Opinion ID: 2978272
Heading Depth: 2
Heading Rank: 1

Heading: Renewal Commissions and Service Fees

Text: In September 1995, Equitable sent a letter to Schaefer requesting verification of his monthly earnings, stating that his “monthly statements should include 1st year and renewal commissions received from all carriers and all expenses paid during the month.” Schaefer responded with a fax, stating his belief that “renewal commissions are not considered earnings income; they are considered deferred compensation from prior year sales.” On October 30, Equitable responded to Schaefer, explaining that “it is still our position that we must take into consideration the income earned for Renewal and services fees when calculating the Pre Disability Monthly Income as well as Current Monthly Income.” Over the years, Schaefer continued to argue that his renewal commissions should be excluded from his current monthly and yearly income calculation, and Equitable responded with letters on September 9, 1996, September 10 and 16, 1997, August 16, 1999, and September 28, 2000, stating that it considered renewal commissions and service fees to be income. In January 2001, Disability Management Services (DMS) took over administration of Equitable’s long-term disability policies, and on July 1, 2004, DMS addressed Schaefer’s concern again, reiterating the answer that Equitable had provided numerous times before: Our review of your file reveals that this issue has been discussed and addressed with you since the inception of your file. We note that renewal commissions have always been included in both the calculation of your Prior Monthly figures and Current Monthly Income figures. If these earnings are included in your Prior Monthly Income then they need to be included in your Current Monthly Income. Renewal commissions have always been included in these calculations and are considered income for ongoing services that you render to your clients. 4 No. 08-2198 Schaefer v. AXA Equitable Life Ins. Co., et al.