According to court records, plaintiff Leah Bilyeu filed a long-term disability (LTD) claim through her employee LTD benefits plan with Unum - the benefits provider - in April 2004, due to the results of several medical conditions that prevented her from “materially performing the duties of any occupation,” according to the lawsuit. Bilyeu made application in April 2004, and was finally granted benefits six months later.
The plaintiff received benefits for two years until they were abruptly stopped by Unum, citing a clause in the policy that referenced a two-year cap on LTD benefits arising from mental illness.
However, Bilyeu disputed Unum’s position that her troubles stemmed exclusively from mental illness. While a medical consultant working under the auspices of Unum concluded that “Bilyeu’s fatigue in large part arises from her anxiety and depression…,” the plaintiff’s own physician disputed that view, stating “[the plaintiff’s] fatigue is mainly physical.” Dr. Kenneth Proefrock also disagreed with Unum’s opinion that Bilyeu “should have full-time sedentary work capacity,” according to court records.
What’s more, according to the denied disability insurance claim, Unum sought a repayment of benefits in the amount of $36,597 that Bilyeu received through social security. Thus, when Bilyeu filed her initial denied ERISA disability claim against Unum, the insurer filed a counterclaim seeking repayment of benefits.
After the district court granted Unum’s motion for summary judgment on its counterclaim, Bilyeu appealed and the Ninth US Circuit Court of Appeals vacated the lower court’s judgment for Unum. When the latter appealed the Ninth Court’s vacate order to the California Supreme Court, the latter refused to review the Ninth Court’s ruling.
The Ninth Court of Appeals held that Unum, under ERISA, could not seek repayment of benefits in such fashion. Unum, the Ninth Court ruled, failed to satisfy the requirements for an equitable lien by agreement due to the fact the funds subject to the lien - the overpayment - had been consumed by the plaintiff and therefore no longer in the possession of the plaintiff. To that point, Unum sought repayment of benefits from the plaintiff’s general assets.
Such legal relief is not available to Unum as a plan fiduciary under the terms of ERISA.
READ MORE CALIFORNIA DENIED DISABILITY INSURANCE LEGAL NEWS
The Employee Retirement Income Security Act (ERISA, as amended 1974) regulates employee benefits plans and sets forth various requirements of fiduciaries.
The denied ERISA disability case is LEAH A. BILYEU v. MORGAN STANLEY LONG TERM No. 10-16070 DISABILITY PLAN; MORGAN STANLEY D.C. No. LONG TERM DISABILITY PLAN 2:08-cv-02071-SRB.