Magazine article HRMagazine

Fiduciary's Offset of Veterans' Benefits Violates ERISA

Magazine article HRMagazine

Fiduciary's Offset of Veterans' Benefits Violates ERISA

Article excerpt

Hannington v. Sun Life and Health Insurance Co., 1st Cir., No. 12-1085 (March 29, 2013).

The 1st U.S. Circuit Court of Appeals affirmed that a claims fiduciary violated the Employee Retirement Income Security Act (ERISA) by improperly reducing a participant's disability payments under a qualified plan by the amount he was receiving as disability compensation under the Veterans' Benefits Act.

David Hannington participated in a group long-term-disability plan issued by Sun Life and Health Insurance Co. Under the plan, a disabled beneficiary received 60 percent of his pre-disability salary less amounts received as "other income." "Other income" was defined to include any amount of disability or retirement benefits under the Social Security Act, the Railroad Retirement Act or any other similar act.

Hannington could not work because of a blood disease that he contracted from vaccinations administered in the Air Force, and he received disability compensation under the Veterans' Benefits Act. Sun approved Hannington's claim for benefits under the plan but determined that the veterans' benefits qualified as "other income. …

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