Larry Carden v. Aetna Life Insurance Company, 2007 U.S. Dist. LEXIS 81678 (D.S.C.) - decided November 2, 2007 – United States District Court for the District of South Carolina – Robert E. Hoskins

I represent Carden.  This case potentially has far reaching implications.  Probably because of that, it was named as one of the 50 most important court decisions to come out of South Carolina in 2007.  (Click here to read the article.)  Carden worked for Duke Energy Corporation which provides its employees with ERISA governed long term disability (LTD) coverage through a plan fully insured by Aetna Life Insurance Company.  The plaintiff had filed and settled a workers’ compensation claim against Duke Energy.  Additionally, Carden had filed an LTD claim with Aetna, but his disability claim was based upon totally different physical problems than his workers’ compensation claim.  Aetna acknowledged the plaintiff’s disability and paid him benefits under the LTD plan.  The LTD plan has a provision that Aetna gets credit or an offset to monies it owes on an LTD claim for amounts received by the disabled person for that person’s receipt of “other income”.  In pertinent part, the plan states:

“Other Income Benefits -- This section outlines income benefits whihc you may receive from other sources while disabled and whihc will be considered as an offset to payments you receive under this plan.

They are:

• • •

     Temporary or permanent, partial or total disability benefits under any state . . . workers’ compensation law . . ., which are meant to compensate the worker for any one or more of the following: loss of past or future wages; impaired learning capacity; lessened ability to compete in the open labor market; any degree of permanent impairment; and any degree of loss of bodily function or capacity.

 • • •

Other income benefits include those, dueto your disability or retirement, which are payable to: you;

• • •

How Aetna Determines Other Income Benefits

Lump Sum Payments from Compensation:

That part of the lump sum payment thatis for disability will be counted, even ifit is not specifically apportioned or identified as such.  This will be done if it is or is not the result of a compromise, settlement, award or judgment.  If there isno proof acceptable to Aetna as to whatthat part is, 50% will be deemed to be for disability.”  (Emphasis added)

Contract Not a Substitute for Workers' Compensation Insurance

The group contract is not in lieu of and does not affect workers’ compensation benefits.  However, any workers’ Compensation benefits are considered other income benefits.”  (Emphasis added)

Carden argued that, given the specific language of the plan and because the circumstances which gave rise to each of his two respective claims, Aetna should not get a credit to its LTD benefit obligation for his receipt of settlement funds on the workers’ compensation claim.  The South Carolina District Court disagreed and ruled in favor of Aetna.  The court held that Aetna gets credit for any monies received by a plan participant on any workers’ compensation claim despite the fact that the basis for the workers’ compensation claim might be different than that of the LTD claim.  The case has far reaching implications, potentially, because Aetna is a very large disability insurer and the fact situation is relatively common.  The case is currently pending on appeal to the United States Court of Appeals for the Fourth Circuit.  (Click here to see a copy of the District Court decision.)  The District Court’s order in Carden cited to another order of the South Carolina District Court, in which I represented the plaintiff, Elgin v. Aetna Life Insurance Company, C/A No.: 6:06-2095-HMH.  The Elgin case involved slightly different plan language and the plaintiff was not employed with Duke Energy.  However, the facts and plan language before the court were similar.  (Click here to view the Elgin decision.)