A recent lawsuit filed against Guardian Life Insurance Company highlight an issue that comes up regularly for disability insurance claimants that have minor children and are approved for Social Security Disability Benefits. Monica Johnson has been receiving long-term disability benefit payments from Guardian Life (Guardian) since August, 2003 as result of her becoming completely and totally disabled in April, 2003. Under the terms of the group long-term disability benefit plan Monica purchased while working for EBE Office Source, Inc., Guardian is allowed to offset her monthly benefit payment according to the amount of Social Security disability income she receives.
Ms. Johnson applied for Social Security Disability Income (SSDI) in 2005, and was approved by the Social Security Administration on or about August 18, 2009 to receive disability income payments retroactive to July 1, 2005. Ms. Johnson’s monthly SSDI payments amounted to $1,545.80. Guardian was already paying Ms. Johnson $2,505 per month up until the time she was approved for SSDI in 2009. That means Guardian can offset Ms. Johnson’s payment by $1,545.80.
Guardian did some calculating upon being notified of Ms. Johnson’s SSDI approval, and concluded that they overpaid Ms. Johnson to the tune of $70,232 between July 1, 2005 and January of 2010. At that time, Guardian withheld payment from Ms. Johnson until a time such that Guardian felt that they had been properly reimbursed for overpayment of benefits. With the combination of a lump sum payment made by Ms. Johnson and Guardian withholding disability benefit payments from her, Guardian informed Ms. Johnson it in a letter dated December 8, 2010 stating that terms for reimbursement to Guardian have been satisfied.
But now, Ms. Johnson’s daughter, Jenna, is thrown into the mix.
As an unmarried minor living with her mother who is completely and totally disabled, Jenna Johnson is entitled to apply for child benefits under the Social Security Act. Having been approved to receive Social Security benefits, Jenna received a monthly benefit of $772 per month as of July 1, 2005.
Monica Johnson, the aforementioned claimant and Jenna’s mother, received a letter from Guardian on February 17, 2011 stating that per terms of the group long-term disability plan she purchased prior to becoming completely and totally disabled Guardian could use the amount of the monthly Social Security benefit Jenna receives to offset the payment Guardian makes to Monica every month. With that said, Guardian claims they overpaid Monica and additional $49,168.54 since Jenna’s monthly Social Security benefit was not factored in to Monica’s monthly payments from Guardian. Guardian said they would withhold monthly payments to Monica and also demanded Monica to pay a lump sum of $41,448.54 to Guardian until reimbursement had been made.
Not so, says Monica. That’s why she filed a civil complaint on behalf of her daughter in United States District Court for the Eastern District of Pennsylvania against Guardian with the help of her disability attorney to prevent Guardian from, in essence, taking away Jenna’s monthly Social Security benefit.
Ms. Johnson alleges that her daughter relies on her Social Security benefit so she may have a place to live, food to eat, clothes to wear, and other necessities of life. Furthermore, Monica alleges that neither she nor her daughter assigned Jenna’s Social Security benefits to Guardian. Ms. Johnson further alleges that pursuant to section 207 of the Social Security Act, “Jenna’s future SSD child benefits may not be assigned or transferred.”
Therefore, Monica Johnson is suing on her daughter’s behalf to keep Guardian from essentially taking away Jenna’s child benefits from Social Security. Ms. Johnson is asking the court to compel Guardian to pay her long-term disability benefits without deducting the amount her daughter, Jenna, receives from Social Security. Additionally, Ms. Johnson is asking for any lost income benefits that were withheld as result of Guardian deducting Jenna’s monthly Social Security benefit. Finally, Ms. Johnson asks the court for reasonable attorney’s fees and costs related to this litigation.
It will be interesting to track the outcome of this case. If the disability policy specifically allows for an offset for child disability benefits, then this will be a difficult case for the claimant to win. However, if the policy has language which violates state or federal law, then the court can rule in favor of the claimant.