Gladstein v. Lincoln Financial Group, Inc.

Filing 39

MEMORANDUM AND ORDER: DENYING Plaintiff Dayna Gladstein's 23 Motion for Summary Judgment; DENYING Plaintiff Dayna Gladstein's 36 Motion to Amend the Complaint; GRANTING Defendant Lincoln Financial Group's 22 Motion for Summar y Judgment with respect to the following: 1) Lincoln's acceptance of the annotated $90,000 check Gladstein submitted as offset for the SSDI payments she received does not constitute full accord and satisfaction. Gladstein remains obligat ed to repay the full amount of any overpayments she incurred; 2) The SSDI benefits awarded to Gladstein's daughter are included in "Other Income," as defined in the Policy, and they must be included in the calculation of the overpaym ent which Gladstein incurred: 3) Lincoln is authorized to reduce LTD benefit payments awarded to Gladstein until full reimbursement of the overpaid amounts were made. Further, Lincoln's claim for unjust enrichment is DISMISSED as moot. -- Wit h respect to Lincoln's request for attorney's fees pursuant to 29 U.S.C. § 1132 (g)(1) asserted in Count VI of its counterclaim, Lincoln, as the prevailing party in this litigation, is directed, if it so chooses, to file a motion f or attorneys fees within fourteen (14) days of issuance of this Memorandum and Order (i.e., by October 7, 2015). Gladstein may file a response within fourteen (14) days thereafter. ---- So Ordered by Judge Mary M. Lisi on 9/22/2015. (Duhamel, John)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
DAYNA GLADSTEIN
v.

C.A. No. 14-390-ML

LINCOLN FINANCIAL GROUP a/k/a
LINCOLN NATIONAL CORPORATION
MEMORANDUM AND ORDER
The plaintiff, Dayna Gladstein (“Gladstein”), seeks payment of
what she alleges are past due benefits under a long term disability
insurance policy issued by the defendant, Lincoln Financial Group1
(“Lincoln”), to Gladstein’s former employer. Gladstein’s claims are
based on the contentions that (1) a $90,000 payment Gladstein made
to Lincoln for reimbursement related to her receipt of social
security disability (“SSDI”) benefits was in full satisfaction of
Lincoln’s demand for $177,353 in overpayments; and (2) any SSDI
benefits awarded to Gladstein’s daughter as a result of Gladstein’s
disability are excluded from Gladstein’s repayment obligations. On

1

Lincoln Financial Group is a trade name of The Lincoln
National Life Insurance Company. Answer ¶2 (Dkt. No. 3). Lincoln is
the successor-in-interest to Jefferson Pilot Life Insurance
Company, which issued the policy at issue in this case. Id. T h e
Court notes that the Policy was issued by Lincoln’s predecessor,
which merged into Lincoln. For ease of reading, the Memorandum and
Order will refer only to Lincoln, which is the party of interest in
this case.
1

its part, Lincoln seeks repayment of approximately $29,3762 for
allegedly overpaid benefits, as well as attorneys’ fees it has
expended in an effort to recoup the overpayment. The matter is
before

the

Court

on

the

parties’

cross-motions

for

summary

judgment.
I. Factual Background
The summary of the factual underpinnings of this case are
based on the submissions of the parties in support of their
respective motions for summary judgment. The Court notes that
Gladstein submitted a Statement of Undisputed Facts (“PSUF”) (Dkt.
No.

23-2,

an

(“PSUF2")(Dkt.
(“PSDF”)(Dkt.

Additional
No.

Nos.

35-1),
27-2,

Statement
a

of

Statement

31),

and

a

Undisputed

Facts

Disputed

Facts

of

Statement

of

Additional

Disputed Facts (“PSDF2")(Dkt. No. 35-2). On its part, Lincoln
submitted a Statement of Undisputed Facts (“DSUF”)(Dkt. No. 22-2),
a Statement of Additional Undisputed Facts (“DSUF2")(Dkt. No. 30),
and a

Statement

of

Disputed

Facts (“DSDF”)(Dkt. No.

29).

In

addition, Lincoln submitted two large binders with the redacted
version of the administrative record (the “Administrative Record”

2

The amount reflects
Lincoln’s original overpayment figure
reduced by the sum of Gladstein’s $90,000 repayment, plus $52,128
in benefit offsets, i.e. reduced payments Lincoln made to Gladstein
following the award of SSDI benefits, plus an $856 overestimate of
such benefits by Lincoln, and $6,000 in attorney’s fees allowed to
Gladstein’s counsel. Affidavit of Jason Schiebel ¶17 (Dkt. No. 283).
2

or “AR”)3, together with a CD containing the same. Docket Entry
05/07/15.

The

Administrative

Record

appears

to

consist

of

Gladstein’s entire claim file, including, inter alia, Gladstein’s
voluminous
application

medical
for

correspondence

record

from

disability
between

the

benefits;

the

parties;

time

she

copies

first

of

documents

the

made

an

extensive

relating

to

determinations made by the Social Security Administration; and
various schedules regarding payments Lincoln made to Gladstein. For
the most part, the details of Gladstein’s disability are not
relevant in this case and the Court will limit its summary of facts
accordingly, leaving out any unsupported allegations, disputes over
factual details that have no impact on the Court’s analysis, or any
arguments made in support of the parties’ respective positions.
The

following

facts

are

undisputed

by

either

party:

in

November 2005, at the time Gladstein first applied for disability
benefits, she was employed by Child and Family Services of Newport
County (“CFS”), to which Lincoln had issued a group long term
disability (“LTD”) insurance policy (the “Policy”)(Dkt. No. 22-3).
DSUF ¶1. The Policy is governed by ERISA;4 it is a

partially

3

The Administrative Record consists of 1844 Bates-stamped pages
of various categories of documents without the benefit of a content
section or an index.
4

Although Gladstein’s LTD claim profile contains the notation:
“Group is Non-ERISA,” see AR at 1, that statement appears to be in
error. Gladstein does not contest Lincoln’s assertion that the
Policy is governed by ERISA. See PSDF (no disagreements with DSUF
3

funded CFS’s employee welfare benefit plan as defined by ERISA.
DSUF ¶¶ 2, 3. The Policy’s benefit percentage is set at 60% of
Gladstein’s basic monthly earnings, with a maximum monthly benefit
of $6,000. AR 2.
specified,

broad

Under the Policy, Lincoln has, unless otherwise
discretionary

authority

concerning

Policy

management, administration, interpretation, and dispute resolution.
Policy at 9, 135.
The following provisions in the Policy are critical to the
issues in this case:
TOTAL DISABILITY MONTHLY BENEFIT
The amount of the Total Disability Monthly Benefit
[to be paid by Lincoln to an insured employee who is
totally or partially disabled] equals:
1. the Insured Employee’s Basic Monthly Earnings
multiplied by the Benefit Percentage (limited to the
Maximum Monthly Benefit); minus
2. Other Income Benefits. Policy at 17, DSUF ¶6.
(Emphasis added).
Other Income Benefits are defined in the Policy to
include
“Benefits under the United States Social Security Act ...
or any similar plan or act as follows:
(a) disability or unreduced retirement benefits for
which the Insured Employee and any spouse or child is
eligible, because of the Insured Employee’s Disability or
eligibility for unreduced retirement benefits;... Policy
at 20. (Emphasis added) DSUF ¶¶ 7, 8.

¶¶1-5).
5

Consistent with the parties’ submissions, the Court will refer
to the exhibit page numbers of the Policy, not the policy page
numbers.
4

Although Gladstein agrees that “this is what is stated in policy
[sic],” she disagrees that “the policy in the matter at hand is
correct,” citing case law for the proposition that social security
benefits paid to minors are not subject to offset against LTD
benefits. PSDF ¶¶6-8.
The Policy further provides that, if the insured is
“entitled to payment or reimbursement from some other
person or organization, through a legal action or claim,
which is due to the same or related Disability for which
Policy benefits are payable,”
Lincoln has the right to a lien on any recovery from that person or
organization for
1. the amount actually recovered for such Disability,
less reasonable legal fees and expenses the Insured
Employee paid to pursue the recovery; or 2. The total
amount of Policy benefits paid for the Disability;
whichever is less. Policy at 12; DSUF ¶9.
In

the

case

of

overpayment

of

Policy

benefits,

full

reimbursement to Lincoln is required within sixty days. Policy at
12; DSUF ¶10. If timely reimbursement is not made, Lincoln has the
right to “1. reduce future benefits until full reimbursement is
made; and 2. recover such overpayments from the Insured Employee or
his or her estate.” Policy at 12. The Policy further specifies that
[s]uch reimbursement is required whether the overpayment is due to
error in processing, “the Insured Employee’s receipt of Other
Income Benefits,” or fraud or any other reason. Policy at 12; DSUF
¶10.

5

Gladstein

first

applied

for

benefits

under

the

Policy

effective6 November 29, 2005. AR 1352; DSUF ¶11. Initially, Lincoln
denied the claim and Gladstein appealed. On April 5, 2007, Lincoln
awarded benefits to Gladstein. AR 1197; DSUF ¶12. In order to
receive the benefits awarded to her, Gladstein was required to fill
out a “Disability Payment Options” form, which informed her that
“Disability benefits will be reduced by the amount of Social
Security Benefits which you and your spouse and family are eligible
to receive.” AR 1185 (underline in original). Because the Social
Security Administration had not yet made a decision regarding
Gladstein’s benefits, Lincoln provided Gladstein with two options
in receiving benefits under the Policy: (1) she could receive
monthly

benefits

reduced

by

what

Lincoln

estimated

her

SSDI

benefits to be, or (2) she could receive an unreduced monthly
benefit

subject

to

repayment

for

any

overpaid

amounts

and

subsequent reduction of any future benefits. AR 1185; DSUF ¶13. It
is

undisputed

that

Gladstein

elected

the

second

option,

acknowledging that if she did not make a timely repayment of any
overpayment, Lincoln was entitled to “offset the amount of the
overpayment against any current or future benefits payable to
[her]... and take any other actions necessary to recover the

6

According to the Administrative Record, Gladstein stopped
working on June 2, 2005, which set the potential benefit start date
for November 29, 2005, following a 180-day elimination period. AR
1352.
6

overpayment.” AR 1186; DSUF ¶14,15.
By letter dated November 7, 2011, Lincoln informed Gladstein
that it had reviewed her Long Term Disability claim and had
determined that no benefits were payable beyond November 28, 2011.
AR 354; DSUF ¶17. According to Lincoln’s notification, “the medical
documentation

contained

in

[Gladstein’s]

claim

file

does

not

support Total Disability as defined by this Policy.” AR 357; DSUF
¶17. Although Gladstein disagrees with Lincoln’s statement that
there was

“a

lack

of medical

documentation to

support total

disability pursuant to the Policy,” DSUF ¶17, PSDF ¶17, the Court
notes that Lincoln’s determination regarding Gladstein’s disability
status is not at issue in this case. Accordingly, a dispute
regarding the underlying validity of Lincoln’s determination as to
Gladstein’s status is insufficient to preclude an adjudication of
the parties’ claims at summary judgment.
Gladstein does not disagree that, as of the date Lincoln
terminated her benefits, she had received $275,966.61 in LTD
benefits from Lincoln. AR 333; DSUF ¶ 18. Gladstein appealed the
termination of her benefits on May 11, 20127. AR 317; DSUF ¶ 19. At
the same time, Lincoln and Gladstein corresponded regarding the
benefit overpayment caused by Gladstein’s receipt of her SSDI

7

Although Lincoln asserts that the appeal was commenced on May
29, 2012, the Administrative Record reflects that Lincoln
acknowledged receiving the appeal on May 11, 2012. Letter dated May
16, 2012 from Lincoln to Gladstein’s counsel. AR 317.
7

award.

DSUF

¶20.

According

to

the

Administrative

Record,

on

September 6, 2005, the Social Security Administration acknowledged
receipt

of

benefits.

Gladstein’s
AR

391,

1180.

August
(As

26,

2005

Gladstein

application
correctly

for

SSDI

points

out,

Lincoln’s statement that she applied for SSDI benefits after
Lincoln approved her claim, see DSUF ¶21, PSDF ¶21, appears to be
in error. However, the timing of the application is not relevant to
the claims of either party.)
On September 12, 2011, an Administrative Law Judge determined
that Gladstein had been disabled under sections 216(I) and 223(d)
of the Social Security Act since June 24, 2005. AR 391. The
response to a query submitted by Lincoln to the Social Security
Administration (“SSA”) reflects a past due SSDI benefits award of
$190,588 ($129,684 to Gladstein as Payee and $60,904 to Gladstein
as Payee for M.C., her daughter8.)

The parties differ on what

lump sum payment Gladstein received for SSDI once her disability
had been determined. According to Lincoln, Gladstein received a
lump-sum

benefit

of

$190,588,

of

which

$183,353

represented

benefits for the same time period during which Lincoln paid her
$275,966 in Policy benefits. DSUF ¶¶ 24, 25. In support of that

8

The record reflects that Gladstein’s daughter M.C. was twelve
years old when Gladstein first applied for disability benefits and
that M.C. was was eighteen years old when Gladstein’s SSDI benefits
were approved and retroactive payment was made. Ex. 2 to Schiebel
Aff. (Dkt. No. 28-5); AR 389; Gladstein Aff. ¶15.
8

contention, Lincoln references AR 0334, which appears to be an
enlargement of the SSA query, that is only partially legible
(compare AR 334 to Dkt. No. 28-5). Although that document states
that Gladstein’s total family benefits are set at $2630.80 per
month and that past benefits due are $190,588, the amount of the
lump sum payment received by Gladstein cannot be gleaned from that
portion of the record. On her part, Gladstein denies receiving a
lump sum benefit of $190,588, asserting instead that she received
a

total amount

of

$163,702, of which

her

dependent received

$60,904. PSDF ¶¶24,25.
The correspondence from Lincoln to Gladstein regarding her
disability claims reflects that Lincoln reiterated on numerous
occasions that any payments made to Gladstein under the Policy were
subject to offset by any SSDI benefits she might receive. See AR
1197 (April 5, 2007 Lincoln letter, informing Gladstein that she
qualified for disability benefits); AR 1195 (April 9, 2007 Lincoln
letter, requesting Gladstein to apply for SSDI benefits); AR 1189
(April 10, 2007 Lincoln letter, advising Gladstein’s attorney that
Gladstein was awarded LTD benefits under the Policy and stating
that “benefits for which Mrs. Gladstein or her dependents may
qualify,

offset

the

monthly

[LDS]

benefit”

set

at

$3,925.”

(Emphasis added); AR 673(December 22, 2008 Lincoln letter reminding
Gladstein to provide Lincoln with the current status of her SSDI
application. The letter also notifies Gladstein that, if the

9

information is not received by January 12, 2009, Lincoln may
estimate her SSDI award and offset the LTD benefits or suspend
future benefits until the information has been received); AR 592
(July 21, 2010 Lincoln letter, informing Gladstein that, because
she had not provided information regarding her SSDI application
status, Lincoln estimated her SSDI benefits at $2,181 per month,
reducing her monthly benefit to $1,744); AR 459 (October 4, 2011
Lincoln letter, acknowledging that Gladstein had been awarded SSDI
benefits,

noting

that,

if

such

benefits

had

been

awarded

retroactively, she would have incurred an overpayment of Policy
benefits, and encouraging her to retain any SSDI lump sum until the
overpayment could be calculated); AR 400 (October 17, 2011 Lincoln
letter, advising Gladstein that, in the absence of an SSA award
letter Lincoln had requested, Lincoln would estimate her monthly
SSDI benefits to be $2,181 for Gladstein and $1,090 for her
dependent. Lincoln offset the entire amount, reducing Gladstein’s
future monthly benefit payments to $654); AR 399 (October 25, 2011
Lincoln

letter,

informing

Gladstein

that

it

would

offset

an

estimated SSDI benefit of $2,181, reducing her future monthly
payments
letters

to

$1,7449).

related

to

Although
future

Gladstein

payments

and

suggests
not

that

“most

reimbursement

9

The change appears to reflect that Lincoln had been informed
by Gladstein that her daughter was no longer eligible for SSDI
benefits because she had reached maturity.
10

obligations,” see PSDF ¶22, it is undisputable that Gladstein was
repeatedly informed by Lincoln that any SSDI payments she and/or
her family received would be offset from her LTD benefits and that
she was obligated to repay any overpayment to Lincoln.
By letter dated January 9, 2012, Lincoln notified Gladstein
that it had received notification of her SSDI award and that, due
to such award, the LTD claim had been overpaid by $177,353. AR 332;
DSUF ¶26. Lincoln requested a check for $177,353 within 30 days.
Attached to the letter is a spreadsheet that reflects (1) Lincoln’s
LTD payments to Gladstein between November 29, 2005 and November
29, 2011, totaling $275,966 (uncontested by Gladstein), and (2) the
amount of
Gladstein,

LTD

benefits

calculated

Lincoln

by

asserts

subtracting

were actually

$2,629

in

due

monthly

to

SSDI

benefits from $3,925 in LTD benefits paid, and totaling $92,612.
Lincoln

further

reduced

the

calculated

overpayment

total

of

$183,35310 by subtracting $6,000 in attorney’s fees to Gladstein’s
counsel for successfully obtaining SSDI benefits for his client.11
AR 333.
By letter dated December 15, 2011, Gladstein’s counsel, on his
10

Although Lincoln alleges that Gladstein received a $190,588
lump sum payment of SSDI benefits, it further asserts that only
$183,353 represented SSDI benefits awarded for the period she also
received $275,966 in Policy benefits from Lincoln. DSUF ¶25.
11

As is evident from the correspondence between Lincoln,
Gladstein, and her counsel, that Gladstein is being represented by
her husband, who is an attorney.
11

client’s behalf, send a check to Lincoln “to fully reimburse
Lincoln Financial for money it has paid to Ms. Gladstein.” DSUF
¶27. Gladstein’s counsel also stated, without further explanation,
that he had “deducted money that was owed to my client and for
attorney’s

fees

as

per

Costa

v.

Pawtucket

Mutual

Insurance

Company.12” AR 330; DSUF ¶29. The $90,000 check Gladstein’s counsel
sent to Lincoln includes a notation that it is intended for “Full
+ final payment owed as reimbursement for benefits paid to Dayna
Gladstein.” AR 107; DSUF ¶28.
In later correspondence Gladstein’s counsel sent to Lincoln,
he asserts that he arrived at what he considered full repayment by
subtracting a fee of $12,79813 from $102,798, the SSDI lump sum
benefits Gladstein admits to receiving. AR 103. A Social Security
Benefit Statement (“SSA-1099") sent to Gladstein reflects net
benefits for 2011 of $115,144.20, comprised of (1) payment by check
or direct deposit of $102,798, (2) Medicare Part B premium of $346,
and (3) attorney fees of $12,000. AR 105.

A second SSA-1099 sent

to “Gladstein for M.C.” reflects net benefits of $60,904, comprised
12

Costa v. Pawtucket Mutual Ins. Co., 688 A.2d 1286 (R.I.
1997)(reimbursement to insurance company for medical payments
coverage under policy reduced by insured’s attorney fees, on the
ground that insurer benefitted from attorney’s legal efforts on the
insured’s behalf).
13

Gladstein’s counsel states that, pursuant to Costa v.
Pawtucket Mut. Ins. Co, he was actually entitled to a 25% attorney
fee, but he had reduced his fee to about half the amount. Costa
offers no support for that contention.
12

of (1) payment by check or direct deposit of $45,678, and (2)
attorney fees of $15,226. AR 106.
By letter dated January 10, 2012, Lincoln informed Gladstein
that it had received a check for $90,000 and that, after applying
the amount to the remaining overpayment, the balance to be repaid
was $87,353. AR 331; DSUF ¶32. On February 13, 2012, Lincoln sent
a second letter to Gladstein, again acknowledging that it had
received

the

$90,000

check,

and

demanding

payment

of

the

outstanding overpayment of $87,353 within thirty days. AR 329; DSUF
32.
According to Gladstein’s LTD claim profile, which sets forth
in some detail any significant events and decisions related to the
claim, as well as any attempted and effected communications between
the parties, Lincoln informed Gladstein on March 28, 2013 that she
was eligible to receive disability benefits for chronic fatigue
syndrome. AR 2, 69. Because coverage for this condition was limited
under the Policy to 24 months—a limitation which Gladstein does not
challenge—Gladstein was eligible for coverage between November 29,
2011

through

November

29,

2013.

AR

2,

68.

Although

Lincoln

initially asserted that the gross benefits for that period totaled
$47,806, see DSUF 34, Affidavit of Cindy Daly at ¶12 (Dkt. No. 224), it appears that Lincoln actually agrees with Gladstein’s
contention that the gross benefits totaled $52,689 (monthly gross
LTD benefits of $3,925 reduced by

13

$1,753 in SSDI benefits equal

net LTD benefits of $2,172, multiplied by 24). See PSDF ¶34,
Schiebel Aff. ¶16.

It is undisputed that Lincoln did not pay

either amount to Gladstein for the November 29, 2011 through
November 29, 2013 period; rather, Lincoln applied $38,269 of those
benefits to the overpayment balance of $87,353, and issued a check
of $9,356, which represented the 24 months of the minimum payment
required under the Policy (10% of the monthly benefit). DSUF ¶35.
On June 14, 2013, Gladstein’s counsel returned the $9,356 check to
Lincoln, together with a lengthy explanation of the reasons for the
return. Gladstein’s counsel claimed that Gladstein was owed $45,075
plus ongoing monthly payments, and that she would accept nothing
less. More specifically, Gladstein’s counsel explained that (1)
Gladstein only received a lumpsum of $102,798 in SSDI benefits and
the $90,000 check she sent to Lincoln for reimbursement reflected
reduction of that amount by her counsel’s discounted attorney’s
fee;14 (2) Gladstein never received any SSDI payments awarded on
behalf of her daughter; (3) under Rhode Island law, Lincoln’s
acceptance of the $90,000 reimbursement check constituted full

14

It is noted that, although Lincoln contends that the Policy
has no provision for attorney fees, the Policy provides that any
lien Lincoln may place on payment or reimbursement to which the
insured may be entitled from third parties is reduced by
“reasonable legal fees and expenses the Insured Employee paid to
pursue the recovery.” AR 12.
In addition, the two SSA-1099 forms reflect attorney’s fees
totaling $27,226 as benefits to Gladstein (on her own behalf and
that of her daughter).
14

satisfaction of all sums owed; and (4) Gladstein was not bound by
language

on

the

Lincoln

check/check

stub

referencing

Benefits” and “Benefit Period from 11/25/11 to 11/29/13.”

“Final
AR 103-

104.
Lincoln applied the $9,536 returned check to the outstanding
overpayment balance. AR 2, Daly Affidavit ¶18. At this time,
Lincoln asserts that it is owed an outstanding overpayment balance
of

$29,376,

whereas

Gladstein

deems

any

balance

due

on

the

overpayment to have been paid and she asserts that she is owed
$52,689 in LTD benefits plus interest. Notwithstanding the parties’
disagreement

about

the

exact

amounts

due

and

certain

inconsistencies in both their calculations,15 the issues that are
ripe for a decision on summary judgment are the following:
(1) Did Gladstein’s $90,000 payment to Lincoln constitute
full payment of all amounts she owed for LTD benefits overpayment
under the Policy?
(2) Is Lincoln entitled to recover from Gladstein an offset
for any SSDI benefits that were awarded to her daughter as a result

15

For example, Lincoln claims an outstanding LTD benefit
overpayment balance of both $39,547 (DSUF ¶37, Daly Aff.) and
$29,376 (Schiebel Aff.) On her part, Gladstein claims to have
received only an SSDI lump sum payment of $102,798, see PSDF ¶24,
omitting from her calculation the Medicare Part B Premium and
attorney’s fees that were included into her net benefit, and
asserting that her daughter received a lump sum payment of $60,904,
see id., including therein the attorney fees that were part of the
net benefit.
15

of Gladstein’s disability?
(3) Did Lincoln have the right to reduce LTD benefit payments
to Gladstein in order to recoup any overpayment for which Gladstein
had not fully reimbursed Lincoln?
II. Procedural History
On April 22, 2014, Gladstein brought a four-count complaint
(the “Complaint”) against Lincoln in Rhode Island district court,
alleging breach of fiduciary duty (Count I), bad faith (Count II),
breach of contract (Count III), and fraud and conversion (Count
IV). (Dkt. No. 1-2). Gladstein, who acknowledges that, “[a]s part
of the disability payments from Lincoln, [she] was required to pay
back any money received from Social Security to Lincoln,” Complaint
¶11, seeks payment of what she alleges to be “past due benefits
owed for the time period of November16 through May 2013 and for
subsequent monthly payments.”
Lincoln removed the case to this Court on September 2, 201417,
asserting jurisdiction on the basis that Gladstein’s state law
based claims

constitute

a

claim

for

benefits

under

a policy

governed by ERISA, 29 U.S.C. §1001 et seq. (Dkt. No. 1-1). On
September 9, 2014, Lincoln filed an answer to the Complaint and

16

Based on other asserted facts in her Complaint, this date
reference relates to November 25, 2011. See Complaint ¶19.
17

Lincoln was not served with the Complaint until August 7,
2014. (Dkt. No. 1-2 at 2).
16

asserted

a

four-count

counterclaim

for

Enforcement

of

Plan

Provisions (Count I), Equitable Lien or Constructive Trust (Count
II), Unjust Enrichment (Count III), and Attorneys’ Fees (Count IV)
to which Gladstein responded with an answer on October 3, 2015
(Dkt. No. 6).
On December 1, 2014, Gladstein filed a motion to amend the
Complaint in order to revise or add facts and to include a classaction claim (Dkt. No 12), to which Lincoln filed a detailed
objection (Dkt. No. 16). In her February 4, 2015 reply to Lincoln’s
objection, Gladstein noted that she had no objection to withdrawing
her class action claims, and filing, instead, an amended complaint
“devoid of any language as to said Class Action.” (Dkt. No. 18).
Following a Rule 16 conference on February 19, 2015, the parties
were directed to file cross-motions for summary judgment on or
before April 24, 2015. Following a grant of an extension of time,
both parties submitted their motions on May 1, 2015.
On June 26, 2015, nearly two months after the parties had
filed their initial summary judgment briefings and a month after
they had submitted their respective objections, Gladstein filed a
new motion to amend/correct the Complaint (Dkt. No. 36), to which
Lincoln objected, in part (Dkt. No. 37), and in support of which
Gladstein filed a reply (Dkt. No. 38-1). Gladstein offers no reason
for her belated attempt to amend her complaint.
In light of the unexplained delay of Gladstein’s attempt to

17

amend her Complaint until after the parties’ cross-motions had been
fully briefed and referred to this Court, and given the undeniable
prejudice

to

Lincoln

should

Gladstein’s

request

be

granted,

Gladstein’s motion to amend her Complaint is denied. The Complaint
filed on April 22, 2014 and removed to this Court on September 2,
2014 is the operative complaint in this case.
III. Standards of Review
A. Cross-Motions for Summary Judgment
A party is entitled to summary judgment “if the movant shows
that there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.” Fed.R.Civ.P.
56(a). In deciding a motion for summary judgment, the Court reviews
the evidence in the light most favorable to the nonmoving party and
draws all reasonable inferences in the nonmoving party's favor.
Cadle Co. v. Hayes, 116 F.3d 957, 959 (1st Cir.1997).
In summary judgment, the burden shifts from the moving party,
who must first aver “‘an absence of evidence to support the
nonmoving party's case,’” Garside v. Osco Drug, Inc., 895 F.2d 46,
48 (1st Cir.1990) (quoting Celotex Corp. v. Catrett, 477 U.S. 317,
325, 106 S.Ct. 2548, 2554, 91 L.Ed.2d 265 (1986)), to the nonmoving
party, who must present facts that show a genuine “trialworthy
issue remains.” Cadle, 116 F.3d at 960 (citing
Inc.

v.

Town

Maldonado–Denis

of
v.

Dedham,

43

F.3d

731,

Castillo–Rodriguez,

18

23

Nat'l Amusements,

735
F.3d

(1st
576,

Cir.1995);
581

(1st

Cir.1994)).
When both parties raise cross-motions for summary judgment,
the basic Rule 56 standard is not altered. Rather, it requires the
Court “to determine whether either of the parties deserves judgment
as a matter of law on facts that are not disputed.” Adria Intern.
Group., Inc. v. Ferre Development, Inc., 241 F.3d 103, 107 (1st
Cir. 2001)(citing Wightman v. Springfield Terminal Ry. Co., 100
F.3d 228, 230(1st Cir. 1996)); Bienkowski v. Ne. Univ., 285 F.3d
138, 140 (1st Cir.2002)(“‘The court must rule on each party's
motion on an individual and separate basis, determining, for each
side, whether a judgment may be entered in accordance with the Rule
56 standard.’ 10A Charles Alan Wright, Arthur R. Miller & Mary Kay
Kane,

Federal

Practice

and

Procedure

§

2720,

at

335–36

(3d

ed.1998).”).
B. Challenge of Determinations under Employee Benefits Plan
Although Gladstein has formulated her Complaint in terms of
claims pursuant to Rhode Island state law, the primary basis of her
claims is the assertion that Lincoln is refusing to pay her for
certain past due benefits under the Policy. Secondly, Gladstein
seeks a determination that repayment of $90,000 fulfilled her
obligation under the Policy to reimburse Lincoln for any SSDI
benefits she received for her disability and that any SSDI benefits
awarded to her daughter are exempt from Gladstein’s repayment
obligations.

19

It is undisputed that the Policy was issued to Gladstein’s
former employer in order to provide her with the benefit of long
term disability insurance. Moreover, it is evident from Gladstein’s
memoranda and PSDF that she concedes that ERISA is applicable in
this case. Pursuant to 29 U.S.C. § 1002(1), the elements of an
ERISA plan are (1) a plan, fund, or program (2) established or
maintained (3) by an employer or by an employee organization, or by
both, (4) for the purpose of providing ... benefits in the even of
disability (5) to participants or their beneficiaries. Wickman v.
Northwestern Mutual Life Insurance Company, 908 F.2d 1077, 1082
(1st Cir. 1990); 29 U.S.C. § 1002(1). 29 U.S.C. §1144 provides that
ERISA supersedes “any and all State laws insofar as they may now or
hereafter relate to any employee benefit plan described in section
1003(a) of this title and not exempt under section 1003(b) of this
title.” 29 U.S.C. §1144.18 Accordingly, Gladstein’s state-law based
claims, to the extent they relate to, and interfere with, the
administration of an ERISA governed benefit plan, see Shaw v. Delta
Air Lines, 463 U.S. 85, 90, 99, 103 S.Ct. 2890, 77 L.Ed.2d 490
(1983), are preempted entirely by ERISA.
The

First

benefit-denial

Circuit

has

context,

‘the

recognized
district

that,

court

“in

sits

an

more

ERISA
as

an

appellate tribunal than as a trial court.’” Cusson v. Liberty Life

18

Section 1003(b) relates to several categories of plans, none
of which are applicable in this case.
20

Assur. Co. of Boston, 592 F.3d 215, 223-224 (quoting Leahy v.
Raytheon Co., 315 F.3d 11, 18 (1st Cir.2002)). “In such cases,
‘summary judgment is simply a vehicle for deciding the issue,’ and,
consequently, ‘the non-moving party is not entitled to the usual
inferences in its favor.’” Id. (quoting

Orndorf v. Paul Revere

Life Ins. Co., 404 F.3d 510, 517 (1st Cir.2005)).
When an ERISA-based benefit plan gives the administrator
discretionary authority19 to determine eligibility for benefits or
to construe the terms of the plan, the Court is required to apply
the deferential “arbitrary and capricious” standard of review.
Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989);
Zarro v. Hasbro, Inc., 896 F.Supp.2d 134, 140 (D.R.I.2012). Under
that “generous standard,” the Court inquires into whether Lincoln’s
determinations

were

“reasoned

and

supported

by

substantial

evidence.” Medina v. Metropolitan Live Ins. Co., 588 F.3d 41, 45
(1st Cir. 2009)(citing Stamp v. Metropolitan Life Ins. Co., 531
F.3d 84, 88 (1st Cir. 2008)). Accordingly, as long as Lincoln’s
determinations rest on a reasonable basis, they will be upheld.
IV.

The Parties’ Positions
Primarily, Gladstein asserts that Lincoln’s acceptance of her

19

The discretionary language of the Lincoln Plan provides, in
pertinent part, that “[e]xcept for the functions that the Policy
clearly reserves to the Group Policyholder or Employer, the Company
has the authority to: 1. manage the Policy and administer claims
under it; and 2. interpret the provisions and resolve questions
under the Policy.” Policy at 13.
21

annotated $90,000 check fully satisfies her admitted obligation to
repay any overpayment she incurred by receiving SSDI benefits. In
support of the contention that she only owed that portion of the
total amount Lincoln demanded as overpayment, Gladstein suggests
that

(1)

SSDI

benefits

awarded

to

her

daughter

because

of

Gladstein’s disability are not considered “Other Income”; and (2)
because

her

daughter

was

of

age

and

no

longer

residing

in

Gladstein’s home when the retroactive SSDI benefits were received,
Gladstein received no benefit from the lump sum payment made on
behalf of her daughter. Gladstein also argues for prejudgment
interest related to Lincoln’s initial denial of her request for
benefits; however, no claim for such interest is included in her
Complaint. Finally, Gladstein asserts that her Complaint was not
brought in bad faith and that an award of attorneys’ fees to
Lincoln is not indicated.
Lincoln asserts that, based on the plain language of the
ERISA-governed Policy provisions, it was obligated (1) to offset
Gladstein’s SSDI income, and (2) to seek reimbursement for overpaid
benefits. Lincoln argues that Gladstein’s state law based claims
are

really

claims

for

benefits

under

the

Policy,

which

are

preempted by ERISA; and that Lincoln is entitled to deference
regarding its interpretation of the Policy language and related
decisions. Accordingly, Lincoln argues, it was entitled to reduce
LTD benefits to Gladstein in order to recoup the amounts she still

22

owed

in

overpayment,

ineffective

in

and

fulfilling

Gladstein’s
her

entire

partial
repayment

payment

was

obligations.

Regarding the SSDI benefits awarded to Gladstein on behalf of her
daughter, Lincoln relies on the plain language of the Policy
provision which includes such benefits as “Other Income” that must
be offset against Gladstein’s LTD benefit payments.
V.

Discussion
The Policy at issue here is an employee welfare benefits plan

governed by ERISA, which, in its plain language, authorizes the
insurer to (1) offset social security benefits payable to the
insured and to his or her spouse and/or children; and (2) recover
any overpayment resulting from lump sum payments of “Other Income”
Benefits, such as SSDI payments. Gladstein, in fact, agrees with
Lincoln’s contention that “[a]s part of the disability payment from
Lincoln, Gladstein was required to pay back any money received from
Social Security to Lincoln.” Complaint ¶11. Gladstein contends
however, that (1) Lincoln’s acceptance of Gladstein’s $90,000
repayment freed her from any obligation to pay the rest of the
overpayment; and (2) any sums awarded to her daughter because of
Gladstein’s disability were not subject to the same repayment
provisions.
A. The $90,000 Check
For the first part of her argument, Gladstein relies on R.I.
Gen. Laws

§

6A-3-311, which

provides, in

23

pertinent

part, as

follows:
(a) If a person against whom a claim is asserted proves
that (i) that person in good faith tendered an instrument
to the claimant as full satisfaction of the claim, ( ii)
the amount of the claim was unliquidated or subject to a
bona fide dispute, and (iii) the claimant obtained
payment of the instrument, the following subsections
apply.
(b) Unless subsection (c) applies, the claim is
discharged if the person against whom the claim is
asserted proves that the instrument or an accompanying
written communication contained a conspicuous statement
to the effect that the instrument was tendered as full
satisfaction of the claim. R.I. Gen. Laws § 6A-3-311.
(Emphases added).
Based on that provision, Gladstein argues that Lincoln’s
acceptance of a repayment check that contained the notation “Full
+ final payment owed as reimbursement for benefits paid to Dayna
Gladstein” operated to fulfill her obligation under the Policy to
reimburse

Lincoln

for

the

offset

from

her

SSDI

benefits.

Gladstein’s claim fails on two accounts. First, determination of
both Gladstein’s and Lincoln’s claims in this litigation requires
a review and interpretation of a Policy that falls under ERISA
regulations.

Gladstein’s

$90,000

repayment

was

based

on

her

contentions that (1) she was not required to repay any SSDI
benefits awarded on behalf of her daughter, and (2) she was
entitled to subtract attorney’s fees from the overpayment amount.
A determination of the merit of those contentions depends on an
interpretation of the provisions in the Policy. To the extent
Gladstein’s payment practices—i.e. paying only a portion of the
24

requested overpayment and simply noting on the check that the
partial payment constituted payment in full—relies on R.I. Gen.
Laws 6A-3-311, application of that state statute is preempted by
ERISA.

Accordingly,

Section

6A-3-311

provides

no

defense

to

Gladstein against Lincoln’s claim for recoupment of all SSDI
benefit payments awarded to Gladstein and her family for the time
period for which she also received unreduced LTD benefit payments
from Lincoln.
B.

SSDI Benefits Awarded to Dependent

With respect to her second argument, Gladstein makes a number
of assertions as to the benefits that were awarded to her daughter,
only some of which are supported by the record. It is undisputed
that Gladstein’s daughter was awarded SSDI benefits as a result of
Gladstein’s disability status; there is no suggestion in the record
that Gladstein’s daughter was awarded such benefits as a result of
her own status. It is likewise undisputed that, by the time
Gladstein was awarded SSDI benefits in 2011 and received a lump sum
retroactive payment of such benefits, her daughter had reached the
age of majority. However, Gladstein’s contentions that her daughter
has not resided in Gladstein’s household since 2008 and that
Gladstein did not receive the lump sum in dependent SSDI benefits
is unsupported by any documentation other than Gladstein’s own

25

statements.20 Gladstein Aff. ¶¶14, 15. The SSA query reflects that
Gladstein was awarded $1,753 in monthly SSDI benefits for 2005,
which amount was increased in subsequent years.21 AR 335. The SSA
query

also

shows

that

an

additional

sum

of

$876

in

monthly

dependent benefits was awarded to Gladstein’s daughter, beginning
in 2005.22 This amount was also increased every year until the
payments

were

terminated

when

Gladstein’s

daughter

reached

maturity.23 The records show Gladstein, at her address, as the payee
for

both

Regardless

benefits,
of

how

for

herself

the

SSDI

and

“for

benefits

M.C.”

awarded

AR
to

335,

336.

Gladstein’s

20

No information has been provided as to where the daughter
lived, or whether the receipt of SSDI benefits awarded to her had
any impact on support payments for which Gladstein may have been
responsible.
21

As Lincoln acknowledges, the SSDI benefit offset is based only
on the amount of the initial SSDI award and does not take any
subsequent increases into consideration. The Policy provides that
“[a]fter the first deduction for each of the Other Income Benefits,
the Monthly Benefit will not be further reduced due to any cost-ofliving increases payable under these Other Income Benefits. Policy
at 20. Gladstein was informed accordingly. AR 1195.
22

The response to the query specifies Gladstein as the “Payee”
“for M.C.” at Gladstein’s address, updated as of November 9, 2011.
AR 336.
23

As Lincoln points out, Gladstein has not offered any evidence
to support her statement that the SSDI benefit payments on behalf
of her daughter ceased in May 2011. However, based on Gladstein’s
affidavit, Lincoln has accepted that representation and has reduced
the outstanding repayment amount accordingly, accounting for some
of the changing calculations of the final outstanding amount in
this case.
26

dependent were eventually distributed or utilized, the Policy is
explicit that the total disability monthly benefit Lincoln will pay
to an insured employee will be reduced by any disability benefits
“for

which

the

Insured

Employee

and

any

spouse

or

child

is

eligible, because of the Insured Employee’s Disability” under the
United States Social Security Act. Policy at 20 (emphasis added) In
the absence of any evidence in the record, or even a suggestion by
Gladstein, that the SSDI benefits awarded to her daughter were
awarded for any other reason independent of Gladstein’s disability,
the Court concludes that those benefits were properly used to
calculate the offset against Gladstein’s LTD benefits.
The two cases on which Gladstein relies, neither of which
constitute controlling precedent for this Court, do not call for a
different conclusion.

Carstens v. U.S. Shoe Corporation’s Long-

Term Benefits Disability Plan, 520 F.Supp. 2d 1165 (N.D. Cal. Oct.
31, 2007) is distinguishable from the instant case, although not
for the reason suggested by Lincoln.24

The Policy language in

Carstens provided for an offset for “[p]eriodic benefits, for loss
of time on account of the Employee’s disability, under or by reason
of...the

United

States

Social

Security

Act...,

exclusive

of

24

Lincoln suggests that in Carstens, SSDI benefits awarded to an
adopted child based on his natural mother’s disability were used to
offset the LTD benefits awarded to his adoptive mother for her own
disability. That assertion is not supported by the district court’s
order.
27

benefits paid to a former spouse of the Employee or to a child of
the Employee.” The district court, making note of the ambiguity of
the policy language, found that the SSDI benefits received by the
adopted child of the insured were not “replacement for his mother’s
‘loss of time,’ and therefore should not be offset under the
[insurer’s] Plan.” Carstens at 1167. By contrast, the language in
the Lincoln Policy expressly states that “disability...benefits for
which the Insured Employee and any spouse or child is eligible,
because of the Employee Insured’s Disability” are subject to an
offset. Policy at 20.
In Unisys Corp. Long-Term Disability Plan ERISA Litigation,
the Third Circuit emphasized that language in a benefits plan must
be specific as to which benefits are to be considered in the offset
provision. Unisys Corp. Long-Term Disability Plan ERISA Litigation,
97 F.3d 710, 715 (3d Cir. 1996). In Unisys, the language of the
benefits plan at issue had been changed and no longer provided for
a deduction of SSDI benefits to dependents. Unlike an earlier
version, which included into the offset “disability benefits for
which...you are eligible, and ...your spouse, child or children are
eligible because of your disability,” Unisys at 712, the new plan
merely addressed “income from other sources,” without specifying
disability benefits received by eligible family members. The Third
Circuit concluded that the omission of a reference to benefits by
family members was unambiguous and that such benefits were not to

28

be included in the offset. Id. at 717.
In the instant case, the language of the Policy is unambiguous
with respect to the extent of the offset. It is undisputed that
Gladstein’s daughter was eligible for SSDI benefit because of
Gladstein’s disability and not for another, independent reason.
Based on

the

explicit

dependent

SSDI

into

provision

the

in

calculation,

the

Policy

the

that includes

amounts

awarded

to

Gladstein’s daughter are subject to the offset and to repayment.
To summarize, this is not a case in which a denial of benefits
by the insurer is challenged by the insured employee. It is
undisputed that Lincoln awarded more than $325,000 in LTD benefits
to Gladstein, of which $275,966 were paid to her, at her election,
in unreduced amounts. An additional sum of $52,128 in LTD benefits
was credited against the overpayment that, under the unequivocal
terms of the Policy, Gladstein was obligated, but failed, to repay
after

being

awarded

more

than

$190,588

in

retroactive

SSDI

benefits. Instead, the case stems from Gladstein’s contention that
(1) a partial payment by annotated check absolved her of any
further reimbursement obligations; (2) any LTD benefits awarded to
her daughter did not constitute “other income” subject to a benefit
setoff; and (3) based on the foregoing, Gladstein was entitled to
receive continued unreduced payments of LTD benefits instead of the
Policy’s minimum amount offered to her by Lincoln.

Because the

undisputed facts of this case and the plain language of the Policy

29

demand otherwise,

Gladstein’s motion for summary judgment cannot

withstand Lincoln’s counter motion.
Conclusion
For the reasons stated herein, Gladstein’s motion for summary
judgment is DENIED. Lincoln’s motion for summary judgment is
GRANTED with respect to the following:
1.

Lincoln’s acceptance of the annotated $90,000 check Gladstein
submitted as offset for the SSDI payments she received does
not constitute full accord and satisfaction. Gladstein remains
obligated to repay the full amount of any overpayments she
incurred.

2.

The SSDI benefits awarded to Gladstein’s daughter are included
in “Other Income,” as defined in the Policy, and they must be
included in the calculation of the overpayment which Gladstein
incurred.

3.

Lincoln is authorized to reduce LTD benefit payments awarded
to Gladstein until full reimbursement of the overpaid amounts
were made.
Further, Lincoln’s claim for unjust enrichment is DISMISSED as

moot. Gladstein’s motion to amend her Complaint is DENIED for the
reasons stated herein.
With respect to Lincoln’s request for attorney’s fees pursuant
to 29 U.S.C. § 1132(g)(1) asserted in Count VI of its counterclaim,
Lincoln, as the prevailing party in this litigation, is directed,

30

if it so chooses, to file a motion for attorney’s fees within
fourteen (14) days of issuance of this Memorandum and Order.
Gladstein may file a response within fourteen (14) days thereafter.

SO ORDERED.
/s/ Mary M. Lisi
Mary M. Lisi
United States District Judge
September 22, 2015

31