How id My Social Security Disabilty Income Offset by Long Term Disabilty in North Carolina?
Full Question:
Answer:
Make-Whole Doctrine is an equitable insurance law principle which holds that in the absence of valid contractual obligation to the contrary an insurer will not receive any of the proceeds from the settlement of a claim, except to the extent that the settlement funds exceed the amount necessary to fully compensate the insured for the loss suffered. Only after the insured has been fully compensated for all the loss the insurer acquires a right to subrogation or is entitled to enforce its subrogation rights. The rule applies to instances in which the insured has recovered from the third party and the insurer attempts to exercise its subrogation right by way of reimbursement against the insured’s recovery. The precise definition of the doctrine varies from state to state, but the concept is nonetheless fairly similar in each state.
Most, but not all, long term disability policies provide for a Social Security offset. SSA offsets (or reduces) recipients’ SSDI benefits by how much they receive from the state disability program. Abuse of discretion generally applies when there is room for subjective judgment, whereas when a statute or contract term governs, it must state that the decision-making authority has discretion to make an order. The offset provisions you are dealing with are likely governed by statutory and conterm law principles, rather than discretionary authority, unless vague matters involving interpretation are involved, etc..
If the insured has to pay back the benefit monies paid, then in reality there is “no coverage” for those benefits. As a limitation on coverage or on the benefits recoverable, such a provision needs to be identified early in the policy, and in simple terminology readily understood by a layperson. To surrender the made whole principle is to limit the “benefits recoverable” because your client understandably expects to get all the settlement money, but now he has to pay back his insurer. For all practicable purposes, such a “limitation” is an “exclusion.” “Limitations on insurance coverage must be effected through an exclusion clause with language that clearly identifies the scope of the limitation to the reasonable purchaser of insurance.” An attorney would need to review your various policies to advise on your legal options regarding payment eligibility, amount, and off-set issues.
Fpr further discussion, please see:
http://www.healthplanlaw.com/?p=54
http://www.cga.ct.gov/2009/rpt/2009-R-0105.htm
http://www.nctreasurer.com/2007lawbook/135/135-106.htm
http://www.passionforsubro.com/made-whole-rule/state-make-whole-doctrine-exempted-from-erisa-preemption/
http://www.passionforsubro.com/erisa/health-care-reform-possible-subrogation-and-reimbursement-rules/
