In Holmstrom v. Metropolitan Life Insurance Company, 2009 WL 901127 (N.D. Ill. March 31, 2009), Holmstrom sued Metropolitan for terminating her long term disability payments. Metropolitan counterclaimed seeking reimbursement from Holmstrom for an overpayment of LTD benefits which occurred when Holmstrom received a payment for back benefits from social security disability. (The Metropolitan plan contained a provision that reduced the monthly LTD payments by the amount received from social security disability).
The only way Metropolitan would be allowed to proceed on its counterclaim is if its claim was equitable in nature. If Metropolitan’s claim was not equitable in nature, then the court would not have jurisdiction. In a lengthy analysis, and based on the Supreme Court’s determination in Sereboff v. Mid Atlantic Medical Services, Inc., 547 U.S. 356 (2006), the Illinois district court determined that Metropolitan’s claim was equitable in nature and granted summary judgment for Metropolitan on its counterclaim.
Holmstrom also argued, unsuccessfully, that Metropolitan did not assist her in obtaining the social security disability benefits, and therefore, Metropolitan waived its right to claim the overpayment. While recognizing the potential viability of such a claim, the court stated that Holmstrom could not rely on such an argument where the LTD plan did not require the administrator to assist the beneficiary in seeking social security disability benefits.
When evaluating a request by an LTD carrier for reimbursement, a careful analysis of whether the claim is actually "equitable" is foundational. This case, along with Sereboff are essential starting points in that analysis.