• Reliastar & ING Disability Benefit Claims, Denial, Appeals and Lawsuit Claim Tips from Lawyers

ReliaStar reduces monthly disability insurance benefits to veteran due to VA benefits

This case is a classic example of how an insurance company can offset its long-term disability payments because the insured is receiving benefits from other sources. In this case, the Court upheld ReliaStar’s decision to reduce the monthly disability payment it sent to a veteran due to additional benefits the veteran was receiving from Veteran Affairs for the same disability. Let’s take a closer look to see why the court ruled the way it did.

Thomas Jones was employed as a trust officer at Hibernia Corporation until 2001. As an employee of Hibernia, Jones was enrolled in a long-term disability benefits plan, which was administered by ReliaStar. In 2000 ING Group acquired ReliaStar. On August 1, 2001, Jones applied for long-term disability benefits due to his disability of gastroparesis. Jones’s doctor submitted a letter to ReliaStar that explained that Jones’s disability was caused by numerous conditions, including type II diabetes mellitus, peripheral neuropathy, and diabetic gastroparesis. ReliaStar approved Jones’s disability claim effective May 9, 2001.

Prior to the award of benefits from ReliaStar, Jones had been receiving benefits from the VA since 1971 for a disability caused by a shrapnel wound to his left shoulder. In 1999, Jones applied for additional benefits from the VA based on diabetes. The VA awarded Jones the additional benefits in December 2001, with an effective date of November 18, 1999.

On April 19, 2005, ReliaStar informed Jones that it had discovered that he was receiving disability benefits from the VA because of his diabetes, and explained that his benefits under the ReliaStar plan would be reduced by the amount of his diabetes based VA benefits pursuant to a provision in the plan. Under the ReliaStar plan, “Other Income is subtracted from the benefit a participant would otherwise receive.” “Other Income” is defined as income that a plan participant is eligible to receive based on the same or related disability for which he is eligible to receive benefits under the Group Policy. ReliaStar concluded that because both the VA and ReliaStar both included diabetes as causes of Jones’s disability, the VA benefits could be subtracted from the benefits ReliaStar paid to Jones.

After Jones’s administrative appeal was denied by ReliaStar, Jones filed suit in federal district court. The district court denied Jones’s request for discovery and dismissed the case, concluding that ReliaStar’s decision to offset Jones’s benefits was not an abuse of discretion. Jones then appealed that decision.

Jones’s Appeal

Jones believed the lower court’s decision was wrong for three reasons:

  1. that the Court used an incorrect standard of review when it reviewed the plan administrator’s decision under an abuse of discretion standard;
  2. that the Court erred when it denied his motion to conduct discovery; and
  3. that the Court was incorrect when it ruled that ReliaStar’s decision to offset Jones’s disability benefits was not an abuse of discretion.

The Court’s Analysis

The United States Court of Appeals for the Eighth Circuit agreed with the lower court’s ruling in favor of ReliaStar.

With regards to the first argument that Jones raised on appeal, that the court should not have used the abuse of discretion standard, the Appeals Court noted that it has long been determined that when an ERISA plan provides a plan administrator with discretion to construe the terms of the plan, the court should review the administrator’s interpretation under an abuse of discretion standard. Firestone Tire & Rubber Co. v. Bruch. The Court stated that this standard applies even if the evaluator of the claim is operating under a conflict of interest, such as here where ReliaStar is both the insurer and the administrator of the plan. Metropolitan Life Insurance Co. v. Glenn.

As to Jones’s second argument, that the court made an error in denying his request for discovery, the Appeals Court noted that there is a general rule that in ERISA cases the review of the courts is limited to the evidence (the administrative record) that was before the administrator of the plan. LaSalle v. Mercantile Bancorporation, Inc. The Court continued that Jones’s argument that he should be allowed discovery to explore ReliaStar’s conflict of interest is moot because ReliaStar has conceded that it was both insurer and administrator of the plan.

Finally, with regards to Jones’s last argument that ReliaStar’s decision to offset Jones’s disability benefits was an abuse of discretion, the Court noted that the administrator’s interpretation of the plan’s language must not be inconsistent with the plan’s goals, must not render the language of the plan meaningless, superfluous, or internally inconsistent, must not conflict with the substantive or procedural requirements of ERISA, must not be inconsistent with prior interpretation of the same words, and it must not be contrary to the plan’s clear language. Erven v. Blandin Paper Co. Finally, the Court declared, the administrator’s interpretation must be reasonable. King v. Hartford Life & Accident Ins. Co. The Appeals Court concluded that ReliaStar’s decision to offset Jones’s benefits was consistent with all of these requirements.

The plan directed ReliaStar to offset the payment of disability benefits by the amount of benefits that a participant receives from other sources because of the same or related disability. ReliaStar reasoned that the 1999 award of VA benefits based on Jones’s diabetes was “separate and distinct” from the 1971 award of VA benefits based on the shoulder injury. However, ReliaStar determined that the VA’s award of benefits in November 1999 for diabetes is related to the plan’s May 2001 award based on numerous conditions including type II diabetes mellitus, peripheral neuropathy, and diabetic gastroparesis.

The Plan did, however, provide an exception that benefits will not be reduced by disability benefits that the participant receives from a past employer, if these benefits have been paid continuously to him for more than 2 years before he becomes eligible to receive benefits under the Group Policy. The administrator determined that the exception did not apply to Jones and that the offset was appropriate because he did not begin to receive benefits from the VA for the diabetes-related disability more than two years before he was eligible to receive disability benefits under the plan (November 1999 from VA, May 2001 from the plan).

The Appeals court therefore concluded that ReliaStar did not abuse its discretion in deciding to offset Jones’s disability benefits based on his receipt of diabetes-related disability benefits from the VA.

Comments (3)

  • Gonsagrie,

    It would be impossible to know without seeing a copy of your insurance policy. Furthermore, since you are from South Africa, we would not be able to provide legal counsel/advice as we are not licensed to practice outside of the United States. I would highly recommend you try to seek out counsel in South Africa to address your questions/concerns.

    Stephen Jessup Sep 21, 2014  #3

  • Hi,

    I am suffering from severe anxiety, depression and memory loss for eight years. I am currently working for this company for ten years. I am always absent from work in hospital. I have being hospitalised for three weeks last month and a evalutation was done. My medical report says I must be medically be boarded off. My disablity claim is given to my company, they will send it to their insurance. I want advise, can I work while my claim is in process?

    Gonsagrie Reddy Sep 20, 2014  #2

  • I had a situation very similar to this case with a few differences. My service-connected VA benefits were awarded for the same disability insured under my LTD and the offset came suddenly after I started receiving SSDI benefits. I started receiving LTD benefits in 2007 from my employer. My confusion stems from the logic of a well documented off-set (as stated by my carrier) is only recognized after a 3 year period. My carrier received annual health and income updates, so my VA benefits awarded in 1995 was hardly surprising. Further, the moment SSDI kicked in, my VA was off-set. I have come to the conclusion that ERISA was set up for private insurance compliance with government laws; it was never meant to protect the insured. So where is the legislation to provide said protection?

    Alita Pope Feb 5, 2011  #1

Leave a comment or ask us a question

Questions About Hiring Us

Do you help ING claimants nationwide?

We represent ING clients nationwide and we encourage you to contact us for a FREE immediate phone consultation with one of our experienced disability insurance attorneys.

Can you help with a ING disability insurance policy?

Our disability insurance lawyers help policy holders seeking short or long term disability insurance benefits from ING. We have helped thousands of disability insurance claimants nationwide with monthly disability benefits. With more than 40 years of disability insurance experience we have helped individuals in almost every occupation and we are familiar with the disability income policies offered by ING.

How do you help ING claimants?

Our lawyers help individuals that have either purchased a ING long term disability insurance policy from an insurance company or obtained short or long term disability insurance coverage as a benefit from their employer.

Our experienced lawyers can assist with ING:

  • ERISA and Non-ERISA Appeals of Disability Benefit Denials
  • ERISA and Non-ERISA Disability Benefit Lawsuits
  • Applying For Short or Long Term Disability Benefits
  • Daily Handling & Management of Your Disability Claim
  • Disability Insurance Lump-Sum Buyout or Settlement Negotiations

Do you work in my state?

Yes. We are a national disability insurance law firm that is available to represent you regardless of where you live in the United States. We have partner lawyers in every state and we have filed lawsuits in most federal courts nationwide. Our disability lawyers represent disability claimants at all stages of a claim for disability insurance benefits. There is nothing that our lawyers have not seen in the disability insurance world.

What are your fees?

Since we represent disability insurance claimants at different stages of a disability insurance claim we offer a variety of different fee options. We understand that claimants living on disability insurance benefits have a limited source of income; therefore we always try to work with the claimant to make our attorney fees as affordable as possible.

The three available fee options are a contingency fee agreement (no attorney fee or cost unless we make a recovery), hourly fee or fixed flat rate.

In every case we provide each client with a written fee agreement detailing the terms and conditions. We always offer a free initial phone consultation and we appreciate the opportunity to work with you in obtaining payment of your disability insurance benefits.

Do I have to come to your office to work with your law firm?

No. For purposes of efficiency and to reduce expenses for our clients we have found that 99% of our clients prefer to communicate via telephone, e-mail, fax, GoToMeeting.com sessions, or Skype. If you prefer an initial in-person meeting please let us know. A disability company will never require you to come to their office and similarly we are set up so that we handle your entire claim without the need for you to come to our office.

How can I contact you?

When you call us during normal business hours you will immediately speak with a disability attorney. We can be reached at 800-682-8331 or by email. Lawyer and staff must return all client calls same day. Client emails are usually replied to within the same business day and seem to be the preferred and most efficient method of communication for most clients.

Dell & Schaefer Client Reviews   *****

Erin P.

I have been very pleased with the services provided by Gregory Dell. His firm has always been reliable, courteous and professional. I am so relieved that he deals with my LTD provider and I have the peace of mind that is he working with my best interests in mind. Highly recommend Gregory Dell.

***** 5 stars based on 202 reviews

Speak With An Attorney Now

Request a free legal consultation: Call 800-682-8331 or Email Us