How does an LTD Carrier Recover an Overpayment?

Can a long term disability carrier bring suit against a claimant to recover an overpayment through ERISA?  The answer to this question has been the subject of many cases, with conflicting results.  The normal fact pattern that brings about this situation is as follows:  The claimant applies for and receives long term disability benefits.  Thereafter, the claimant receives Social Security disability benefits.  Most, if not all, long term disability (LTD) plans have a provision for offsetting the LTD benefits by the amount of Social Security disability benefits the claimant receives.  In other words, once that claimant receives Social Security disability benefits in a lump sum amount for past due benefits, the LTD carrier has an overpayment claim.  The issue is how the LTD carrier can collect the overpayment.  Obviously, the LTD carrier will ask the claimant to pay back the overpayment.  Often, the claimant will comply. If the claimant does not comply and the carrier is still paying LTD benefits, the carrier will normally stop paying monthly LTD benefits until such time as the overpayment is recovered. Basically, the carrier credits the amount owed against the overpayment balance.  Some carriers have tried other approaches, such as bringing suit under ERISA or bringing a counterclaim for reimbursement under ERISA if the claimant brings suit to challenge a decision of the carrier.  In one relatively recent case, the Court held that because the carrier could not specifically identify whether or not the claimant still had the overpayment proceeds in her possession, the LTD carrier could not recover the overpayment directly from the claimant, but instead, could withhold benefits to collect to the overpayment.  Epolito v. Prudential Ins. Co. of Am., 737 F. Supp. 2d 1364, 2010 U.S. Dist. LEXIS 91010 (M.D. Fla. 2010).


About tngainjurylawyer
Serious Injury Lawyer in Tennessee and Georgia.

Comments are closed.

%d bloggers like this: