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Sanders v. Hartford

United States District Court, Fourth Circuit

July 30, 2013

KENNETH SANDERS, Plaintiff,
v.
THE HARTFORD, Defendant.

MEMORANDUM OPINION

ALEXANDER WILLIAMS, Jr., District Judge.

Plaintiff Kenneth Sanders brings this action against Defendant Hartford Life and Accident Insurance Company. Plaintiff asserts claims under ERISA, 29 U.S.C. ยงยง 1001 et seq. Defendant asserts a counterclaim for a constructive trust and/or equitable lien for overpaid disability benefits. Three motions are pending before the Court: (1) Plaintiff's Motion for Summary Judgment; (2) Defendant's Cross-Motion for Summary Judgment; and (3) Defendant's Motion to Strike. The Court has reviewed the record and deems no hearing necessary. For the reasons that follow, the Court GRANTS IN PART Defendant's Cross-Motion for Summary Judgment, DENIES Plaintiff's Motion for Summary Judgment, and DENIES AS MOOT Defendant's Motion to Strike.

I. FACTUAL AND PROCEDURAL BACKGROUND

Plaintiff Kenneth Sanders (Plaintiff) worked for EMC Corporation (EMC). Defendant Hartford Life and Accident Insurance Company (Hartford) is a private insurance company. Hartford issues a group insurance policy (Policy) that funds an employee benefit plan for EMC employees.

The Policy provides long-term disability (LTD) benefits of 66 2/3 % of monthly earnings to participants subject to certain terms. See Doc No. 39-1 at 50. Under the Policy, participants who have a disability preventing them from performing the material and substantial duties of their occupations are eligible to receive LTD benefits for twenty-four months following the onset of the disability. In order to continue receiving benefits thereafter, participants must show that they cannot perform the material and substantial duties of any occupation. No matter the length or severity of the disability, participants with mental disorders may receive benefits under the Policy for a maximum of twenty-four months.

The Policy further provides that participants' LTD monthly benefit is "subject to reduction by deductible sources of income or Disability Earnings. " Id. Likewise, the Policy states that the LTD monthly benefit is calculated by "[s]ubtract[ing] the Deductible Sources of Income from Your Gross LTD Monthly Benefit." Id. at 55. "Deductible Sources of Income" include"[d]isability benefits paid, payable, or for which there is a right under... [t]he Social Security Act." Id. at 56. The Policy also requires participants to "supply proof that You have applied for other Deductible Income Benefits such as... Social Security Disability benefits...." Id. at 64.

Plaintiff injured his shoulder during his employment with EMC. In January 2008, Defendant approved Plaintiff for short-term disability. In March 2008, Plaintiff applied for LTD benefits. In applying for LTD benefits, Plaintiff acknowledged as follows:

If I receive disability benefits greater than those which should have been paid, I understand that I will be required to provide a lump sum repayment to the insurance company. The insurance company has the option to reduce or eliminate future disability payments in order to recover any overpayment balance that is not reimbursed.

Doc. No. 39-6 at 95. In April 2008, Defendant approved Plaintiff for LTD benefits. Doc. No. 39-6 at 64. The letter of approval states that Plaintiff would need to supply "proof of [his] application for SSD benefits" should his disability be extended. Id. at 66. Similarly, the letter states that becoming entitled to receive Deductible Sources of Income may have an effect on Plaintiff's benefits. Id. at 66.

Plaintiff continued to claim that he was unable to work and Defendant continued to provide him with LTD benefits. In April 2009, Plaintiff again certified that he understood that he would be required to provide a lump sum repayment if Defendant gave him disability benefits greater than those that Defendant should have paid him and that Defendant could reduce or eliminate future disability payments to recover any overpayments. See Doc. No. 39-5 at 95. On the same date, Plaintiff represented that he was not receiving and did not expect to receive other income. See id. at 96. In June 2009, Plaintiff once more (1) acknowledged that he was obligated to reimburse Defendant for any overpayment of benefits and (2) failed to provide information regarding any other sources or potential sources of income. See id. at 86-90.

In November 2009, Defendant informed Plaintiff that it had determined that Plaintiff was not eligible for LTD beyond April 2010. Doc. No. 39-4 at 45. Defendant wrote Plaintiff in January 2010 to remind him of the same. Nevertheless, the Parties continued to share documents. Eventually, in June 2010, Defendant notified Plaintiff that he qualified for LTD benefits after April 2010 based on his having been diagnosed with PTSD. See Doc. No. 39-5 at 55. Defendant further informed Plaintiff that, due to the nature of his PTSD, it would not pay him benefits past April 2012. Doc. No. 39-4 at 22. Plaintiff also claimed that he was disabled due to a lung condition known as sarcoidosis.[1] Defendant denied his claim for disability based on this condition. Doc. No. 39-4. Plaintiff does not allege, and the administrative record does not reflect, that Plaintiff pursued an appeal of this decision.

In October 2010, Defendant once again requested Plaintiff to provide information regarding his SSD application status. Id. at 6. Defendant warned Plaintiff that it would reduce his benefit by an estimated SSD award if Plaintiff failed to provide the requested information by November 3, 2010. Id. at 7. Plaintiff failed to respond. On or around November 12, 2010, using the Social Security Administration's online benefit calculator, Defendant estimated Plaintiff's primary and dependent benefits. See Doc. No. 39-2 at 70-71; Doc. No. 39-5 at 4-5. The online calculator estimated Plaintiff's monthly benefit as $2, 117 and Plaintiff's dependent's monthly benefit as $1, 596. Apparently on the same day, Defendant reduced Plaintiff's dependent's estimated monthly benefit to $1, 058. Doc. No. 39-2 at 98. On or around this time, Defendant began reducing Plaintiff's LTD award to $2, 071 or $2, 158.33.

Although the exact amount of Plaintiff's original LTD award is not conclusively clear, the record reflects that Defendant reduced Plaintiff's LTD award by $3, 175, the sum of Plaintiff's estimated monthly benefit ($2, 117) and Plaintiff's dependent's monthly benefit ($1, 058). Some evidence suggests that Plaintiff's original monthly benefit was $5, 333.33, and that Defendant subtracted from this amount the sum of Plaintiff's estimated monthly benefit ($2, 117) and Plaintiff's dependent's monthly benefit ($1, 058), for an adjusted monthly award of $2, 158.33. See Doc. No. 39-3 at 85, 87. Other evidence indicates that Plaintiff's original monthly benefit was $5, 246, and that Defendant similarly subtracted from this amount the sum of Plaintiff's estimated monthly benefit ($2, 117) and Plaintiff's dependent's monthly benefit ($1, 058), for an adjusted monthly award of $2, 071. Doc. No. 39-2 at 81; Doc. No. 39-4 at 98.

In March 2011, Defendant evidently stopped paying Plaintiff his reduced monthly LTD benefit of $2, 071 or $2, 158.33. On the same date, Defendant sent Plaintiff a letter and corresponding chart explaining the basis for its decision to suspend his reduced LTD payment. Doc. No. 39-3 at 84-87. The chart states that Plaintiff would have first been eligible for SSD in July 2008[2] and starts the calculation of overpayments on this date. Id. at 87. The chart concludes the overpayment calculation period on November 2010, the date on which Defendant began reducing Plaintiff's LTD payments to $2, 071 or $2, 158.33. For this 28-month period, Defendant calculated Plaintiff's overpayment as ...


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