On June 3, 2008, the U.S. District Court for the Central District of California granted defendants’ motion for summary judgment in Knapp v. Unum Life Insurance Company, et al., disposing of plaintiff’s class claims for benefits due and a clarification of rights under an ERISA plan pursuant to 29 U.S.C. § 1132(a)(1) (B), breach of fiduciary duty pursuant to 29 U.S.C. § 1132(a)(3), and her accompanying request for injunctive relief.
Having suffered an on-the-job injury, plaintiff was receiving long-term disability benefits under her employer’s employee benefits plan. She filed suit when Unum, the underwriter of the group policy, serving as plan administrator, began to offset her plan payments by the amounts of the workers’ compensation she received.
The “Summary Plan Description” provided, “[i]f you are eligible for group disability benefits from other sources, such as Workers’ Compensation, … your … LTD benefit will be adjusted so that your total monthly income from all sources does not exceed the percentage of pay option you elected.” Nonetheless, plaintiff argued that the reduction in plan payments was improper because the term “income,” as used in plan documents, referred only to payments made for the purpose of wage replacement and, under California law, wage replacement is not the purpose of workers’ compensation permanent disability benefits.
The court found Unum’s interpretation of the plan’s offset provisions and resulting reduction of benefits reasonable and within its broad discretion. According to the opinion, plaintiff failed to set forth any evidence that Unum’s practice in calculating disability benefits under the plan differed from its interpretation of the plan’s offset provisions. The court also held that the Policy and Summary Plan Description, when read together, adequately informed plaintiff of the practice of offsetting disability benefits, thus foreclosing any argument that plaintiff did not receive adequate notice or rational explanation for the reduction in benefits or that the reduction was contrary to plaintiff’s reasonable expectations.