SCHULTZ v. AVAILL, INC. LONG TERM (7th Cir. March 2, 2012)
Proposed class-action plaintiffs sought a ruling that Social Security Benefits provided to children of disabled parents did not constitute “loss time disability payments,” subject to an offset under long-term disability insurance.
According to the opinion, the plaintiffs argued that the dependent payments were “additional” and did not constitute replacement of income: “Essentially, they argue, the purpose of Social Security payments to a dependent child of a disabled parent is not to replace the income that the household has lost as a result of the parent’s inability to work. The purpose is instead to provide additional ‘support’ for the child.” Plaintiffs argued that because the dependent’s benefits can only be used for the support of the child, they differed from the general-use benefits which the insurers contracted to provide and did not duplicate them. In essence, the argument was that the insurers contracted to provide broader benefits, and offsetting them by limited benefits impermissibly reduced the intended scope of coverage.
Rejecting the argument, the court held that the only possible interpretation of the statute required a finding that the dependent benefits were intended to replace the disabled parent’s loss of income due to “loss of time.” Therefore, they were subject to offset under a policy requiring the offset of “loss time disability payments.” It found that social security benefits for children were part of the “total package” based on the loss of time from work.
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