Long Term Disability Insurance Lawyer Blog
In another recent SMDA victory, the Federal Court overturned Metropolitan Life Insurance Company’s decision improperly under-calculating the claimants LTD benefits. In Gray v. Metlife the Court found that Metlife had wrongfully excluded the claimants “Health and Welfare” pay from his “base monthly earnings.”
The Court determined that the ERISA claim should be reviewed De Novo since the policy was amended after March 1, 2007 when the State of Michigan banned the use of discretionary clauses. This is one in a number of cases confirming this important issue.
Reviewing the policy language the Court found:
The Plan’s definition of “BME” is less than perfect. It simply excludes “overtime and other extra pay.” However, “other extra pay,” is not defined. In this case Plaintiff’s H&W payments were made directly to him to be used for his health and welfare, such as medical expenses. However, there appears to be no requirement that the payments be used solely for that purpose or otherwise forfeited. The collective bargaining agreement (“CBA”) in effect during the relevant period, and included in the administrative record, indicates that “effective July 1, 2008 all drivers will receive an hourly rate of $4.20, up to 40 hours per week . . . .” AR at 224-25. Likewise, the CBA provides, “Effective July 1, 2008 all drivers will receive an hourly rate of $1.20, up to 40 hours per work week, into the Pension program for eligible employees.” Id. at 225.
Again, Plaintiff’s H&W payments were made directly to him. There is no evidence that those payments were required to be used only for medical expenses. They were reflected in each of his pay stubs, and the amount was determined by his CBA. Under those circumstances, the court finds that his H&W earnings were part of his BME. If the defendant had intended them to be excluded from the BME calculation, it, as drafter of the language of the Plan, could have drafted it that way.
The Court has remanded the claim to MetLife to recalculate his basic monthly earnings and apply the correct offset to the SSD overpayment issue.