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Troiano v. Aetna Life Insurance Co.

United States District Court, D. Rhode Island

September 30, 2015

DEBRA TROIANO, Plaintiff
v.
AETNA LIFE INSURANCE COMPANY, GENERAL DYNAMICS CORPORATION LONG TERM DISABILITY PLAN, and GENERAL DYNAMICS CORPORATION, Defendants.

MEMORANDUM AND ORDER

MARY M. LISI, District Judge.

Since 2003, the plaintiff in this case, Debra Troiano ("Troiano"), has been the recipient of tax-free long-term disability ("LTD") benefits under an employee welfare benefit plan (the "Plan") established by General Dynamics Corporation ("GDC"), her former employer, and funded and administered by Aetna Life Insurance Company ("Aetna, " together with GDC, the "Defendants"). Troiano seeks a declaration from this Court that the LTD benefits she receives, which are subject to set-off by Social Security Disability Insurance ("SSDI") benefits, should be reduced by the after-tax amount of SSDI benefits she receives and not, as they are now, reduced by the gross amount of SSDI benefits she was awarded. The matter is before the Court on the parties' cross-motions for summary judgment.

I. Factual Background[1]

The facts underlying Troiano's claims are, for the most part, undisputed. The parties' disagreement focuses primarily on Aetna's interpretation of the provision in the Policy which defines the "Other Income Benefits" by which Troiano's LTD benefit payments are to be reduced.

From 1988 to 2003, Troiano, a Rhode Island resident, was an employee of Electric Boat Corporation, a subsidiary of GDC. Plaintiff's Statement of Undisputed Facts ("PSUF") ¶ 1; Defendants' Statement of Undisputed Facts ("DSUF") ¶¶ 1, 4. Throughout her employment, Troiano participated in GDC's LTD Plan, which was fully funded through an insurance policy issued by Aetna, an insurance company registered to do business in Rhode Island, with its principal place of business in Hartford, Connecticut. PSUF ¶ 2; DSUF ¶ 2, 3. The Plan is an "employee welfare benefits plan, " governed by the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1001 et seq. DSUF ¶¶ 2, 7. As required under ERISA, GDC, as the administrator for the Plan, issued a Summary Plan Description ("SPD") effective January 1, 2003, which describes the terms, conditions, and operations of LTD coverage under the Plan. DSUF ¶ 8, 9, 18. Aetna acted for the Plan as claims administrator regarding LTD benefits. DSUF ¶¶ 8, 1.

The Plan includes the following provisions that are relevant to this case:

Under Section 503 of Title 1 of the Employee Retirement Income Security Act of 1974, as amended (ERISA), Aetna is a fiduciary. It has complete authority to review all denied claims for benefits under this policy. In exercising such fiduciary responsibility, Aetna shall have discretionary authority to:
determine whether and to what extent employees and beneficiaries are entitled to benefits; and
construe any disputed or doubtful terms of this policy.
Aetna shall be deemed to have properly exercised such authority. It must not abuse its discretion by acting arbitrarily and capricious. Aetna has the right to adopt reasonable:
of this policy to promote orderly and efficient administration. TROIANO 00027 (emphases added).

With respect to Long Term Disability Benefits, the Summary of Coverage provides that the Scheduled Monthly Benefit consists of 60% of the beneficiary's monthly predisability earnings. The Summary notes that "([a]ny benefit actually payable may be reduced by other income benefits'. The Booklet-Certificate contains definitions of other income benefits', adjusted predisability earnings', and predisability earnings'.)" TROIANO 00030.

The Booklet notes that

"[i]f other income benefits are payable for a given month:
The monthly benefit payable under this Plan for that month will be the lesser of:
the Scheduled Monthly LTD Benefit; and the Maximum Monthly Benefit;
minus all other income benefits, but not less than the Minimum Monthly Benefit. TROIANO ...

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