McClure v. Country Life Insurance Co.

          ORDER

         At issue is Plaintiff Benjamin McClure's motion for partial summary judgment, which is fully briefed. (Docs. 205, 235, 263.) For the following reasons, the motion is denied.^[1]

         I. Background

         McClure purchased a disability insurance policy (“Policy”) from Defendant Country Life Insurance Company (“Country Life”) in 1995. The Policy provides a monthly base benefit of $800 in the event McClure becomes disabled. McClure also purchased a supplemental Social Insurance Rider (“SIR”), which provides up to $700 per month in additional benefits subject to certain offsets, including payments received for Social Security Disability Insurance (“SSDI”) benefits. Specifically, the SIR provides, in relevant part:

This rider pays monthly benefits when the policy pays monthly benefits. An adjustment may be made for cost of living. The amount of the rider monthly benefit is the maximum monthly benefit of the rider less benefits from social insurance. Social insurance means:

A. United States Social Security Disability Insurance . . .;

. . .

When you are eligible for benefits from social insurance, you must apply. This includes reapplication, rehearing or appeal as necessary. You must provide us proof of your application and the results.

         McClure submitted a claim for disability benefits in January 2013 after sustaining a disabling head injury in November 2012. Country Life initially approved the claim and paid monthly base and SIR benefits from November 2012 until April 2014, when it terminated his claim. McClure brought this action against Country Life in December 2015, alleging that it breached the parties' insurance contract and administered his claim in bad faith.

         In May 2016, during the pendency of this litigation, McClure was awarded SSDI benefits retroactive to December 2012. Later, in November 2016, Country Life concluded that McClure's claim was compensable as of June 2014. Country Life has paid McClure base benefits retroactive to that date through the present, but has not paid SIR benefits, retroactive or otherwise, because McClure now is receiving SSDI benefits that offset the SIR benefit entirely. McClure moves the Court to find, as a matter of law, that Country Life is in breach of the insurance contract and owes him SIR benefits, both for the retroactive period and going forward.

         II. Legal Standard

         Summary judgment is appropriate when there is no genuine dispute as to any material fact and, viewing those facts in a light most favorable to the nonmoving party, the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). Facts are material if they might affect the outcome of the case under governing law, and a dispute over those facts is genuine “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Summary judgment may also be entered “against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

         III. Discussion

         McClure argues that Country Life owes him SIR benefits as a matter of law for four reasons: (1) the SIR does not include a reimbursement provision that permits Country Life to recoup SIR overpayments when SSDI benefits are awarded retroactively; (2) to the extent Country Life has a right to reimbursement, it has waived it by not seeking reimbursement for overpayments between December 2012 and April 2014; (3) allowing multiple insurers to offset disability benefits based on the same SSDI benefit violates public policy; and (4) applying the offset provision under the circumstances of this case runs counter to McClure's reasonable expectations. The Court addresses each in turn.

         A. Lack of a Reimbursement Provision

         The SIR does not contain a reimbursement provision, but McClure's argument on this point is misplaced because Country Life has not sought reimbursement for past overpayments. Rather, Country Life has offset McClure's monthly SIR benefit at the time of payment by the amount of his monthly SSDI benefit, a practice expressly permitted by the SIR.

         The SIR states that it pays monthly benefits when the Policy pays monthly base benefits, and that the amount of the SIR benefit “is the maximum monthly benefit of the rider less benefits from social insurance, ” including SSDI. From December 2012 to April 2014, Country Life paid base benefits. Country Life also paid the maximum SIR benefit because McClure was not receiving SSDI benefits during this time. Country Life terminated base benefits in April 2014 and, as a result, ceased making SIR payments. In May 2016, McClure was awarded SSDI benefits retroactive to December 2012. Later, in November 2016, Country Life determined that McClure's claim was compensable and began paying base benefits retroactive to June 2014. At the time these base benefits were paid, ...