Rood v. N.Y. State Teamsters Conference Pension & Ret. Fund

39 F.Supp.3d 241

Paul J. ROOD, Plaintiff

v.NEW YORK STATE TEAMSTERS CONFERENCE PENSION AND RETIREMENT FUND; and The Board of Trustees of the New York State Teamsters Conference Pension and Retirement Fund, Defendants.

No. 5:13–CV–0435 LEK/ATB.

United States District Court, N.D. New York.

Signed Aug. 20, 2014.

Carla N. McKain, McKain Law, PLLC, Ithaca, NY, for Plaintiff.

Donald L. Havermann, Morgan, Lewis Law Firm, Washington, DC, Sean K. McMahan, Alston, Bird Law Firm, Atlanta, GA, Vincent M. Debella, Paravati, Karl Law Firm, Utica, NY, for Defendants.

MEMORANDUM–DECISION and ORDER

LAWRENCE E. KAHN, Senior District Judge.

I. INTRODUCTION

Plaintiff Paul J. Rood (“Plaintiff”) commenced this action on April 19, 2013, alleging a claim for disability pension benefits under the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. §§ 1001 –1461. Dkt. No. 1 (“Complaint”). Plaintiff's Complaint names the New York State Teamsters Conference Pension and Retirement Fund (the “Fund”) and its Board of Trustees (“the Board”) (collectively, “Defendants”) as Defendants. Id. Presently before the Court are the parties' Motions for summary judgment. Dkt. Nos. 15 (“Defendants Motion”); 16 (“Plaintiff Motion”). For the following reasons, Defendants' Motion is denied and Plaintiff's Motion is granted.

II. BACKGROUND¹

A. The Fund

The Fund is a multi-employer plan that provides pension and disability benefits to employees covered by collective bargaining agreements between contributing employers and various local unions of the International Brotherhood of Teamsters. Dkt. Nos. 15–5 (“Defendants SMF”) ¶ 1; 18–1 (“Response to Defendants SMF”) ¶ 1. The Fund pays pension and disability benefits to eligible participants and beneficiaries pursuant to a written pension plan. Defs. SMF ¶ 3; Resp. to Defs. SMF ¶ 3; Dkt. No. 15–8 Ex. 2 (the “Plan”).

B. Disability Benefits Under the Plan

Under the Plan, a participant who becomes “disabled” is eligible for a disability benefit (“Fund Disability Benefit” or “FDB”) if he has earned ten years of Future Service Credit. Plan § 7.03(a); Defs. SMF ¶ 7; Resp. to Defs. SMF ¶ 7. A participant is considered “disabled” if he satisfies the requirements for a Social Security disability award. Plan § 2.15; Defs. SMF ¶ 8; Resp. to Defs. SMF ¶ 8. The participant's disability benefit ends when the participant reaches normal retirement age under the Plan. Plan § 7.03(b); Defs. SMF ¶ 9; Resp. to Defs. SMF ¶ 9.

The monthly Fund Disability Benefit amount is equal to the normal pension benefit the participant would be entitled to if he had attained the age requirement for a normal pension. Plan § 7.03(c); Defs. SMF ¶ 11; Resp. to Defs. SMF ¶ 11. However, the Plan further provides that, if a participant is also receiving workers' compensation (“WC”) benefits due to an occupational disability, the monthly amount of the Fund Disability Benefit will be reduced by the amount of monthly WC benefits received. Plan § 7.03(i); Defs. SMF ¶¶ 12–13; Resp. to Defs. SMF ¶¶ 12–13. But if part of the participant's WC benefit is “used to offset other payment sources (i.e., Social Security disability awards, long-term disability, etc.)” to which the participant may be entitled, that portion of the WC benefit is not included in the reduction of the participant's monthly Fund Disability Benefit. Plan § 7.03(i); Defs. SMF ¶¶ 14–16; Resp. to Defs. SMF ¶¶ 14–16.

C. Workers' Compensation Medicare Set–Aside Arrangements

Medicare is a federally funded program that covers health care costs for certain individuals, including those who have received Social Security disability benefits for at least twenty-four months. See 42 U.S.C. § 1395c. Medicare Parts A and B provide hospital and medical care benefits to individuals by making payments on their behalf directly to health care providers, or, in some cases, to individual beneficiaries. See generally 42 U.S.C. §§ 1395c, 1395d, 1395g, 1395j –1395k.

In 1980, Congress passed the Medicare Secondary Payer Act (“MSPA”), 42 U.S.C. § 1395y. “In certain circumstances, the MSPA makes Medicare the ‘secondary payer’ in relation to certain other sources, which are considered ‘primary payers.’ ” Meek–Horton v. Trover Solutions, Inc., 915 F.Supp.2d 486, 488 (S.D.N.Y.2013) (citing 42 U.S.C. § 1395y(b)(2)(A) ). For instance, under the MSPA, Medicare is prohibited from making a payment for a Medicare enrollee's medical benefits if “payment has been made or can reasonably be expected to be made under a workmen's compensation law or plan of the United States or a State....” 42 U.S.C. § 1395y(b)(2)(A) ; see also 42 C.F.R. § 411.46 (“If a lump-sum [WC] award stipulates that the amount paid is intended to compensate the individual for all future medical expenses required because of the work-related injury or disease, Medicare payments for such services are excluded until medical expenses related to the injury or disease equal the amount of the lump-sum payment.”). Consequently, when Medicare makes a payment for medical expenses that are covered by a WC award, the Medicare payment is merely conditional, and Medicare is entitled to reimbursement. 42 U.S.C. § 1395y(b)(2)(B). If reimbursement is not made, the MSPA authorizes the federal government to bring an action for damages against the primary payer, or against entities that receive primary payments, including the individual Medicare beneficiary. 42 U.S.C. § 1395y(b)(2)(B)(ii)-(iii) ; 42 C.F.R. § 411.24(e), (g).

Accordingly, when settling a WC claim, the parties may designate and identify the portion of the settlement amount that is intended to pay for future work-injury-related medical expenses that are covered and otherwise reimbursable by Medicare.Centers for Medicare & Medicaid Services, Workers' Compensation Medicare Set–Aside Arrangement (WCMSA) Reference Guide § 3.0 (Feb. 3, 2014). This designated amount is known as a Workers' Compensation Medicare Set–Aside (“WCMSA” or “MSA”). Id. “The goal of establishing a WCMSA is to estimate, as accurately as possible, the total cost that will be incurred for all medical expenses otherwise reimbursable by Medicare for work-related conditions during the course of the claimant's life, and to set aside sufficient funds from the settlement, judgment, or award to cover that cost.”² Id.

D. Plaintiff's Benefits Claim

Plaintiff was an employee of a contributing employer of the Fund. Defs. SMF ¶ 4; Resp. to Defs. SMF ¶ 4. On or about October 5, 2009, Plaintiff suffered an injury while on the job. Defs. SMF ¶ 5; Resp. to Defs. SMF ¶ 5. Plaintiff completed an application for a Temporary Disability Benefit under the Plan on or about August 12, 2010. Dkt. Nos. 16–1 (“Plaintiff SMF”) ¶ 18; 17–1 (“Response to Plaintiff SMF”) ¶ 18. Plaintiff was awarded Social Security Disability Insurance benefits (“SSDI”) on August 30, 2010. Pl. SMF ¶ 19; Resp. to Pl. SMF ¶ 19. On October 1, 2010, the Board approved a Temporary Disability Benefit for Plaintiff effective May 1, 2010. Pl. SMF ¶ 20; Resp. to Pl. SMF ¶ 20. The Board's calculation of Plaintiff's Fund Disability Benefit included an offset for monthly WC payments Plaintiff was receiving. Pl. SMF ¶ 21; Resp. to Pl. SMF ¶ 21. On May 1, 2011, the Plan recalculated Plaintiff's Fund Disability Benefit to reflect the fact that Plaintiff's SSDI benefits were being reduced to offset his WC payments.³ Pl. SMF ¶ 22; Resp. to Pl. SMF ¶ 22.

In October 2011, Plaintiff settled his WC claim with Liberty Mutual, his employer's WC insurance carrier. Pl. SMF ¶ 24; Defs. SMF ¶ 22; Dkt. No. 1–3 (“WC Settlement Agreement”). The WC Settlement Agreement provided for a total payment of $214,285, including $12,000 in attorney's fees and $120,000 paid to Plaintiff up front. WC Settlement Agreement ¶ 2. The remainder of the settlement payment was devoted to a WCMSA, including $18,535 in seed money and an annuity paid out in annual contributions of $4,910, with an expected payout of $146,216.06. Id. The WC Settlement Agreement stipulated that the MSA sum “is allocated for the claimant's future related medical expenses in recognition of Medicare interest,” and “is intended directly for payment of future Medicare covered medical expenses and related prescription medication.” Id. ¶ 8. The New York State Workers' Compensation Board approved the WC Settlement Agreement on or about January 31, 2012. Defs. SMF ¶ 23; Resp. to Defs. SMF ¶ 23.

On May 7, 2012, the Fund notified Plaintiff that it had recalculated his Fund Disability Benefit based on the WC Settlement Agreement. Defs. SMF ¶ 24; Resp. to Defs. SMF ¶ 24. The Fund subtracted the $12,000 in attorney's fees from the total payment of $214,285, and reduced Plaintiff's Fund Disability Benefit by this sum of $202,285.00. Defs. SMF ¶ 24; Resp. to Defs. SMF ¶ 24. Pursuant to Plan rules, this sum was divided by 140—the number of months from the settlement date through the month Plaintiff would attain age 65—yielding a monthly offset of $1,444.89. Defs. SMF ¶ 24; Resp. to Defs. SMF ¶ 24.

In May 2012, Plaintiff wrote a letter to the Fund disputing the recalculation of his benefits and requesting that the portion of the WC lump sum settlement allocated to the MSA not be included in the offset. Pl. SMF ¶ 34; Defs. SMF ¶ 30. The Fund treated the letter as a “claim for benefits” under the Fund's claims and appeals procedure and proceeded to deny Plaintiff's claim on May 14, 2012. Pl. SMF ¶ 35; Defs. SMF ¶ 31. Plaintiff appealed the May 14 denial, arguing that the offset calculation should not include the MSA funds because those funds are segregated and not otherwise available to him. Pl. SMF ¶ 38; Defs. SMF ¶¶ 32–33; Compl., Ex. I. The Board denied Plaintiff's appeal on June 4, 2012, stating that Plan § 7.03(i) does not provide for exclusion of the MSA funds from the WC reduction. Pl. SMF ¶ 40; Defs. SMF ¶¶ 35–37; Compl. Ex. J.

E. Procedural History

Plaintiff commenced this action on April 19, 2013, asserting a claim for benefits under ERISA § 502(a)(1)(B). Compl. Plaintiff seeks an order compelling...