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Thread: LTD Overpayments & Bankruptcy

Created on: 12/05/02 07:06 PM

Replies: 21

Jacques


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Joined: 12/03/02

Posts: 49

LTD Overpayments & Bankruptcy
12/05/02 7:06 PM

I realize this may be more of a legal question, but does anyone have any experience whether a bankruptcy ruling voids an LTD carrier's right to collect an overpayment from future disability payments?

Any citations would be greatly appreciated.
Thank you.
Jacques

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Gerry


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Joined: 10/24/01

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LTD Overpayments & Bankruptcy
12/05/02 8:24 PM

Jacques:

You need to check with an attorney in your State as this could very well be a
State sensitive issue.

Gerry Katz, MSPA, RHU, ALHC, DABFE
Expert Witness & Disability Claim Consultant
(954) 217-8260

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FRED


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Joined: 12/14/02

Posts: 15

LTD Overpayments & Bankruptcy
12/14/02 8:18 PM

I too have been forced into a Chapter 13 and been awarded 17,000 in back pay benefits for my disabily by Social Security, now the employer wants me to give all the money back to them. I've been disabled since 8/1/2001 and reduced to 65% of my base pay rate. Now I don't know wether to hire a lawyer or what. That costs money, to someone with no income that can be very devastating.

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Jacques


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LTD Overpayments & Bankruptcy
12/16/02 12:44 PM

Gerry, thanks for your reply, but I thought bankruptcy was a federal issue and would be the same nationwide.

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ConsumerAdvocates


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LTD Overpayments & Bankruptcy
12/16/02 8:02 PM

Jacques,

You are right, it is subject to the federal bankruptcy laws. However, perhaps Gerry was referring to the fact that some states do have laws and statutes dealing with debtor-creditor relationships (proper liens for example) that may have an effect on how a claim is to be prioritized.

In regard to your other question about disability benefits payback, disbility payments are generally exempt (except for credit insurance) and after all the insurance company asking for back overpayments is not a true creditor, as the benefits were not a "loan" or made as part of a credit transaction. What the insurance company is doing is asking for a return of benefit overpayments, and if you don't, they excercise a common law right of "offset" and reduce future benefits.

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Jacques


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Joined: 12/03/02

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LTD Overpayments & Bankruptcy
12/16/02 8:21 PM

Thanks for your reply. Since then, I have had this same question from two other persons so I'm having to research it a little more.

It does appear to be a type of interest free loan, and the insurance company, though notified, made no attempt to participate as a creditor in the bankruptcy proceedings.

You are certainly correct in that with future payments coming from the insurance company, they are in an excellent position to withhold benefits until repaid, lawfully or not.

My problem seems to be finding an attorney who is familiar with both bankruptcy law and insurance/ERISA.

Thanks again for your input.
Jacques.

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ConsumerAdvocates


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LTD Overpayments & Bankruptcy
12/17/02 10:43 AM

Jacques,

I don't see any way that the overpayment of benefits could possibly be regarded as an interest free loan, nor would the insurance company want it to be. Why? No payment schedule, security or maturity date just to name a few.

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FRED


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Joined: 12/14/02

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LTD Overpayments & Bankruptcy
12/24/02 4:58 PM

My Thanks to all of you for your help in this matter, I have contacted my attonery(Bankruptcy) and have gotten no response,I am still in search of a good ERISA expert that can help me out with this mess. My Chapter 13 Trustee is treatening to throw my case out because of some slight differnces that he noted in the filing methods. Again, that's I believe attorney business not mine. If I was that all knowing in law, I would have been a lawyer!
God Bless, and have a good Holiday!

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FRED


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Joined: 12/14/02

Posts: 15

LTD Overpayments & Bankruptcy
12/29/02 6:56 PM

TITLE 11 Bankruptcy > CHAPTER 5 > SUBCHAPTER II > Sec. 522.



Sec. 522. - Exemptions



(d)The following property may be exempted under subsection (b)(1) of this section:

(10)



The debtor's right to receive -



(A)a social security benefit, unemployment compensation, or a local public assistance benefit;



(B)a veterans' benefit;



(C)a disability, illness, or unemployment benefit;



(D)alimony, support, or separate maintenance, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor;



(E)a payment under a stock bonus, pension, profitsharing, annuity, or similar plan or contract on account of illness, disability, death, age, or length of service, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor, unless -



(i)such plan or contract was established by or under the auspices of an insider that employed the debtor at the time the debtor's rights under such plan or contract arose;



(ii)such payment is on account of age or length of service; and



(iii)such plan or contract does not qualify under section 401(a), 403(a), 403(b), or 408 of the Internal Revenue Code of 1986.


What does this mean ?

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dave61599


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LTD Overpayments & Bankruptcy
12/29/02 10:14 PM

Sec. 522. - Exemptions

(d)The following property may be exempted under subsection (b)(1) of this section:

I think it means that the agreement (may) go either way. I am not sure that you will know ahead of time what way it will go. The company is going to do there best to see that they get it.
The article before this is what tells you what is being exempted and should clarify it some The word may makes it uncertain.
Dave

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FRED


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Joined: 12/14/02

Posts: 15

LTD Overpayments & Bankruptcy
12/30/02 10:35 AM

I've just gotten my first check since my employer now adjusted my LTD vs my SSDI income I got $541.60. My first Social Security Check doesn't come out until the last week in Jan., and I my Chapter 13 Trustee a payment of $576.00 by the 2 of Jan., nevermind, my medical expenses, prescriptions, co pays, treatments food, rent,utilities, or anything else. I think I'm in big trouble!

I've tried to call my attorney, and that does me no good, I've tried to speak to my employer who wanted all the backpay that SSDI gave me returned, and that too did me no good, I've looked in the phone book, and can't find anyone that has knowledge in the area of law that I am stuck in, and right now I'm frankly lost.

That's a big change from when a year and a half ago I was earning 72,000.00 a year. I already had one car taken from me, I no longer can drive, my Doctors are on the other side of town, and no method to get to them.

My Lawyers know that I am on SSDI so they don't get any more money from me, that's probably why I'm not getting any help from them.

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dave61599


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LTD Overpayments & Bankruptcy
12/30/02 12:28 PM

Does the new payment from your company have an additional amount taken out that will gradually get your overpayment from SSDI paid for? Keep your Chapter 13 Trustee informed of your entire situation they are there to help you out of your situation. Also If you are not forward with the company that is paying you disability then they have the recourse to just stop making payments and once they do that you could have a very difficult time of getting the payments started again. You have just received a back payment on your SSDI the company has already reduced your pay for the SSDI so they have already taken the money out of the last month of your back pay. Any expenses that you had in getting your SSDI should also not be included in what you owe back to your company. Getting $540.00 mounth is better than getting $0.00. USE CARE IN WHAT YOU DO IF YOU THINK YOUR SITUATION IS BAD NOW IF YOUR COMPANY OR YOUR TRUSTEE THINKS YOU ARE NOT BEING FORTHRIGHT WITH THEM THINGS COULD GET A LOT WORSE.
Dave

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snowdog


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Joined: 12/30/02

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LTD Overpayments & Bankruptcy
12/30/02 1:39 PM




Each set of facts are different when it comes to overpayment and Bankruptcy. It all depends upon what your Summary Plan Description says; as well as whether the policy is ERISA or Non-ERISA; and what your specific fact situation is. Many of the cases have come out with opposite results.

The core issue in of many if not all these cases is whether there is a Set-Off or a Recoupment. Generally a set-off is subject to the rules and laws of the Bankruptcy Court. Recoupment on the other hand is a remedy that in many cases survives Bankutptcy.
Check with a legal professional.

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jpsuprat


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Joined: 01/01/03

Posts: 3

LTD Overpayments & Bankruptcy
01/01/03 11:13 PM

I came across this forum because I am in a situation very similar and I am seeking guidance on what I should do. For the past two years I have been receiving LTD from the Hartford Life from a policy paid by my employer. I was recently awarded SSDI and was given a lump sum check totalling $14,000. The Hartord stated that they can make a retroactive allocation for the funds based on my disability onset date. Six months have gone by and the Hartford has continued to pay me in addition to the SSDI monthly check. The Hartford is now asking for around $30k and want it all back. They are saying I can have two years to pay them the money back, but I am beginning to wonder if they have legal recourse to request the money back. Afterall, the total amount of the SSDI and the LTD does not equall my predisability wage so it's not as if I am making more money than I did before I went out on LTD. I'm not sure how to handle this situation. They want a $6,000 payment by Friday and then will dock me the remainder of my benefit for the next two years. Does this sound legal? Any advice would seriously help.

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snowdog


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Joined: 12/30/02

Posts: 15

LTD Overpayments & Bankruptcy
01/04/03 5:47 PM




You are in an idential position that I am in right now. These overpayment situations are a real hardship for those of us on disability. In my opinion, the courts should change the rules on overpayments; when a recoupment is asserted against the plan participant, it in almost every case creates a great hardship. The insurance companies hope this hardship will force thoses who have valid claims into some type of part-time work and then cut off their benefits.

Send me an e-mail and I will be glad to talk with you. Because of the complexity of this issue I would have to write a disertation, and I don't think the persons in charge of this forum would like to see a long winded paper on the subject.

Thanks.

snowdog4755@aol.com

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Cos


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Joined: 09/19/02

Posts: 17

LTD Overpayments & Bankruptcy
01/08/03 12:51 PM

Fred the point Dave raises about the expenses not being included in your overpayment recovery is very important. You should have a letter giving a breakdown of the overpayment the carrier is requesting. Make sure they are giving you credit for these expenses (if allowed per the plan), as attorney fees can easly be a couple thousend dollars that you may be able reduce your overpayment amount.

There are a number of cases at my former employer where we would get the SSDI award amount but not the info on the expenses and would later adjust the overpayment amount downwards once the additional info was received. This won't cure all the problems the overpayment is causing you but it can ease it a bit.

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FRED


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Joined: 12/14/02

Posts: 15

LTD Overpayments & Bankruptcy
01/08/03 1:41 PM

I'm sure you are refering to the Dave who Posted on this thread. If so, then I have lot's of letters to refer to as far the matter of overpayment goes. Yes, indeed the lawyers fees do add up in to $2,500.00.00 by the time the plan is completed. And yes, there is a way to get reduced or negociated settlement amount from my employer if I want to agree. But that will entail getting the Trustee in the middle of it all so I don't know exactly how that all will work it's way out. In my last talk with my lawyer, and employer I assured both of them that I was interested in getting medical attention to my condition first, keeping my benefits, working out what I had to get things right, and carry on. As I see it, the Trustee, is there to make sure that the all the debtors get their share, and acts as a mediator in a dispute over money, by use of the laws that he is guided by.

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2tired


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Joined: 01/15/03

Posts: 56

LTD Overpayments & Bankruptcy
01/15/03 8:36 PM

Here's a sick twist to our

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dave61599


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Joined: 07/28/02

Posts: 2,170

LTD Overpayments & Bankruptcy
01/15/03 10:19 PM

I have not read anything that would cover this in ERISA I think it may be something that needs to be handled outside of ERISA. The company may well try to say it is covered under ERISA so you need to be prepared for that. The conflict of interest by the lawyer to your case may fall into the same category as improper actions by investigators for the insurance company using lies to get information they were not entitled to have. Ask for your complete claims file including all of this lawyer’s records that he has gotten on you. You are not going to get them but it may make it much harder to use any of what the lawyer has done as that reopens your right to have the information anytime they try to use it.
You need to run this by your lawyer as I am not a lawyer and could be wrong.
Dave:

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FRED


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Joined: 12/14/02

Posts: 15

LTD Overpayments & Bankruptcy
01/22/03 5:24 PM

We went to a great ERISA lawyer yesterday and he reviewed the the "summary plan" that my Corporation had, and gave us some great ideas. He also said that in the field of ERISA Law most lawyers tend to be corporate Lawyers, because that's where the money is. Not poor scum like me. Oh and another thing, the plan that I had in my grubby little paws for years was the the copy that was given the employees by HR. That really wasn't the whole underlined, or dot the I's policy that Corporate has. That document is very long and complex and quite a bit of reading. Anytime you want a copy, you can ask for one, it is part of your ERISA rights.

I wish to take this moment to Thank You All for being such good friends, and helpers in this most trying situation.

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