Long Term Disability Overpayments

The normal fact pattern that brings about this situation is as follows:  The claimant applies for and receives long term disability benefits.  Thereafter, the claimant receives Social Security disability benefits.  Most, if not all, long term disability (LTD) plans have a provision for offsetting the LTD benefits by the amount of Social Security disability benefits the claimant receives.  In other words, once that claimant receives Social Security disability benefits in a lump sum amount for past due benefits, the LTD carrier has an overpayment claim.  The issue is how the LTD carrier can collect the overpayment.  Obviously, the LTD carrier will ask the claimant to pay back the overpayment.  Often, the claimant will comply. If the claimant does not comply and the carrier is still paying LTD benefits, the carrier will normally stop paying monthly LTD benefits until such time as the overpayment is recovered. Basically, the carrier credits the amount owed against the overpayment balance.  Some carriers have tried other approaches, such as bringing suit under ERISA or bringing a counterclaim for reimbursement under ERISA if the claimant brings suit to challenge a decision of the carrier.  In one relatively recent case, the Court held that because the carrier could not specifically identify whether or not the claimant still had the overpayment proceeds in her possession, the LTD carrier could not recover the overpayment directly from the claimant, but instead, could withhold benefits to collect to the overpayment.  Epolito v. Prudential Ins. Co. of Am., 737 F. Supp. 2d 1364, 2010 U.S. Dist. LEXIS 91010 (M.D. Fla. 2010).

UPDATE (10/17/2012) – I have reviewed some additional favorable cases regarding this topic:

* Herman v. Metlife (M.D. Fla. 2010); Ross v. Pennsylvania Manufacturing Association Ins. Co., (S.D.W.Va. 5/22/2006) (Recovery of overpayment prohibited by 42 U.S.C. 407); See also: Mote v. Aetna (N.D. Ill. 2006); Reichert v. Liberty.



About tngainjurylawyer
Serious Injury Lawyer in Tennessee and Georgia.

2 Responses to Long Term Disability Overpayments

  1. Kelly W Walker says:

    I was waiting on a settlement offer from Cigna for my LTD and my SSDI was approved. I have received LTD payments for two years. I understand that there is an overpayment that has occurred. My question is can Cigna seize my home or vehicle to recover the overpayment? I understand they can keep the future payments if 350$ a month that they are scheduled to pay me, until the overpayment is recovered. Lets face it, as soon as I pay them the overpayment from my SSDI backpay, Cigna will drop me anyway making me jump thru hoops etc in order to keep my future payments. Dealing with this company has been the worse experience of my life. I had to appeal for a year before my monthly payments were finally reimbursed. I have medical bills, home repair bills etc and want that money to supplement my SSDI monthly payments because I know Cigna won’t pay me the monthly benefits thay I am entitled to. I just want to make sure that if I keep the money from my SSDI backpay, that they cant seize my property that is in my husband and my name. Thank you

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