ERISA-Seventh Circuit Holds That Failure To Include A Self-Reported Symptoms Limitation In The SPD Prevents The Insurer From Using It To Stop Paying Long-Term Disability Benefits

In Weitzenkamp v. Unum Life Insurance Company of America, Nos. 10-3898, 11-1006 (7th Cir. 2011), the plaintiff had been diagnosed with fibromyalgia, chronic pain, anxiety, and depression. She was awarded long-term disability benefits under an employee benefits plan (“the Plan”) issued and administered by the defendant, Unum Life Insurance Company (“Unum”). These benefits were discontinued after payment for twenty-four months, when Unum determined that the plaintiff had received all to which she was entitled under the Plan’s self-reported symptoms limitation. Further, since the plaintiff had retroactively received social security benefits, Unum also sought to recoup equivalent overpayment of the Plan’s benefits, as provided by the Plan. On appeal to the Seventh Circuit Court of Appeals (the “Court”), the plaintiff challenged the application of the self-reported symptoms limitation to her case, and argued that Unum’s claim for overpayment is barred because the Social Security Act prohibits attachment or garnishment of social security payments.

In this case, the Plan provides that benefits cease after twenty-four months for those with “[d]isabilities, due to sickness or injury, which are primarily based on self-reported symptoms”. According to the Plan, self-reported symptoms are “the manifestations of your condition which you tell your doctor that are not verifiable using tests, procedures or clinical examinations standardly accepted in the practice of medicine.” Unum felt that this limitation on benefits applies to the plaintiff, who was suffering from diseases- notably fibromyalgia and chronic pain – not (at that time) thought to be verifiable through testing. On the other hand, the summary plan description for the Plan (the “SPD”) did not mention the self-reported symptoms limitation. The Court ruled that Unum’s failure to include this limitation in the SPD estops it from relying on this limitation to stop paying benefits under the Plan. The court said that the SPD failed to “reasonably apprise” the plaintiff of the self-reported symptoms limitation, and this limitation is relevant to a wide spectrum of plan participants. The SPD does not meet the applicable requirements of ERISA, and estoppel is warranted.

As to the recoupment issue, the Court noted that Section 207(a) of the Social Security Act controls. That section states that social security benefits shall not “be subject to execution, levy, attachment, garnishment, or other legal process.” Under this rule, while Unum cannot impose a lien directly on the plaintiff’s social security benefits, Unum instead seeks an equitable lien on specific funds it paid the plaintiff under the Plan. Those amounts came from the Plan, not Social Security. The Court ruled that neither section 207(a), nor any other provision in the Social Security Act, bars Unum’s recovery of the Plan’s overpayments.

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