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6th Cir.: Income Offsets to Benefits

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  • 6th Cir.: Income Offsets to Benefits

    In an open and shut case from the 6th Circuit, the court explores how an individual's earnings can offset the monthly benefits received. The Plaintiff was diagnosed with Parkinson's, applied for, and was approved to receive Total Disability benefits from Lincoln, Afterwards, the Plaintiff reported that he was working as an independent contractor for a political campaign, and receiving income from doing so. Accordingly, the Defendant began offsetting his benefits. The Plaintiff initiated a class action.

    The plan contained a provision which read:

    OTHER INCOME BENEFITS means benefits, awards, settlements or Earnings
    from the following sources. These amounts will be offset, in determining the amount
    of the Insured Employee’s Monthly Benefit. Except for Retirement Benefits and
    Earnings, these amounts must result from the same Disability for which a Monthly
    Benefit is payable under this Policy.
    The Plaintiff reasoned the following:

    Despite this clear language, Barber contends that the Earnings provision operates simply as a definition in the Other Income Benefits section, but not as one of “the following sources” that can offset benefits. Although the term “Earnings” never appears in the other sources listed in the Other Income Benefits section (such as Social Security or worker’s compensation benefits), Barber claims the term “may be relevant” elsewhere in the contract. To support his reading, Barber points to the Progressive Income Benefit provision, which states, “The Progressive Income Benefit will not be reduced by any Other Income Benefits, or by earnings from any form of employment.” Barber suggests that if Other Income Benefits included employment earnings, the references to both Other Income Benefits and “earnings from any form of employment” would be unnecessary. Lincoln claims that this provision only references “earnings” generally––in contrast to the defined term Earnings used in the Other Income Benefits section. But the Earnings definition includes “pay . . . from any occupation or form of employment.” And Lincoln fails to explain how that language would not encompass “earnings from any form of employment.”
    Ultimately, the court held that the policy's language was clear, and that the Plaintiff could not prevail on this assertion. Additionally, as the Plaintiff did not exhaust his administrative remedies prior to commencing suit, the court dismissed his second claim as well.

    The opinion is attached below.
    Attached Files