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Harding v. Aetna Life Insurance Co.

United States District Court, D. Maine

July 25, 2016

KEVIN R. HARDING, Plaintiff
v.
AETNA LIFE INSURANCE COMPANY, Defendant

          DECISION AND ORDER ON CROSS-MOTIONS FOR JUDGMENT ON THE ADMINISTRATIVE RECORD

          D. BROCK HORNBY UNITED STATES DISTRICT JUDGE

         The issue in this case is whether settlement proceeds resulting from a general release for injuries from a car accident amount to “other income benefits” that can be offset against disability benefit payments otherwise due under an employee disability insurance plan provided by a group life, accident, and health insurance policy. Both parties have moved for judgment on the administrative record.[1] I conclude that the language of the insurance plan supports the insurance carrier’s decision to offset a portion of the proceeds.

         Background

         As a result of a car accident, the plaintiff Kevin Harding has received disability benefit payments from the defendant Aetna Life Insurance Company under a plan that his employer offered. R. at 205, 366. Harding also obtained a $100, 000 settlement (after attorney fees, $76, 471.33) from the driver of the other vehicle and that driver’s insurance company. Id. at 381, 385. Aetna notified Harding that the settlement would reduce its disability payments to Harding, id. at 247, 385-86, because of language in the insurance plan that provided: “Any other income benefits you are eligible for may affect your benefits from this plan. The amount of the other income benefits will be subtracted from your monthly LTD benefit for which you are eligible.” Id. at 37.[2]

         Harding filed this lawsuit to challenge Aetna’s determination that his settlement amounted to an “other income benefit” that could be offset against his disability benefit payments.

         Jurisdiction

         This is a claim under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1001-1461. Federal courts have subject-matter jurisdiction over ERISA claims. Id. § 1132(a)(1)(B), (e); 28 U.S.C. § 1331.

         Standard of Review

         The judicial standard of review for a denial of benefits in an ERISA case is de novo, “unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan.” Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). In this case, Harding’s disability insurance plan is governed “by applicable federal law and the laws of Texas.” R. at 28. Texas law prohibits discretionary clauses in group health insurance policies issued after February 1, 2011, that include “disability income protection coverage providing for periodic payments during disability due to sickness and/or accident.” 28 Tex. Admin. Code §§ 3.1201-3.1203. Because Harding’s policy was issued on August 1, 2014, R. at 28, any discretionary clause cannot apply, and I must apply the de novo standard of review, as Aetna concedes. Def.’s Mot. at 4 (ECF No. 18).

         Under the de novo standard of review, I “grant no deference to the administrators’ opinions or conclusions.” Richards v. Hewlett-Packard Corp., 592 F.3d 232, 239 (1st Cir. 2010). “In other words, [I] stand in the shoes of the administrator to determine whether the administrative decision was correct.” Id. (internal quotation marks omitted).

         Analysis

         Language in plans governed by ERISA is interpreted under principles of federal common law. See Forcier v. Metropolitan Life Ins. Co., 469 F.3d 178, 185 (1st Cir. 2006). “That body of law requires that [courts] accord an ERISA plan’s unambiguous language its plain and ordinary meaning.” Id. Under de novo review, ambiguous plan terms must be strictly construed against the drafter/insurer (in this case Aetna). See Stamp v. Metropolitan Life Ins. Co., 531 F.3d 84, 93 (1st Cir. 2008).

         The Aetna disability insurance plan states:

Any other income benefits you are eligible for may affect your benefits from this plan. The amount of the other income benefits will be subtracted from your monthly LTD benefit for which you are eligible. If the result is less than the minimum monthly benefit shown in the Schedule of Benefits, the plan will pay an amount equal to the minimum monthly benefit. Please refer to the Other Income Benefits section of this ...

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