Sedgwick and AT&T sued as a result of SSDI Overpayment

A recent decision by a Federal Judge in a California ERISA Disability Lawsuit serves as a reminder to all individuals receiving disability benefits: If your disability policy allows for the insurance company to “offset” other income benefits and to collect for overpayments, you must always remember that eventually you may owe that money to the insurance company should they request it soon thereafter or at a later date.

In a case against AT&T Umbrella Benefit Plan No. 1 (a long term disability plan for AT&T employees which was third-party administrated by Sedgwick), a claimant brought suit after the Plan reduced his benefits by $500 per month in an attempt to recover $63,288.11 in past overpayments it believed were owed to AT&T by the claimant.

Claim History

The claimant previously applied for, and received, long term disability benefits from AT&T and Sedgwick. While he was on claim he also applied for, and was eventually approved for, Social Security Disability (SSDI) Benefits. Soon after being approved by the Social Security Administration (SSA), the claimant received a sizeable back benefits check for SSDI benefits for the time period when SSA first found he was disabled to the present. The SSA also began sending him a monthly benefit check due to his disability.

The claimant’s policy with AT&T allowed for AT&T to offset any other income the claimant received while on claim for long term disability benefits. Nearly a year after SSA awarded the claimant disability benefits, AT&T finally got around to requesting the overpayments it believed were owed. AT&T requested that the claimant pay it $63,288.11, the sum of money the SSA eventually paid the claimant for the same time period that AT&T had already paid. Unfortunately, by the time AT&T made this request, the claimant had already spent the money. In an attempt to recoup the money it believed was owed, AT&T began to reduce the claimant’s LTD benefits by $500 per month.

ERISA Disability Lawsuit

Upset at receiving $500 less in benefits per month, a lawsuit was filed. In the lawsuit, the claimant made various arguments in an attempt to justify his belief that he should not have to pay AT&T the money back. Most notably the claimant believed that AT&T’s long delay in requesting the overpayment somehow prevented AT&T from now collecting the money. The claimant argued that this delay effectively waived AT&T’s rights to the money. Unfortunately, the Court did not agree.

The Court first noted that “the terms of the Disability Plan ‘unambiguously’ grant (AT&T) the power to reduce (the claimant’s) LTD benefits to account for a retroactive SSDI award. “The Court also noted that although AT&T waited a year to request the money, AT&T informed the claimant on several occasions that should he be awarded SSDI benefits, he would be required to reimburse AT&T for any overpayment. This was done both verbally and through letters. Additionally, before the claimant began to receive LTD benefits from AT&T, he signed an Agreement that stated he would notify the claims administrator immediately if he was awarded SSDI benefits and that he would repay AT&T in full any money that ended up becoming an overpayment. Finally, the Court noted that the Disability Plan itself states that “failure to apply an offset as soon as it is available shall not constitute a waiver of offset rights or otherwise prevent their later exercise.”

In the end, the Court found that the delay in requesting the overpayment from the claimant did not constitute a waiver of AT&T’s rights to the reimbursement. The Court also stated that the claimant “should have known that the retroactive SSDI award was not his to spend. Thus, Plaintiff’s current state of financial hardship for having spent the retroactive SSDI award does not persuade the Court that equitable relief is warranted.”

While our firm did not handle this case, it can serve as a reminder that before a claimant spends any money they receive from Social Security (or another source), it is best to speak with your Disability Attorney who can guide you through this process. Failure to send in the overpayment can lead to one’s benefits being reduced, totally suspended or even denied. The disability attorneys at Attorneys Dell & Schaefer, Chartered, represent claimants nationwide and are available for a free consultation to discuss your disability claim options.


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Sedgwick

Lame

Reviewed by Dennis T. on December 11th 2023   Verified Policyholder | March 2022 date of disability
My experience with Sedgwick and personell is as follows: Unhelpful, unprofessional and an overall unpleasant experience.
Sedgwick

I was disabled 2003 by SS. I got SSDI 7 years too late.

Reviewed by Bunny on August 9th 2023   Verified Policyholder
I believe if Sedgwick would have moved on my Claim. They absolutely did everything not to answer my calls, change dates. I had already been through WV comp. Ins. Sold out,... read more >
Sedgwick

They falsify documents and avoid contact as much as possible.

Reviewed by Jeff Allsop on July 27th 2023   Verified Policyholder | February 2023 date of disability
They avoided sending the documents needed for the claim for two weeks. I had to escalate with a call from my company's HR and Sedgwick (the only way I was ever able to get... read more >
Sedgwick

Not getting paid

Reviewed by Cezes on June 15th 2023   Verified Policyholder | March 2020 date of disability
I been battling Sedgwick about my claim. I was to get paid today and I did not get paid.Sledges is the worse company I ever had to deal with. I been fighting with my b... read more >
Sedgwick

You have to be well versed in your rights when dealing with them

Reviewed by Lauren on June 3rd 2023   Verified Policyholder | May 2023 date of disability
I live in CA and have a very straightforward maternity leave case. Every adjuster is unaware of CA leave laws. They’ve gotten in wrong every time. You have to advocate f... read more >
Sedgwick

Sedgewich is the worst-immediate denial of all requests for treatment. Rubber stamps DENIED ALL RFA’s

Reviewed by J on May 31st 2023   Verified Policyholder | August 2023 date of disability
Sedgewich immediately denies all RFA. They’re ur team are THEMSELVES not a independent medical team…
Sedgwick

Very very slow to respond

Reviewed by Steve on May 31st 2023   Verified Policyholder | April 2023 date of disability
Very very slow to respond to reply to questions they put you on a timeline, but they can bend their timeline.
Sedgwick

Denial of treatment for injuries that therefore become a permanent disability.

Reviewed by Anonymous on December 28th 2022   Verified Policyholder | October 2022 date of disability
Sedgwick denies claims, or ignores them. They refuse to heed doctor referrals and refuse to compensate for work related injuries and expenses. They want you to go away.
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