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The Wagner Law Group Description 

The Wagner Law Group, A Professional Corporation, is a nationally recognized ERISA & employee benefits, estate planning, employment, labor & human resources practice. 

 

Established in 1996, The Wagner Law Group has 23 attorneys engaged exclusively in employee benefits, estate planning and employment law. Seven of our attorneys are AV rated by Martindale-Hubbell as having very high to preeminent legal abilities and ethical standards. The firm is among the largest ERISA boutiques in the country. Our practice is national in scope, with clients in more than 40 states and several foreign countries.

 

 

 

 

 

Contact Info

The Wagner Law Group

 

  Integrity | Excellence

  

Massachusetts Office 

Tel: (617) 357-5200 

Fax: (617) 357-5250 

99 Summer Street 

13th Floor

Boston, MA 02110


Florida Office 

Tel: (561) 293-3590
Fax: (561) 293-3591
7108 Fairway Drive
Suite 125
Palm Beach Gardens, FL 33418

   

San Francisco Office

Tel: (415) 625-0002

Fax: (415) 358-8300

315 Montgomery Street

Suite 904

San Francisco, CA 94104

 

Illinois Office

Tel: (847) 250-1365

Fax: (847) 250-1367

414 West Deerpath Road
Lake Forest, IL  60045  

 

www.wagnerlawgroup.com

 

 

 

 

June 19, 2014

 

 State and Federal Law Alert

 

 

 

Supreme Court Declines to Hear Case Allowing Recoupment of Benefit Overpayment 

 

 

 

 

 

The United States Supreme Court has declined a plan beneficiary's request to clarify whether a plan administrator can enforce a lien to recoup benefit overpayments when the overpaid benefits are no longer in the possession and control of the beneficiary at the time the plan asserts its lien.

 

In Thurber v. Aetna Life Insurance Company, the Second Circuit Court of Appeals ruled that a plan administrator could enforce a lien under ERISA and recover overpaid benefits, even if the overpaid benefits no longer remained in the plan participant's possession. The participant subsequently petitioned the Supreme Court to review the ruling to resolve a split among the circuit courts on this issue. Currently, the First, Second, Third, Sixth and Seventh Circuits allow fiduciaries to enforce such liens, while the Eighth and Ninth Circuits do not.

 

Background. In Thurber, the participant was enrolled in an ERISA-covered benefit plan that provided disability benefits. After being injured in a car accident, the participant applied for and received STD benefits for six months. The participant also applied for LTD benefits.

 

The plan administrator denied the participant's LTD claim, finding that she was not disabled because she could perform the functions required for her job. During the LTD claims review process, however, the plan administrator discovered that the participant had been receiving no-fault auto insurance payments, which should have been offset against the STD benefits.

 

After exhausting the internal appeals process to no avail, the participant sued the plan, alleging that its denial of her LTD claim was erroneous because it was not based on the evidence and failed to disclose how the decision was made. In turn, the plan administrator filed a counterclaim against the participant under ERISA, seeking to recover what it deemed to be an overpayment of STD benefits due to the participant's receipt of no-fault insurance payments.

 

Lower Courts' Decisions. At trial, the district court upheld the plan administrator's denial of the participant's LTD claim but denied its recoupment of benefits claim, finding that this type of recovery was unavailable under ERISA. The plan administrator appealed this decision to the Second Circuit.

 

On review, the Second Circuit reversed the trial court's decision, finding that the plan administrator's counterclaim was permitted under ERISA because it sought to recover specific funds in a specific amount, as authorized by the plan. In response, the participant petitioned the Supreme Court to review the Second Circuit's decision. The Supreme Court, however, ultimately declined to review the matter.

 

Impact of Supreme Court's Decision to Decline to Review Thurber. While the Thurber decision comes as good news to plan fiduciaries, the Supreme Court's decision to decline a review of the matter allows the circuit courts to remain divided on the issue. Accordingly, plan fiduciaries must be cognizant that their ability to recoup benefit overpayments may depend upon the location of the case. 

  

 

 

 

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Pursuant to Internal Revenue Service Circular 230, we hereby inform you that any advice set forth herein with respect to US federal tax issues is not intended or written by The Wagner Law Group to be used and cannot be used, by you or any taxpayer, for the purpose of avoiding penalties that may be imposed on you or any other person under the Internal Revenue Code.

 

This Newsletter is provided for information purposes by The Wagner Law Group to clients and others who may be interested in the subject matter, and may not be relied upon as specific legal advice.  This material is not to be construed as legal advice or legal opinions on specific facts. Under the Rules of the Supreme Judicial Court of Massachusetts, this material may be considered advertising.