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Gladstein v. Lincoln Financial Group

United States District Court, D. Rhode Island

September 22, 2015



MARY M. LISI, District Judge.

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 Group[1] ("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 its part, Lincoln seeks repayment of approximately $29, 376[2] 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 Additional Statement of Undisputed Facts ("PSUF2")(Dkt. No. 35-1), a Statement of Disputed Facts ("PSDF")(Dkt. Nos. 27-2, 31), and a 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" 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 medical record from the time she first made an application for disability benefits; copies of the extensive correspondence between the parties; documents 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 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. Under the Policy, Lincoln has, unless otherwise specified, broad discretionary authority concerning Policy management, administration, interpretation, and dispute resolution. Policy at 9, 13[5].

The following provisions in the Policy are critical to the issues in this case:

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. 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.

Gladstein first applied for benefits under the Policy effective[6] 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 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, 2012[7]. AR 317; DSUF ¶ 19. At the same time, Lincoln and Gladstein corresponded regarding the benefit overpayment caused by Gladstein's receipt of her SSDI award. DSUF ¶20. According to the Administrative Record, on September 6, 2005, the Social Security Administration acknowledged receipt of Gladstein's August 26, 2005 application for SSDI benefits. AR 391, 1180. (As Gladstein correctly points out, Lincoln's statement that she applied for SSDI ...

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