On April 29, 2011, Dr. Phillip W. Watson and his disability attorney filed a lawsuit in the United States District Court Southern District of Florida as a last resort to settle Watson’s claim that in violation of ERISA, Title 29, United Stated Codes 1000-1461, Paul Revere Life Insurance Company arbitrarily decided to deduct part of his disability benefits payments when Watson applied for his early Social Security retirement benefits (SSR).
Dr. Phillip Watson, formerly an anesthesiologist, submitted his disability claim to his insurer Paul Revere Life Insurance Company in February of 2007. At the time, Dr. Watson was 63. Consequently, in August 2007, Watson began receiving $6,000.00 per month from his claim which was approved to be continued until February 24, 2013. Everything went as expected, with Watson receiving his monthly benefits from August 2007 until October 2009.
According to the Summary Plan Description (SPD) Paul Revere gave to Watson, he was eligible to file for early Social Security Retirement (SSR) benefits at age 62. So, Watson opted to receive his early SSR benefits and applied for them in July of 2009. Watson began receiving those SSR benefits in September 2009 in the amount of $1,720.00/month. Watson notified Paul Revere of his award of early SSR benefits immediately. Then, Watson received correspondence from Paul Revere, dated October 1, 2009, which stated that Paul Revere would be deducting money from his Paul Revere benefits payments and that Watson was to repay Paul Revere $3,591.23 in disability benefits to take care of the overpayment Watson had been receiving as a result of the combined Paul Revere disability benefits and the SSR. Watson, trying to be cooperative, honored the request under protest and handed over the $3,591.23.
Did Paul Revere Wrongfully Deducted Money From Watson’s Disability Benefits?
Watson then began a letter campaign, protesting Paul Revere’s deductions of the SSR amounts from his Paul Revere disability benefits and attempted to resolve the issue through administrative avenues, but was denied his requests. Once Watson exhausted his remedies for the deduction debate, he received a letter from the insurer, dated January 21, 201, denying his appeals.
According to Watson’s complaint, Watson had “at various times and for various reasons” requested that Paul Revere supply him with a copy of his policy since July 1, 1997. Each request was met with the provision to Watson of a copy of only the insurer’s SPD. On November 12, 2009, only after Watson had elected to take his early SSR benefits, did Paul Revere send him a copy of his policy. On receipt of the policy, Watson discovered that the SPD does not state that early SSR will result in a deduction of that amount from benefits, but the full policy does contradict that.
Watson’s Disability Attorney Claims Insurer is Guilty of ERISA Violations
Consequently, Watson’s lawsuit against Paul Revere charges the insurer with two counts of ERISA violations:
Count I – states that Paul Revere improperly deducted funds from Watson’s disability benefits and continues to do so; and asks for damages in an amount equal to Watson’s past due disability benefits that were improperly deducted along with attorney fees and any other relief the Court sees fit.
In light of the recent Supreme Court decision in Cigna v. Amara it will be difficult for the claimant to prevail. The claimant in this case appears to have relied on the summary plan description and not the actual plan documents. It will be unfair if the Plaintiff loses due to his reliance on incorrect documents that Unum sent him. The bottom line is that a claimant should always rely on the actual plan documents and not the SPD.
Count II – requests that Paul Revere be penalized for not adhering to ERISA’s requirements that employees should be provided with a full and complete copy of their insurance policy upon request. Watson asks that the insurer be penalized in the amount of $110.00/day beginning the day after Watson requested those documents in reference to his disability benefits claim (January 28, 2010) which amounts to $50,160.00. And, he seeks damages of an additional penalty calculated as the difference between “Watson’s February 2009 request for the Policy (when he was making a decision about taking his early SSR benefits and the actual production of the Policy on November 12, 2009, which is calculated to be $24,860.00. On this count, Watson also requests attorney fees, court costs, and any other penalties the Court sees fit.
The claimant may have a hard time prevailing on this Count if he did not send a request for the plan documents to his former employer. The disability company is usually not responsible for providing a copy of the plan documents. It is the responsibility of the Plan Sponsor, which is usually the employer. A request must be sent in writing to the correct party in order to enforce the $110 a day penalty.
Disability policies are often ambiguous and difficult to read. A claimant should consult with an attorney so that they don’t mistakes which could result in thousands of dollars in lost disability benefits.