Opinion ID: 215106
Heading Depth: 2
Heading Rank: 2

Heading: The Terms of the Boston Mutual Plan

Text: Having reviewed these disputed facts concerning D & H's decision to obtain the Boston Mutual policy, we turn to the plan language that governs that policy. There is no dispute that the policy, unlike the Guarantee Life policy, is governed by ERISA. We divide discussion of the plan's contents between provisions concerning benefit eligibility, provisions concerning benefit calculation, and provisions concerning overpayment of claims. As to benefit eligibility, principals and all other employees are eligible for benefits if they suffer a specified loss in earnings due to disability. This applies when these individuals are not able to perform some or all of the material and substantial duties of [their] regular occupation and have at least a 20% loss in [their] pre-disability earnings. This litigation does not concern what rises to an inability to perform occupational duties. It concerns, instead, what it means to have a 20% loss in pre-disability earnings as defined by the plan. For both principals and all other employees, the plan gives these definitions concerning earnings: Pre-disability earnings means your monthly rate of earnings from the employer in effect just prior to the date disability begins. Basic annual Earnings shall mean the Insured Person's earnings for the prior calendar year as reported by the Group Policyholder on form W-2, excluding commissions. If an individual has earnings for less than a calendar year, the plan provides that Basic Annual Earnings shall be determined by averaging the monthly earnings for each month worked and annualizing the result. The plan lists a series of circumstances that justify benefit termination. These include when an individual is no longer disabled, has reached the end of the maximum payment duration, or has current earnings [that] exceed 80% of [his or her] pre-disability earnings. Benefits will also be terminated when an individual is able to increase [his or her] current earnings by increasing the number of hours [he or she] work[s] or the number of duties [he or she] perform[s] in [his or her] regular occupation but . . . do[es] not do so. The plan emphasizes, in bolded all-capital letters, that if an individual is disabled and working, earning more than 80% of [his or her] pre-disability earnings, no payment will be made. As to benefit calculation, the plan specifies that the maximum monthly payment is $6,000 and the minimum monthly payment is $100 or 10%, presumably of monthly pre-disability earnings. It includes two formulas for benefit calculation. The first applies to individuals earning less than 20% of [their] pre-disability earnings, whether they are currently working or not. The second applies to individuals working and earning between 20% and 80% of [their] pre-disability earnings. The plan makes no express provision for how to calculate benefit payments for individuals who are not working but are nonetheless earning between 20% and 80% of their pre-disability earnings. The specifics of the two formulas are as follows. Under the first, monthly payments are figured by taking the lesser of (a) $6,000 and (b) 60% of pre-disability earnings, and then subtracting any other income amounts except any income [the individual] earn[s] or receive[s] from any form of employment. Under the second, benefits are initially the lesser of (a) $6,000, (b) 100% of pre-disability earnings minus any other income amounts including current income [the individual] earn[s] or receive[s] from any form of employment, and (c) 60% of pre-disability earnings. After 24 months, additional payments under this formula are determined by taking the lesser of (a) $6,000, and (b) 60% of pre-disability income, and then subtracting 50% of any income [the individual] earn[s] or receive[s] from any form of employment and 100% of any other income amounts. The policy defines other income amounts in six categories. All the categories except for one pertain to benefits and awards an individual either receives or is eligible to receive under specified laws or employer insurance plans. The remaining category, particularly important for our purposes, states that other income amounts includes any income you earn or receive from any form of employment. As to overpayment, the plan provides, We have the right to recover overpayments due to fraud; an error we make in processing your claim; [or] your receipt of other income amounts. It also states, If we determine that we overpaid your claim, then we require you repay us in full. We will determine the method by which you will repay us.