ERISA-First Circuit Upholds Administrator’s Offset Of LTD Benefits

In Troiano v. Aetna Life Insurance Company, No. 16-1307 (1st Cir. 2016), the lawsuit arose from a dispute between an ERISA disability plan administrator (here, defendant Aetna) and a beneficiary over the amount by which the monthly disability payments made to the beneficiary from the plan should be offset by her other monthly income from Social Security. The administrator maintains that the disability payments must be offset by the gross (pre-tax) amount of Social Security income, while the beneficiary argues that the payments must be offset by the net (post-tax) amount of Social Security income.

The district court found for the administrator, noting that its interpretation of the Plan language to allow for a gross offset was entitled to deference and was, in any event, ultimately reasonable. In addition to contesting this decision, the beneficiary was complaining that the district court abused its discretion when it denied the beneficiary’s broad requests for discovery. Having made a number of assumptions in the beneficiary’s favor, the First Circuit Court of Appeals (the “Court”) affirmed the district court’s rulings, upholding the administrator’s decision on how to compute the offset and denying discovery. The Court noted that, to be clear, the dispute is not about whether the Social Security income may offset the disability payments. It is about whether the administrator may use the simple gross amount of the Social Security payments for offset purposes, with the Court concluding that it may.

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