Pennsylvania Court rules that CIGNA disability insurance policy allows for offset of lost wages from auto insurance policy
A District Court ruling issued in Scranton, Pennsylvania highlights the importance of understanding the terms of a long-term disability insurance policy. It is common for these disability insurance policies to reduce monthly disability benefits by other benefits or income a claimant receives. This case is a good example of the complex language in disability insurance policies which can be subject to multiple interpretations.
In this case, claimant Joseph George was injured in a non-work related automobile accident in January of 2006. He worked for PPL Services Corporation, which provided him with a group long-term disability policy managed by CIGNA’s subsidiary Life Insurance Company of America (LINA). The policy stipulated that the maximum benefit he could receive each month was $5,000. The policy also stated that this amount could be reduced by “other income benefits.”
CIGNA Policy Reduces Benefits by “Other Income”
The CIGNA disability insurance policy defined what some of these “other income benefits” were. Social Security disability benefits were considered eligible benefits for reducing LINA’s payout. Proceeds from any group insurance or similar plan, were also considered “other benefits.” Disbursements from unemployment or workmen’s comp were listed. The policy also listed specifically “any benefits received from coverage subject to the mandatory part of the vehicle financial responsibility law;” and “any amounts paid on account of loss of earnings or earning capacity through settlement, judgment, arbitration or otherwise, where a third party may be liable, regardless of whether liability is determined.
The disability policy paid 60% of his monthly covered earnings of $4,705.65. This meant that CIGNA’s first benefit check in August 2006 was $2,823. When the disability insurance plan found out two months later that he was receiving monthly wage loss benefits from his automobile insurance policy with Liberty Mutual for $1,500.00, it reduced his CIGNA disability monthly benefit to $1,323 per month and asserted that George owed them $3,000 in overpaid disability benefits.
ERISA Disability Attorney Files Suit For Underpayment of Benefits
George’s disability insurance attorney filed an ERISA disability lawsuit against CIGNA for failing to pay him his full benefits. The disability insurance lawyer argued that Cigna violated ERISA by not paying his client all the benefits he was entitled to. He contended that the wage loss payments were not “other income benefits” and that LINA only had to reduce the $5,000 maximum monthly benefit before it could reduce the $2,823 payment which reflected less than 60% of the earnings George had brought in before his accident.
Court Considers Disability Benefit Plan Language
The Court’s first concern was to identify whether there was any ambiguity in the policy language. It would consider the “(1) the words of the contract; (2) the alternative meaning suggested by counsel; and (3) the nature of the objective evidence to be offered in support of that meaning.” The Court would have to look at the entire policy and construe its meaning as a whole.
What did the Court find? The CIGNA/Lina disability benefit policy clearly stated that it intended to reduce the disability benefits it had to pay out if other income sources arose. The policy covered just about every possible source of potential income:
- Local, state, provincial, or federal government disability or retirement plans that George might qualify for
- Any sick leave he qualified for
- Social Security disability benefits he might be awarded
- Retirement plan benefits
- Unemployment benefits he might claim
- Compensation payments
- “Any wage or salary for work performed”
- Any benefits received due to mandatory vehicle insurance requirements
- “Any amounts paid on account of loss of earnings or earning capacity through settlement, judgment, arbitration or otherwise”
LINA pointed to this list. The Liberty Mutual payment of $1,500 fit both the mandatory insurance requirement definition and the settlement definition. LINA pointed to the fact that Pennsylvania law required automobile insurance policies to provide wage loss coverage of up to $50,000. George’s policy covered him up to $25,000. Thus the $1,500 disbursement fell squarely under LINA’s definition of “other income sources.”
George’s disability insurance lawyer argued that when his client read the long-term disability policy, he understood that only benefits which he had to purchase insurance to receive would offset his disability benefit payments. He also understood that he would receive more benefits, up to $5,000 a month. His attorney argued that this was a reasonable interpretation of the plan language, and thus the Court should enter judgment in his favor.
The Court found otherwise. In context of the entire policy document, it was clear that LINA’s policy was designed to reduce its obligation to pay out long-term disability benefits. One clause was especially applicable. CIGNA/LINA included “any amounts paid on account of loss of earnings.” The Liberty Mutual payments were specifically wage loss payment compensation.
Disability Attorney Argues Basis of Calculation of Benefit Reduction
George’s disability attorney’s final argument was that the policy did not state that the offset would be applied against the 60% calculation. What the policy actually stated was that the amount payable in the event of a claim would be the “lesser of 60% of an Employee’s Monthly Covered Earnings rounded to the nearest dollar or the Maximum Disability Benefit, reduced by any Other Income Benefits.” The disability lawyer argued that the phrase “reduced by any other income benefits” applied only to the maximum disability benefit. This would mean that George should expect that any other income benefits would be subtracted from $5,000 and only impact his benefit from LINA when the other income benefits exceeded $2177. For LINA to subtract the $1500 from the 60% figure breached the policy.
The comma before “reduced by any other income benefits” would prove George’s enemy. The Court failed to recognize that it would be possible for an ordinary individual to be confused by the wording of the phrase, and thus failed to construe the phrase in a manner that was favorable to George as the policy holder. The Court upheld the reasonableness of LINA’s interpretation that first it would calculate the disability benefit using the formula “lesser of 60% of an Employee’s Monthly Covered Earnings rounded to the nearest dollar or the Maximum Disability Benefit.” Then it would offset any benefits by any income listed in the policy.
The Court’s final ruling was in favor of CIGNA. George would have to pay the disability insurance plan $3000 for excess benefits.
This case highlights how important it is to understand what a disability benefit plan provides. Disability Insurance Plans with benefit offsets like CIGNA/LINA’s are common. Most policies require claimants to apply for Social Security benefits so the disability plan’s insurance payments are reduced. Insurance settlements are usually covered in the plan language as it was in this case.
Resources to Help You Win Disability Benefits
Disability Benefit Denial Options
Submit a Strong Cigna Appeal Package
We work with you, your doctors, and other experts to submit a very strong Cigna appeal.
Sue Cigna
We have filed thousands of disability denial lawsuits in federal Courts nationwide against Cigna.
Protect Your Benefits
Get Your Cigna Disability Application Approved
We help claimants throughout the entire application process.
Prevent a Cigna Disability Benefit Denial
We manage every aspect of your disability claim following claim approval.
Negotiate a Cigna Lump-Sum Settlement
Our goal is to negotiate the highest possible buyout of your long-term disability policy.
Cigna Reviews
(642)
Policy Holder Rating
5
0%
4
0%
3
0%
2
0%
1
0%
Timely Payments
0.0out of 5
Handling Claim
0.0out of 5
Customer Service
0.0out of 5
Dependable
0.0out of 5
Value
0.0out of 5
Showing 8 of 642 Reviews
Sedgwick
AT&T Was Great and Sedgwick Horrible
My Physician recommended that I take some time from a toxic environment after several deaths in my family coupled with AT&T trying to run tenured employees out of the door... read more >
New York Life
Keeps claiming they will not approve claim for pre existing conditions but my illness is not preexisting
I have been appealing a claim for LTD for 8 months! New York Life keeps claiming they will not approve claim for pre existing conditions but my illness is not preexisting ... read more >
Reliance Standard
Staff Lie
I had my disability cut off the day I was scheduled to find out whether I should have surgery. The claims examiner was aware that I had an appointment on that date and sai... read more >
Reply
Hartford
Former Hartford employee has had life insurance and accidental death policy's revoked for one late premium payment
Dislike how they are constantly interrupting the lives of their disabled EE's whom are entitled to benefit which they paid into out of there pay check every pay period onl... read more >
Reply
Lincoln Financial
Never received benefits my entire leave - or help with them
I used my short term disability insurance for maternity leave and started the process beforehand knowing when I would be out (scheduled induction.) It took a little over a... read more >
Sun Life
Unscrupulous Tactics
Sunlife uses unscrupulous tactics in order to prevent payment of claims. They wait until it is close to the 30 day mark and then they ask for another form of information o... read more >
Sedgwick
Lame
My experience with Sedgwick and personell is as follows: Unhelpful, unprofessional and an overall unpleasant experience.
Unum
Low payments
I was injured at work. I did house keeping in a hospital. I tore just about everything imaginable in my knee. I was let go from my job, because I was no longer able to do ... read more >
Answered Questions by Our Lawyers
(70)
Showing 8 of 70 Answered Questions
Q: Why can Cigna get away with not paying me anything for my disability?
A: Barbara: It sounds like you have a complex situation. Unfortunately, it also sounds like you had legal represe... Read More >
Q: Do I have to be an active employee to apply for LTD?
A: Lori: Generally speaking, if out on claim and a new/different disability arises you can add that to your exist... Read More >
Q: Can Cigna refuse to give me a copy of my short term disability policy?
A: Dave, since the policyholder is your employer CIGNA can refuse to provide it to you. You should contact your e... Read More >
Q: Is my plan governed by ERISA?
A: LeRoy, we will have to review the policy in order to give an opinion as to whether it would be governed by ERI... Read More >
Q: Can I add a physical disability claim to my mental health one without seeing a doctor (hard to get an appointment with COVID)?
A: Heather, the only way to effectively include your physical disability claim is to see a physician qualified to... Read More >
Q: Do you handle CIGNA cases in Florida?
A: Vito, yes. We absolutely do handle Cigna cases in Florida. Please email me at Rachel@diattorney.com and send... Read More >
Q: How can Cigna get away with not answering my calls?
A: Carol, knowing Cigna it sounds like they are approving your claim on appeal for a closed period of time and th... Read More >
Q: Do you handle closed cases only, or open ones as well?
A: Renee, we handle all types of open claims with Cigna – applications, claims handling, appeals, lawsuits, buy... Read More >
Helpful Videos
(888)
Showing 12 of 888 Videos
Disability Benefit Tips
(330)
Showing 8 of 330 Benefit Tips
Is Cigna Seeking To Offset Disability Benefit by Social Security Survivor Benefit?
I recently spoke with a gentleman who called into our office who has been receiving long term disability benefits from Cigna for several years... Read More >
Is Cigna's Denial of Your Appeal Really a Denial?
Following the submission of your appeal has Cigna sent you a letter stating that after review of the information provided on appeal their deci... Read More >
What Should a Claimant Expect When Suing Cigna or any Other Disability Company for Long Term Disability Benefits?
ERISA disability lawsuits are complicated due to the pro-insurance company laws. Our disabili... Read More >
Are Cigna Short Term Disability Denials on the Rise?
When it comes to claims for short term disability benefits under ERISA governed group policies, more often than not the short term disability ... Read More >
Cigna's latest strategies for handling and denying disability benefit claims
Watch Gregory Dell and Stephen Jessup discuss Cigna's latest strategy for handling disability... Read More >
Is a Claimant's Complaints of Pain Enough to Qualify for Short or Long Term Disability Insurance Benefits?
The answer to this question applies to the vast majority of long term disability insurance claims that we handle on a daily basis. Pain is sub... Read More >
Is My Insurance Company Allowed to Take An Offset of My Monthly LTD Benefit for Social Security Benefits My Kids Receive As A Result of My Disability?
It is common practice for insurance companies to find ways to limit the amount of money they have to pay to claimants. If you are receiving lo... Read More >
Is My "No-Fault" Auto Insurance Settlement an Offset Under My Long Term Disability Insurance Policy?
If your policy is an employer provided group disability policy governed by ERISA, then any proceeds you receive from a settlement based on "No... Read More >
Dell Disability Cases
(375)
Showing 8 of 375 Dell Disability Cases
Cigna Sued For Failing To Make A Timely Decision on Appeal
If your disability insurance claim has ever been denied you will have received a formal denial letter from your insurance carrier in which you... Read More >
CIGNA Overturns a Waiver of Premium for Group Life Insurance Policy
In early 2019, the widow of a decease man contacted our firm as she was troubled by the actions of CIGNA, also known as Life Insurance Company... Read More >
Cigna Admits Error In Denying Disability Benefits
Our client, a former school teacher, suffering from multiple severe medical conditions including autonomic nervous system damage, small fiber ... Read More >
CIGNA Overturned Their Denial of LTD Benefits for Nevada Healthcare Coordinator
Our client, Ms. G, formerly worked as a Healthcare Coordinator for a large regional healthcare provider. For many years Ms. G suffered from ch... Read More >
CIGNA Denies Technology Manager under the Own Occupation Provision & Dell Disability Lawyers Wins Appeal
Our client, Mr. N, formerly worked as a Technology Manager / Vice President for a large bank. For many years Mr. N suffered from chronic debil... Read More >
CIGNA overturned previous denial of waiver of life insurance premiums
Our client was the husband and beneficiary of Ms. S, who formerly worked as a registered nurse for a regional Healthcare System. In January 20... Read More >
Dell Disability Lawyers successfully appeal denial of benefits to claimant with CRPS/RSD
Ms. S contacted our firm after receiving a letter from her disability carrier, Cigna, denying her claim for short term disability benefits und... Read More >
LINA overturned its previous LTD denial for Medical Technologist
Our client, Ms. H, formerly worked as a Medical Technologist for a National Clinical Laboratory. In July 2017 a number of medical issues, incl... Read More >
Disability Lawsuit Stories
(765)
Reviews from Our Clients
