In most ERISA group disability policies, a claimant will have and overpayment owed to a disability insurance company if they have been approved for social security benefits. In some cases a claimant will spend the SSDI money and attempt to not repay the disability company.

In a recent lawsuit, Aetna filed a lawsuit against a disability claimant seeking reimbursement of disability benefits that had been paid following as SSDI award. The following is a recent example of a claimant with an Aetna disability policy who tried to avoid paying back his SSDI overpayment but ultimately was required to pay back the money to Aetna. Eric S., while employed by UPS, participated in his company’s long-term disability ("LTD") plan governed by ERISA and administered by Aetna. Like most group long-term disability policies, Eric’s policy with Aetna stated that Eric’s long-term disability benefits would be reduced by the amount of his Social Security benefits, workers’ compensation benefits or settlement, and disability pension benefits received. It further stated that the Plan is entitled to repayment of any overpayment made to Eric due to his receipt of these other benefits. Eric received monthly LTD benefits for twenty-four months under the policy. However, on September 6, 2012, Aetna notified Eric that his benefits would end on September 19, 2012. On March 8, 2013, Eric was approved for Social Security Disability benefits.

Aetna Sues To Recover Overpayment

After his LTD claim was terminated Eric filed suit in Kentucky against Aetna alleging Aetna had improperly terminated Eric’s claim for disability benefits. Aetna counterclaimed to recover an overpayment, which occurred as a result of Aetna’s prior LTD payments to Eric and his subsequent approval for SSDI benefits. Eric’s long-term disability attorneys put forth several legal arguments in an attempt to prevent Aetna from recovering the alleged overpayment to Eric. All of Eric’s arguments were ineffective as the Kentucky District Court concluded that Aetna’s claim for the overpayment would not be dismissed. Like Eric’s policy, most group long-term disability policies contain a provision allowing the disability insurer to recover any payments received from SSDI for either the claimant or the claimant’s children as a result of the claimant’s disability. In addition, the disability insurer will reduce what they owe each month by the amount the claimant receives from SSDI. The court ruled that Aetna could only recover from the disability benefits that had been overpaid and not the SSDI benefits. There are some situations where a claimant may not need to pay back and SSDI overpayment, but these are rare.