Thurber v. Aetna
As a full-time client services representative at Quest Diagnostics, Sharon Thurber was enrolled in their Employee Retirement Income Security Act. This disability benefits plan was administered by Aetna Life Insurance Company and entitled Thurber to long-term benefits in the event of a disabling condition that left her unable to perform the duties of her position. Her occupation involved, according to her supervisor, an estimated 80 percent of sitting during her shift and a remaining 20 percent of standing and walking a short distance.
As a result of a car accident in 1983, Thurber’s right leg is shorter than her left. Additionally, in August 2007, Thurber had another car accident while driving on the New York State Thruway in which she hit a cement barrier. Ever since then, Thurber has not worked, and Aetna approved short-term disability benefits for six months for “trauamtic arthritis in both knees.”
Thurber was receiving “other income benefits” while receiving short-term disability benefits from Aetna, but informed them of this when she submitted a claim for long-term disability benefits. According to the plan, Aetna “may” reduce short-or long-term disability benefits if “other income benefits” are being received by a beneficiary.
Despite multiple Capabilities and Limitations Worksheets submitted by physicians mentioning her “intermittent, unpredictable pain,” and disabled state, Aetna denied Thurber’s claim for long-term disability benefits. The denial letter stated that the medical reports submitted by the physicians did not show that she was unable to carry out the tasks required of her as a client services representative, but Aetna also mentioned that Thurber was able to submit any further information that might prove helpful to her case. Following this, Thurber appealed the denial of long-term benefits in April 2008. After further medical review and information, in Late May, Aetna denied Thurber’s appeal. Subsequently, Thurber asked for reconsideration of the appeal she claimed as she submitted additional medical reviews and information from Board certified orthopedic surgeons. A third independent review physicial concluded that Thurber was “functionally impaired from the date of her arthroscopic surgery and for six weeks of recovery thereafter.” However, on Dec. 6, 2008, Aetna re-affirmed its denial. Following Aetna’s denial of benefits under ERISA, 29 U.S.C. § 1132(a)(1)(B), Thurber filed a complaint in the U.S. District Court for the Western District of New York.
This case flows directly out of — and builds upon — the work Public Justice has done in U.S. Airways v. McCutchen and CGI v. Rose, and involves a similar set of issues concerning the meaning and scope of ERISA Section 502(a)(3) claims for equitable relef. Unlike McCutchen and Rose, however, which involved an ERISA health insurance plan’s effort to obtain “reimbursement” for medical bills from an injury victim, this case involves an ERISA disability benefit plan’s effort to recover disability “overpayments” from a disabled employee. This difference has legal significance, but overpayment claims pursued by ERISA plans against their beneficiaries are similar in effect to reimbursement claims: they both deprive beneficiaries of critically important benefits at a time when they need them most; and they both undermine the legitimate expectations of how insurance benefits are supposed to work.
The U.S. Supreme Court has never decided an overpayment case, and the nature of an overpayments claim involves a very different set of facts than a reimbursement claim. This means that the Court’s recent decision in McCutchen will have little direct impact on overpayments claims arising under ERISA. What’s more, the lower courts have become deeply divided over how to interpret and apply the Supreme Court’s reimbursement cases to overpayment claims; since 2010 five circuits have weighed in on this issue and divided 3-2.
Public Justice believes this case presents a very strong vehicle for Supreme Court review on this issue. Not only did the Second Circuit sanction an ERISA plan’s attempt to recover disability “overpayments” from a destitute and disabled former employee and found that the plan’s claim was equitable within the meaning of Section 502(a)(3), but it explicitly acknowledged and deepened the already existing split among the circuits and all but called for Supreme Court Review.