James Riley worked for Summaria Systems until he became disabled from multiple sclerosis. He applied for ERISA long term disabilty benefits, and his claim was approved. The Plan began paying benefits. Mr. Riley was also a Vietnam War veteran and he received monthly VA disability benefits. Riley's MS was considered a service-related disability contracted during a period of war. The disabilty plan, Sun Life, decided that Mr. Riley's long term disability benefits should be reduced, as Sun Life claimed they were entitled to an offset, since the Plan said that long term disability benefits could be reduced by "other income." Riley appealed the Plan's decision to lower his monthly benefits, and the district court upheld the plan's decision to reduce benefits. Mr. Riley then appealed to the US Court of Appeals.
The US Court of Appeals reversed the district court's decision. Although the plan did allow for offset for income derived from Social Security, Railroad Retirement, or "any other similar act or law provided in any jurisdiction," VA benefits are not similar to Social Security and Railroad Retirement benefits, which are federal insurance programs. Instead, VA benefits are the federal government's obligation to wounded men and women during military service. As such, the court held that VA benefits are not similar to Social Security or Railroad Retirment Act benefits and thus, are not subject to the offset for "other income" benefits under the plan.
ERISA long term disability plans often contain clauses that allow the plan to offset the benefits for other income you receive. If you receive long term disability benefits and the plan administrator attempts to reduce your benefits for other income you receive, give us a call at 314-315-8111 and we will review the plan for you to see if the plan is actually allowed to offset your benefits.
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