MARY M. LISI, District Judge.
The plaintiff, Dayna Gladstein ("Gladstein"), seeks payment of what she alleges are past due benefits under a long term disability insurance policy issued by the defendant, Lincoln Financial Group
The summary of the factual underpinnings of this case are based on the submissions of the parties in support of their respective motions for summary judgment. The Court notes that Gladstein submitted a Statement of Undisputed Facts ("PSUF") (Dkt. No. 23-2, an Additional Statement of Undisputed Facts ("PSUF2")(Dkt. No. 35-1), a Statement of Disputed Facts ("PSDF")(Dkt. Nos. 27-2, 31), and a Statement of Additional Disputed Facts ("PSDF2")(Dkt. No. 35-2). On its part, Lincoln submitted a Statement of Undisputed Facts ("DSUF")(Dkt. No. 22-2), a Statement of Additional Undisputed Facts ("DSUF2")(Dkt. No. 30), and a Statement of Disputed Facts ("DSDF")(Dkt. No. 29). In addition, Lincoln submitted two large binders with the redacted version of the administrative record (the "Administrative Record" or "AR")
The following facts are undisputed by either party: in November 2005, at the time Gladstein first applied for disability benefits, she was employed by Child and Family Services of Newport County ("CFS"), to which Lincoln had issued a group long term disability ("LTD") insurance policy (the "Policy")(Dkt. No. 22-3). DSUF ¶1. The Policy is governed by ERISA;
The following provisions in the Policy are critical to the issues in this case:
Other Income Benefits are defined in the Policy to include
The Policy further provides that, if the insured is
Lincoln has the right to a lien on any recovery from that person or organization for
In the case of overpayment of Policy benefits, full reimbursement to Lincoln is required within sixty days. Policy at 12; DSUF ¶10. If timely reimbursement is not made, Lincoln has the right to "1. reduce future benefits until full reimbursement is made; and 2. recover such overpayments from the Insured Employee or his or her estate." Policy at 12. The Policy further specifies that [s]uch reimbursement is required whether the overpayment is due to error in processing, "the Insured Employee's receipt of Other Income Benefits," or fraud or any other reason. Policy at 12; DSUF ¶10.
Gladstein first applied for benefits under the Policy effective
By letter dated November 7, 2011, Lincoln informed Gladstein that it had reviewed her Long Term Disability claim and had determined that no benefits were payable beyond November 28, 2011. AR 354; DSUF ¶17. According to Lincoln's notification, "the medical documentation contained in [Gladstein's] claim file does not support Total Disability as defined by this Policy." AR 357; DSUF ¶17. Although Gladstein disagrees with Lincoln's statement that there was "a lack of medical documentation to support total disability pursuant to the Policy," DSUF ¶17, PSDF ¶17, the Court notes that Lincoln's determination regarding Gladstein's disability status is not at issue in this case. Accordingly, a dispute regarding the underlying validity of Lincoln's determination as to Gladstein's status is insufficient to preclude an adjudication of the parties' claims at summary judgment.
Gladstein does not disagree that, as of the date Lincoln terminated her benefits, she had received $275,966.61 in LTD benefits from Lincoln. AR 333; DSUF ¶ 18. Gladstein appealed the termination of her benefits on May 11, 2012
On September 12, 2011, an Administrative Law Judge determined that Gladstein had been disabled under sections 216(I) and 223(d) of the Social Security Act since June 24, 2005. AR 391. The response to a query submitted by Lincoln to the Social Security Administration ("SSA") reflects a past due SSDI benefits award of $190,588 ($129,684 to Gladstein as Payee and $60,904 to Gladstein as Payee for M.C., her daughter
The correspondence from Lincoln to Gladstein regarding her disability claims reflects that Lincoln reiterated on numerous occasions that any payments made to Gladstein under the Policy were subject to offset by any SSDI benefits she might receive. See AR 1197 (April 5, 2007 Lincoln letter, informing Gladstein that she qualified for disability benefits); AR 1195 (April 9, 2007 Lincoln letter, requesting Gladstein to apply for SSDI benefits); AR 1189 (April 10, 2007 Lincoln letter, advising Gladstein's attorney that Gladstein was awarded LTD benefits under the Policy and stating that "benefits for which Mrs. Gladstein
By letter dated January 9, 2012, Lincoln notified Gladstein that it had received notification of her SSDI award and that, due to such award, the LTD claim had been overpaid by $177,353. AR 332; DSUF ¶26. Lincoln requested a check for $177,353 within 30 days. Attached to the letter is a spreadsheet that reflects (1) Lincoln's LTD payments to Gladstein between November 29, 2005 and November 29, 2011, totaling $275,966 (uncontested by Gladstein), and (2) the amount of LTD benefits Lincoln asserts were actually due to Gladstein, calculated by subtracting $2,629 in monthly SSDI benefits from $3,925 in LTD benefits paid, and totaling $92,612. Lincoln further reduced the calculated overpayment total of $183,353
By letter dated December 15, 2011, Gladstein's counsel, on his client's behalf, send a check to Lincoln "to fully reimburse Lincoln Financial for money it has paid to Ms. Gladstein." DSUF ¶27. Gladstein's counsel also stated, without further explanation, that he had "deducted money that was owed to my client and for attorney's fees as per
In later correspondence Gladstein's counsel sent to Lincoln, he asserts that he arrived at what he considered full repayment by subtracting a fee of $12,798
By letter dated January 10, 2012, Lincoln informed Gladstein that it had received a check for $90,000 and that, after applying the amount to the remaining overpayment, the balance to be repaid was $87,353. AR 331; DSUF ¶32. On February 13, 2012, Lincoln sent a second letter to Gladstein, again acknowledging that it had received the $90,000 check, and demanding payment of the outstanding overpayment of $87,353 within thirty days. AR 329; DSUF 32.
According to Gladstein's LTD claim profile, which sets forth in some detail any significant events and decisions related to the claim, as well as any attempted and effected communications between the parties, Lincoln informed Gladstein on March 28, 2013 that she was eligible to receive disability benefits for chronic fatigue syndrome. AR 2, 69. Because coverage for this condition was limited under the Policy to 24 months—a limitation which Gladstein does not challenge—Gladstein was eligible for coverage between November 29, 2011 through November 29, 2013. AR 2, 68. Although Lincoln initially asserted that the gross benefits for that period totaled $47,806,
Lincoln applied the $9,536 returned check to the outstanding overpayment balance. AR 2, Daly Affidavit ¶18. At this time, Lincoln asserts that it is owed an outstanding overpayment balance of $29,376, whereas Gladstein deems any balance due on the overpayment to have been paid and she asserts that she is owed $52,689 in LTD benefits plus interest. Notwithstanding the parties' disagreement about the exact amounts due and certain inconsistencies in both their calculations,
(1) Did Gladstein's $90,000 payment to Lincoln constitute full payment of all amounts she owed for LTD benefits overpayment under the Policy?
(2) Is Lincoln entitled to recover from Gladstein an offset for any SSDI benefits that were awarded to her daughter as a result of Gladstein's disability?
(3) Did Lincoln have the right to reduce LTD benefit payments to Gladstein in order to recoup any overpayment for which Gladstein had not fully reimbursed Lincoln?
On April 22, 2014, Gladstein brought a four-count complaint (the "Complaint") against Lincoln in Rhode Island district court, alleging breach of fiduciary duty (Count I), bad faith (Count II), breach of contract (Count III), and fraud and conversion (Count IV). (Dkt. No. 1-2). Gladstein, who acknowledges that, "[a]s part of the disability payments from Lincoln, [she] was required to pay back any money received from Social Security to Lincoln," Complaint ¶11, seeks payment of what she alleges to be "past due benefits owed for the time period of November
Lincoln removed the case to this Court on September 2, 2014
On December 1, 2014, Gladstein filed a motion to amend the Complaint in order to revise or add facts and to include a class-action claim (Dkt. No 12), to which Lincoln filed a detailed objection (Dkt. No. 16). In her February 4, 2015 reply to Lincoln's objection, Gladstein noted that she had no objection to withdrawing her class action claims, and filing, instead, an amended complaint "devoid of any language as to said Class Action." (Dkt. No. 18). Following a Rule 16 conference on February 19, 2015, the parties were directed to file cross-motions for summary judgment on or before April 24, 2015. Following a grant of an extension of time, both parties submitted their motions on May 1, 2015.
On June 26, 2015, nearly two months after the parties had filed their initial summary judgment briefings and a month after they had submitted their respective objections, Gladstein filed a new motion to amend/correct the Complaint (Dkt. No. 36), to which Lincoln objected, in part (Dkt. No. 37), and in support of which Gladstein filed a reply (Dkt. No. 38-1). Gladstein offers no reason for her belated attempt to amend her complaint.
In light of the unexplained delay of Gladstein's attempt to amend her Complaint until after the parties' cross-motions had been fully briefed and referred to this Court, and given the undeniable prejudice to Lincoln should Gladstein's request be granted, Gladstein's motion to amend her Complaint is denied. The Complaint filed on April 22, 2014 and removed to this Court on September 2, 2014 is the operative complaint in this case.
A party is entitled to summary judgment "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). In deciding a motion for summary judgment, the Court reviews the evidence in the light most favorable to the nonmoving party and draws all reasonable inferences in the nonmoving party's favor.
In summary judgment, the burden shifts from the moving party, who must first aver "`an absence of evidence to support the nonmoving party's case,'"
When both parties raise cross-motions for summary judgment, the basic Rule 56 standard is not altered. Rather, it requires the Court "to determine whether either of the parties deserves judgment as a matter of law on facts that are not disputed."
Although Gladstein has formulated her Complaint in terms of claims pursuant to Rhode Island state law, the primary basis of her claims is the assertion that Lincoln is refusing to pay her for certain past due benefits under the Policy. Secondly, Gladstein seeks a determination that repayment of $90,000 fulfilled her obligation under the Policy to reimburse Lincoln for any SSDI benefits she received for her disability and that any SSDI benefits awarded to her daughter are exempt from Gladstein's repayment obligations.
It is undisputed that the Policy was issued to Gladstein's former employer in order to provide her with the benefit of long term disability insurance. Moreover, it is evident from Gladstein's memoranda and PSDF that she concedes that ERISA is applicable in this case. Pursuant to 29 U.S.C. § 1002(1), the elements of an ERISA plan are (1) a plan, fund, or program (2) established or maintained (3) by an employer or by an employee organization, or by both, (4) for the purpose of providing ... benefits in the even of disability (5) to participants or their beneficiaries.
The First Circuit has recognized that, "in an ERISA benefit-denial context, `the district court sits more as an appellate tribunal than as a trial court.'"
When an ERISA-based benefit plan gives the administrator discretionary authority
Primarily, Gladstein asserts that Lincoln's acceptance of her annotated $90,000 check fully satisfies her admitted obligation to repay any overpayment she incurred by receiving SSDI benefits. In support of the contention that she only owed that portion of the total amount Lincoln demanded as overpayment, Gladstein suggests that (1) SSDI benefits awarded to her daughter because of Gladstein's disability are not considered "Other Income"; and (2) because her daughter was of age and no longer residing in Gladstein's home when the retroactive SSDI benefits were received, Gladstein received no benefit from the lump sum payment made on behalf of her daughter. Gladstein also argues for prejudgment interest related to Lincoln's initial denial of her request for benefits; however, no claim for such interest is included in her Complaint. Finally, Gladstein asserts that her Complaint was not brought in bad faith and that an award of attorneys' fees to Lincoln is not indicated.
Lincoln asserts that, based on the plain language of the ERISA-governed Policy provisions, it was obligated (1) to offset Gladstein's SSDI income, and (2) to seek reimbursement for overpaid benefits. Lincoln argues that Gladstein's state law based claims are really claims for benefits under the Policy, which are preempted by ERISA; and that Lincoln is entitled to deference regarding its interpretation of the Policy language and related decisions. Accordingly, Lincoln argues, it was entitled to reduce LTD benefits to Gladstein in order to recoup the amounts she still owed in overpayment, and Gladstein's partial payment was ineffective in fulfilling her entire repayment obligations. Regarding the SSDI benefits awarded to Gladstein on behalf of her daughter, Lincoln relies on the plain language of the Policy provision which includes such benefits as "Other Income" that must be offset against Gladstein's LTD benefit payments.
The Policy at issue here is an employee welfare benefits plan governed by ERISA, which, in its plain language, authorizes the insurer to (1) offset social security benefits payable to the insured and to his or her spouse and/or children; and (2) recover any overpayment resulting from lump sum payments of "Other Income" Benefits, such as SSDI payments. Gladstein, in fact, agrees with Lincoln's contention that "[a]s part of the disability payment from Lincoln, Gladstein was required to pay back any money received from Social Security to Lincoln." Complaint ¶11. Gladstein contends however, that (1) Lincoln's acceptance of Gladstein's $90,000 repayment freed her from any obligation to pay the rest of the overpayment; and (2) any sums awarded to her daughter because of Gladstein's disability were not subject to the same repayment provisions.
For the first part of her argument, Gladstein relies on R.I. Gen. Laws § 6A-3-311, which provides, in pertinent part, as follows:
Based on that provision, Gladstein argues that Lincoln's acceptance of a repayment check that contained the notation "Full + final payment owed as reimbursement for benefits paid to Dayna Gladstein" operated to fulfill her obligation under the Policy to reimburse Lincoln for the offset from her SSDI benefits. Gladstein's claim fails on two accounts. First, determination of both Gladstein's and Lincoln's claims in this litigation requires a review and interpretation of a Policy that falls under ERISA regulations. Gladstein's $90,000 repayment was based on her contentions that (1) she was not required to repay any SSDI benefits awarded on behalf of her daughter, and (2) she was entitled to subtract attorney's fees from the overpayment amount. A determination of the merit of those contentions depends on an interpretation of the provisions in the Policy. To the extent Gladstein's payment practices—i.e. paying only a portion of the requested overpayment and simply noting on the check that the partial payment constituted payment in full—relies on R.I. Gen. Laws 6A-3-311, application of that state statute is preempted by ERISA. Accordingly, Section 6A-3-311 provides no defense to Gladstein against Lincoln's claim for recoupment of all SSDI benefit payments awarded to Gladstein and her family for the time period for which she also received unreduced LTD benefit payments from Lincoln.
With respect to her second argument, Gladstein makes a number of assertions as to the benefits that were awarded to her daughter, only some of which are supported by the record. It is undisputed that Gladstein's daughter was awarded SSDI benefits as a result of Gladstein's disability status; there is no suggestion in the record that Gladstein's daughter was awarded such benefits as a result of her own status. It is likewise undisputed that, by the time Gladstein was awarded SSDI benefits in 2011 and received a lump sum retroactive payment of such benefits, her daughter had reached the age of majority. However, Gladstein's contentions that her daughter has not resided in Gladstein's household since 2008 and that Gladstein did not receive the lump sum in dependent SSDI benefits is unsupported by any documentation other than Gladstein's own statements.
The two cases on which Gladstein relies, neither of which constitute controlling precedent for this Court, do not call for a different conclusion.
In
In the instant case, the language of the Policy is unambiguous with respect to the extent of the offset. It is undisputed that Gladstein's daughter was eligible for SSDI benefit because of Gladstein's disability and not for another, independent reason. Based on the explicit provision in the Policy that includes dependent SSDI into the calculation, the amounts awarded to Gladstein's daughter are subject to the offset and to repayment.
To summarize, this is not a case in which a denial of benefits by the insurer is challenged by the insured employee. It is undisputed that Lincoln awarded more than $325,000 in LTD benefits to Gladstein, of which $275,966 were paid to her, at her election, in unreduced amounts. An additional sum of $52,128 in LTD benefits was credited against the overpayment that, under the unequivocal terms of the Policy, Gladstein was obligated, but failed, to repay after being awarded more than $190,588 in retroactive SSDI benefits. Instead, the case stems from Gladstein's contention that (1) a partial payment by annotated check absolved her of any further reimbursement obligations; (2) any LTD benefits awarded to her daughter did not constitute "other income" subject to a benefit setoff; and (3) based on the foregoing, Gladstein was entitled to receive continued unreduced payments of LTD benefits instead of the Policy's minimum amount offered to her by Lincoln. Because the undisputed facts of this case and the plain language of the Policy demand otherwise, Gladstein's motion for summary judgment cannot withstand Lincoln's counter motion.
For the reasons stated herein, Gladstein's motion for summary judgment is DENIED. Lincoln's motion for summary judgment is GRANTED with respect to the following:
1. Lincoln's acceptance of the annotated $90,000 check Gladstein submitted as offset for the SSDI payments she received does not constitute full accord and satisfaction. Gladstein remains obligated to repay the full amount of any overpayments she incurred.
2. The SSDI benefits awarded to Gladstein's daughter are included in "Other Income," as defined in the Policy, and they must be included in the calculation of the overpayment which Gladstein incurred.
3. Lincoln is authorized to reduce LTD benefit payments awarded to Gladstein until full reimbursement of the overpaid amounts were made.
Further, Lincoln's claim for unjust enrichment is DISMISSED as moot. Gladstein's motion to amend her Complaint is DENIED for the reasons stated herein.
With respect to Lincoln's request for attorney's fees pursuant to 29 U.S.C. § 1132(g)(1) asserted in Count VI of its counterclaim, Lincoln, as the prevailing party in this litigation, is directed, if it so chooses, to file a motion for attorney's fees within fourteen (14) days of issuance of this Memorandum and Order. Gladstein may file a response within fourteen (14) days thereafter.
SO ORDERED.
In addition, the two SSA-1099 forms reflect attorney's fees totaling $27,226 as benefits to Gladstein (on her own behalf and that of her daughter).
