The opinion of the court was delivered by: Stephen G. Larson United States District Judge
FINDINGS OF FACT AND CONCLUSIONS OF LAW
This matter is before the Court on administrative review.
Plaintiff David Scott Elliott currently receives disability benefits from Defendant Union Security Insurance Company ("USIC") under a group disability income policy ("Policy"). The Policy is subject to the requirements of the Employee Retirement Income Security Act of 1974 ("ERISA"). Plaintiff began receiving disability benefits under the Policy on December 20, 1999. In June, 2006, he was awarded Social Security disability benefits that were retroactive to February 1, 2003. USIC recalculated plaintiff's benefits based on the retroactive Social Security benefits award and determined that it had overpaid plaintiff. Plaintiff disagreed, exhausted his administrative remedies, and has now brought suit against USIC to recover withheld benefits from July 20, 2006 through March, 2009, for a total amount of $10,437, plus $151.99 per month going forward. The Court has reviewed the parties' briefs and the administrative record. Having now carefully considered the full record and arguments of the parties, the Court finds and concludes as follows:
Elliot's employer, Elliot, Leibl & Snyder LLP, held a long-term disability insurance policy for its employees issued by USIC, policy number 4018419. Administrative Record ("AR") 1-37. The Policy was established and maintained under ERISA, and grants discretionary authority upon USIC. AR 30.
Under the Policy, the benefit calculation for long term disability is as follows: The "Schedule Amount minus the Offset Amount" equals the Amount of Benefit. AR 17-21. The Schedule Amount is 60% of monthly pay, with a maximum of $10,000 per month. AR 17. The Offset Amount includes offsets for Social Security benefits. AR 21. The Policy also explains that if the amount of benefits is either more or less than what should have been paid, USIC will adjust the payment accordingly. AR 23. Any overpayment results in a reduction or suspension of benefits until the overpayment is recovered. AR 23.
A cost of living adjustment ("COLA") is also factored into the Policy, and is calculated as follows: "On each anniversary after the qualifying period ends, any benefit payable will be multiplied by 1.00 plus: 3% or the percentage increase in general social security disability payments during the past 12 months, whichever is less." AR 6.
Plaintiff became disabled on September 21, 1999, as a result of a motorcycle accident. AR 39. On December 20, 1999, after a ninety-day qualifying period, USIC began to pay disability benefits to Plaintiff in the amount of $10,000 per month. AR 39, 81. Then, in June, 2006, Plaintiff received a lump sum Social Security disability benefit award of $67,654.50, which represented retroactive benefits from February 1, 2003, through April, 2006.*fn1 AR 165-166. The Social Security Administration calculated Plaintiff's Social Security benefit award to be $1,811 per month, plus cost of living adjustments. AR 166. Plaintiff would continue to receive Social Security benefit awards for a principal amount of $1,811 per month, plus cost of living adjustments. AR 166.
On July 11, 2006, USIC informed Plaintiff that it had recalculated his benefits based on the retroactive Social Security benefit award according to the terms and conditions of the Policy. AR 154-156. USIC subtracted the $1,811 monthly Social Security benefit award from the Schedule Amount of $10,000 per month, resulting in a benefit payable to $8,189 per month. AR 154-156. Plaintiff's cost of living adjustment ("COLA") was also recalculated, so that the COLA percentage increase was calculated after subtracting the Social Security benefit monthly award. AR 154-156. As a result of the retroactive Social Security award, plaintiff was informed that an overpayment existed. AR 154-156.
On August 1, 2006, plaintiff's counsel sent USIC a letter that disagreed with USIC's calculation and requested it recalculate plaintiff's benefits. AR 147-149. On August 16, 2006, USIC responded and offered a detailed explanation of how plaintiff's overpayment occurred. AR 742. USIC explained that plaintiff's first scheduled benefit prior to receiving his first cost of living adjustment was $10,000. AR 742-743. Then, beginning December 20, 2000, his benefit was increased. AR 742. Under the Policy, the COLA is either "3% or the percentage of increase in general social security disability payments during the past 12 months, whichever is less." AR 742. Thus, plaintiff's monthly benefit increased from $10,000 the first year he was disabled to $10,300 the second year he was disabled. AR 742. As plaintiff remained disabled during the next calendar year, his benefit increased on December 20, 2001, due to another COLA, thus making his eligible monthly benefit $10,000 $300 $268, for a total monthly benefit of $10,568. AR 743. USIC's letter went on to explain that, once plaintiff was awarded his Social Security disability benefit, his COLA's had to be readjusted, because COLA's are based on the net eligible monthly benefit. AR 743. Thus, the retroactive Social Security award resulted in a decreased benefit payable on which to calculate the COLA, resulting in an overpayment. AR 743.
Plaintiff's responding letter on August 21, 2006, again disagreed with USIC's methodology and stated that, according to the Policy, the COLA should not have been readjusted as of February 1, 2003, because it was not an anniversary day. AR 142. Plaintiff also stated USIC was not entitled to "back out the cost-of-living increases for 2000, 2001, and 2002 as of February 1, 2003." AR 143. Plaintiff also asked that USIC comply with ERISA claim requirements and provide plaintiff "with the documents and instruments governing the plan, i.e. the policy of insurance." AR 145.
On August 31, 2006, USIC responded, explaining that it did not change plaintiff's 2000 or 2001 COLA, but that his 2002 COLA was adjusted due to plaintiff's February 1, 2003, retro Social Security award, and the fact that his 2002 COLA covered the period from December 20, 2002, to December 19, 2003. AR 739. That COLA adjustment was necessary to allow for the issuance of plaintiff's correct monthly benefit starting February 1, 2003. AR 739.
On September 8, 2006, plaintiff's responding letter asked for a final determination from USIC, and stated, "If I read your letter correctly, you calculate the overpayment as of September 19, 2006 at $45,652.76. I calculate the overpayment as of September 19, 2006 at $36,835.36. You calculate the ongoing benefits at $9,447.13. I calculated the ongoing benefits at $9,617.16." AR 135. On September 18, 2006, plaintiff's counsel stated he had received a copy of the ...