaningless.
In In re Unisys Corp. Long-Term Disability Plan ERISA Litigation, the Third Circuit held
that a plan must specify which benefits are to be considered in an offset provision. See In re
Unisys Corp. Long-Term Disability Plan ERISA Litigation, 97 F.3d 710 (3d Cir. 1996). In
Unisys, the defendant drafted a LTD plan which provided that benefits received by employees
could be adjusted if the employees received pension benefits from other sources. After the
original publication of the plan, the plan was revised to state that benefits were subject to
reduction by amounts of any dependents’ Social Security awards. The plaintiffs, employee
participants of the plan, argued that only benefits they themselves received should be deducted
from plan benefits. Defendants argued that this new language expressed a continuation, rather
than a change of an existing provision. The district court granted summary judgment in the
defendants’ favor. On appeal, the Third Circuit examined the language of the plan, reversed the
district court, and concluded, “[t]here is no evidence in the record which supports Unisys’
argument that the words ‘benefits you receive’ are susceptible of the meaning ‘benefits you and
your dependents receive.’” Id. at 715.
Thus we have concluded as a matter of law that the language of the
Income From Other Sources provision of the Unisys LTD Plan is
unambiguous. It provides that the benefits which a participant
receives may be adjusted for disability benefits which the
participant himself receives from other sources, such as Social
Security. It does not provide for adjustments for disability benefits
which a participant’s dependents receive from other sources.
Id. at 717. Although not binding on this Court, the Court finds Unisys persuasive, as it deals with
similar language to the Plan at issue here.
Defendants rely on Fortune v. Group Long Term Disability Plan for Employees of
Keyspan Corp., et al., 391 Fed. Appx.. 74 (2d Cir. 2010), and other cases where courts have
found DSSD offsets to be permissible. However, the relevant plan language in Fortune, and each
of the cases in which a court has found DSSD payments appropriately offset against LTD
benefits, expressly stated that Social Security benefits paid to the plan participant’s family would
be subject to such an offset. See, e.g., Fortune, 391 Fed. Appx. at 79 (noting that OIB was
defined to include “disability benefits under: (a) the United States Social Security Act . . . that
you, your spouse and children are eligible to receive because of your Disability”) (alteration in
original); Hampton v. Dana Corp., 152 Fed. Appx 441, 442 (6th Cir. 2005) (“[P]lan provided that
monthly benefits would be reduced by ‘the amount of any Primary and Family Social Security
Benefits for which the Employee is . . . eligible.’”) (footnote omitted) (alteration in original);
Rellou v. JP Morgan Chase Long-Term Disability Plan, et al., No. 07-1334, 2009 WL 3151230,
*1 (S.D.N.Y. Sept. 30, 2009), aff’d, 439 Fed. Appx. 21 (2d Cir. 2011) (observing that ERISA
plan stated that plan administrator “will subtract from your gross disability payment . . . [t]he
amount that you, your spouse and your children receive as disability payments because of your
disability under . . . the United States Social Security Act”) (alteration in original); Schultz v.
Aviall, Inc. Long Term Disability Plan, et al., 790 F. Supp. 2d 697, 701, 705 (N.D. Ill. 2011),
aff’d, 670 F.3d 834 (7th Cir. 2012) (finding that the respective plans allowed for deductible
sources of income including “[t]he amount that you, your spouse and children receive or are
entitled to receive as loss of time disability payments because of your disability under . . . the
United States Social Security Act” and amounts “payable to you or your spouse or children based
on your work and earnings” including “benefits payable under or by reason of . . . [t]he United
States Social Security Act as amended from time to time [but not] benefits paid to your former
spouse or to your child living with such spouse”); Mayhew v. Hartford Life and Accident Ins. Co.,
et al., 822 F. Supp. 2d 1028, 1034-35 (N.D. Cal. 2011) (noting that OIB was defined to include
“disability benefits under the United States Social Security Act . . . or similar plan or act that,
your spouse and children are eligible to receive because of your Disability”); Pennell v. The
Hartford Life and Accident Ins. Co., No. 09-485, 2010 WL 330259, *5 (N.D. Ohio Jan. 21, 2010)
(allowing offset where OIB was defined as “the amount of any benefit for loss of income,
provided to you or your family, as result of the period of Disability for which you are claiming
benefits under this plan,” including Social Security benefits). The Plan at issue here contains no
such explicit language.5
Although the Reimbursement Agreement did refer to payments received by Plaintiff’s
dependents, the Court finds that the Reimbursement Agreement did not substantively alter the
terms of the Plan, specifically with respect to the OIB Provision. Rather, the Reimbursement
Agreement reaffirmed CIGNA’s offset rights pursuant to the Plan and obligated Plaintiff to
reimburse CIGNA for any overpayment of LTD benefits based upon the offsets outlined in the
Finally, since the Court finds the Plan language to be unambiguous as a matter of law, it
need not reach the parties’ remaining contentions with respect to, inter alia, the sufficiency of the
documentation provided by Plaintiff in support of his appeal, the import of any extrinsic evidence
in support of their respective interpretations, whether the Court may consider evidence outside the
administrative record, or the propriety of Defendants’ use of Social Security regulations in
justifying its determination.
After carefully reviewing the entire record in this matter, the parties’ submissions and the
applicable law, and for the above-stated reasons, the Court hereby
ORDERS that Defendants’ motion for summary judgment is DENIED; and the Court
ORDERS that Plaintiff’s motion for summary judgment is GRANTED; and the Court
ORDERS that the parties’ counsel shall be available for a telephone conference on
Friday, October 18, 2013 at 10:00.am. to discuss setting a trial date on the issue of damages and
attorney’s fees. Defendants’ counsel shall initiate the call using a professional teleconferencing
service; and the Court further
ORDERS that the Clerk of the Court shall serve a copy of this Memorandum-Decision
and Order on all parties in accordance with the Local Rules.
IT IS SO ORDERED.
Dated: September 27, 2013
Albany, New York
Plan’s OIB Provision.
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