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9th Cir. – Unpublished – Offset Provision Enforced

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  • 9th Cir. – Unpublished – Offset Provision Enforced

    Here’s a new case out of the Ninth Circuit entitled Susan Rene Jones v. Life Insurance Company of North America. The only mildly interesting part of the case is the court’s enforcement of the offset provision.

    “Under the abuse of discretion standard, an administrator’s denial of benefits must be upheld ‘if it is based upon a reasonable interpretation of the plan’s terms and if it was made in good faith.’” Moyle v. Liberty Mut. Ret. Benefit Plan, 823 F.3d 948, 957–58 (9th Cir. 2016) (citation omitted). Here, the relevant plan provision states: “Any benefit payable under the Plan shall be reduced by: (i) Social Security Benefits, effective at the time the Participant becomes entitled to benefits.” Despite Jones’ assertions to the contrary, LINA’s determination that the offset provision applied to Jones’ DSSDI benefits when she began receiving the DSSDI benefits in 2009 is based on a reasonable interpretation of the plain language of the plan in effect at that time. See Boyd v. Bert Bell/Pete Rozelle NFL Players Ret. Plan, 410 F.3d 1173, 1178 (9th Cir. 2005) (“An ERISA administrator abuses its discretion only if it (1) renders a decision without explanation, (2) construes provisions of the plan in a way that conflicts with the plain language of the plan, or (3) relies on clearly erroneous findings of fact.”). Because LINA construed the plan provision consistent with its plain language and did not otherwise abuse its discretion, the district court properly upheld LINA’s decision that Jones’ LTD benefits were offset by her DSSDI benefits.
    The court also finds that the California insurance code regarding the offset is preempted.

    Jones also contends that the offset provision is void under California Insurance Code § 10127.15. Section 10127.15 provides:

    Any provision contained in a policy of disability insurance or a self-insured employee welfare benefit plan for a reduction of loss of time benefits during a benefit period because of an increase in benefits payable under the federal Social Security Act, as amended, shall be null and void with respect to any such increase which occurs on or after the effective date of this section.
    However, ERISA preempts § 10127.15. See 29 U.S.C. § 1144(a) (“any and all State laws insofar as they may now or hereafter relate to any employee benefit plan” are superseded by ERISA, subject to exceptions not relevant here). Therefore, Merck’s offset provision is not barred by § 10127.15.
    The very brief opinion is attached below.
    Attached Files
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