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

Heading: COLA payments

Text: On May 20, 1996, Schaefer complained to Equitable that he was only receiving COLA payments under the policies purchased in 1987 and 1988, and not the 1976 and 1979 policies as well. A June 19, 1996 letter from Equitable to Schaefer stated: The COLA riders for [the 1976 and 1979] Policies . . . are payable for total disability. However, the riders allow an index adjustment increased by ½ % of the prior monthly earnings for the residual benefits payable. Since you qualified for 100% residual benefits for current month you were not entitled to the adjustment. On July 3, 2001, Schaefer wrote to DMS, again complaining that he had not been receiving cost of living benefits under the 1976 and 1979 policies. In its response, DMS stated that it needed to “determine this benefit from January 24, 1996 to the present.” Two weeks later, in another letter, DMS stated that it was “in the process determining [sic] your Cost of Living Adjustment Benefit for each month from January 24, 1996 to the present. Once our review is complete, I will contact you.” On September 17, 2001, DMS sent a third letter to Schaefer, stating that its “accountant completed the Cost of Living Adjustment Benefit monthly calculations from January 24, 1996 to August 24, 2001 under the [1976 and 1979] claims. Enclosed are two checks representing payment under the Cost of Living Adjustment Benefits.” Schaefer contends that he received cost of living benefits on all four policies through most of 2003. However, on April 1, 2004, DMS wrote to Schaefer again, and asserted that it had erred when it paid him COLA benefits under the 1976 and 1979 policies. It stated: Our records indicate you have only claimed a period of total disability for two months during your entire claim from January 24, 1995 through March 24, 1995. Given this information, you have not been continuously totally disabled for 12 5 No. 08-2198 Schaefer v. AXA Equitable Life Ins. Co., et al. months at any point during your claim and as a result, you are not entitled to receive an increase in your Monthly Income. . . . As I advised you during our conversations, a review of benefits paid to you each month under [the 1976 and 1979 policies] since the onset of disability reveals that an error has occurred in the calculation of your residual disability [Cost of Living Factor]. As a result, a significant overpayment of $16,833.89 in residual disability benefits has been paid to you under these policies. . . . As we discussed, we are not seeking reimbursement for this overpayment but need to continue to adjust your current payable benefit accordingly. On April 24, 2004, Schaefer responded, stating that he received the April 1 letter, and that it was “nothing but smoke and mirrors to try to get out of paying my Cost of Living Benefits.” Schaefer argued that his residual disability status in 1995 counted towards the calculation of a 12month period of disability required in the 1976 and 1979 policies’ COLA riders. On May 7, DMS responded to Schaefer’s letter, asserting the same position it expressed in its April 1st letter. Schaefer continued to write letters to DMS disputing its interpretation of the COLA Riders to his 1976 and 1979 policies, and DMS maintained the position it articulated in its April 1, 2004 letter. On November 22, 2006, Schaefer filed suit against Equitable and DMS in Michigan state court, alleging breach of contract, “conspiracy to wrongfully deny benefits in violation of unfair and deceptive trade practices statutes,” promissory estoppel, and a violation of ERISA. The defendants removed the suit to the U.S. District Court for the Eastern District of Michigan, claiming federal jurisdiction due to the diversity of the parties2 and the ERISA claim. The parties filed cross motions 2 Schaefer is a Michigan resident, Equitable is a New York business entity with its principle place of business in New York, and DMS, a Connecticut corporation, has its principle place of business in Massachusetts. 6 No. 08-2198 Schaefer v. AXA Equitable Life Ins. Co., et al. for summary judgment, and on August 20, 2008, the district court granted defendants’ motion, finding that Schaefer’s claim for breach of contract was time barred, and dismissing the remaining claims. Schaefer filed a timely appeal to this court.3