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CAMARDA v. PAN AM

January 31, 1997

ANTHONY CAMARDA, Plaintiff, against PAN AMERICAN WORLD AIRWAYS, INC., CENTENNIAL LIFE INSURANCE CO., and ADELE M. ASKIN, PLAN ADMINISTRATOR GROUP LIFE LONG TERM DISABILITY POLICY # 880186, Defendants.


The opinion of the court was delivered by: SEYBERT

 SEYBERT, District Judge:

 Plaintiff Anthony Camarda brings this action against defendant Pan American World Airways, Inc. ("Pan Am"), Centennial Life Insurance Company ("Centennial") and Adele M. Askin, as Plan Administrator for Group Life Long Term Disability Policy # 880186, asserting claims arising from Centennial's suspension of plaintiff's disability benefits. Pan Am and Askin were subsequently dismissed from the case, and Centennial remains the sole defendant.

 Plaintiff asserts a cause of action under the Employees' Retirement Income Security Act, 29 U.S.C. § 1001 et seq. ("ERISA") and demands damages in an amount equal to the benefits withheld and a declaration by the Court as to the plaintiff's continuing right to receive benefits, together with the legal costs, legal fees plus interest and penalties. Before the Court are plaintiff's motion for summary judgment and defendant's cross-motion for summary judgment. For the foregoing reasons, the Court denies plaintiff's motion for summary judgment and grants defendant's cross-motion for summary judgment.

 FACTUAL BACKGROUND

 The following facts are not in dispute unless indicated otherwise.

 A. Events Giving Rise to the Suspension of Benefits

 Plaintiff Anthony Camarda ("Camarda") was an employee of Pan Am from 1966 up to and through October, 1981. D's 3g Stmt., P 5; P's 3g Stmt., P 2. Camarda had been involved in several on-the-job accidents until he became totally disabled in October, 1981. P's 3g Stmt. P 3.

 As a result of Camarda's total disability, Centennial, which served as the Pan Am's disability plan administrator and underwriter, began paying disability benefits to Camarda in October, 1981 and continued to do so through December, 1990 in the amount of $ 1,405.04 per month. P's 3g Stmt. P 4, 6. Such payments were made pursuant to Pan Am's Group Life Long Term Disability Policy # 880186 (the "Plan").

 When Camarda initially began receiving disability benefits under the Plan, Centennial deducted an automatic offset because of an anticipated award of Social Security benefits. Matthews Aff. P 15. Camarda's initial application for Social Security benefits on September 20, 1982, however, was denied on June 16, 1983. D's 3g Stmt., P 17; Matthews Aff. P 16. Aware that this denial of Social Security benefits allowed him to increase his monthly benefits from Centennial, Camarda promptly submitted proof of his denial to the Plan in order to receive reimbursement for the prior offsets. D's 3g Stmt. P 18; Matthews Aff. P 17; Camarda Dep. at 108. Upon receipt of the decision denying Social Security disability benefits to Camarda, Centennial ceased the automatic offset and reimbursed him in the sum of $ 7,200. D's 3g Stmt. P 19; Matthews Aff. P 18.

 On or about February 13, 1985, Camarda reapplied for Social Security benefits for the same work-related injuries. D's 3g Smt. P 20; Camarda Dep. at 90. This time around, on April 23, 1986, Camarda was awarded Social Security disability and checks were mailed directly to Camarda, his wife and his sons. D's 3g Stmt. P 21; Camarda Dep. at 91; Notice of Favorable Decision, Birzon Aff., Ex. J.

 In the decision awarding these benefits, the Administrative Law Judge (the "ALJ") found Camarda to be disabled as a result of both physical and mental impairments arising from the prior work-related accident. Notice of Favorable Decision, Ex. J to Birzon Aff., at 7-8; Camarda Dep. at 92-93. In particular, the ALJ found Camarda to be under a "disability" as a result of orthopedic impairments beginning June 17, 1983 and a mental impairment beginning October 24, 1985. Id. Because the ALJ was procedurally barred from considering any impairments assessed in the prior ALJ decision of June 16, 1983, the decision addressed solely impairments that arose after the date of the prior denial. Id. On May 20, 1986, the Social Security Administration issued to Camarda a "Social Security Award Certificate" in the amount of $ 14,239.80 to cover disability benefits from June 17, 1983 through April 1986 for both physical and mental impairments. Social Security Award Certificate, Matthews Aff., Ex. 5.

 Camarda conceded during his deposition that he did not inform Centennial that he began receiving Social Security benefits until sometime in 1994. Camarda Dep. at 112-113. He further explained that he did not inform Centennial of the award because he was embarrassed about having been found to have a mental impairment. Camarda Dep. at 113. In addition, Camarda did not report the award because he believed that he did not have to report any Social Security disability awards for a mental impairment. Camarda Dep. at 113. *fn1" This belief stemmed from his review of the Centennial Summary Plan Description, which he believed excluded coverage for mental impairments. Camarda Dep. at 113. Camarda conceded, however, that his mental impairment arose because of the physical injuries he sustained while working for Pan Am. Camarda Dep. at 115.

 The parties dispute, however, when Centennial began to ask for an authorization to review Camarda's Social Security file. Camarda asserts that he was never asked for such a release until 1991, only weeks prior to the suspension of his benefits. Centennial, on the other hand, claims that it made repeated attempts to secure an authorization since 1985, when Camarda reapplied for Social Security benefits. Matthews Aff. P 23. For example, Centennial cites to a letter dated February 28, 1985, when Camarda wrote to Centennial that "my wife and I feel that the authorization to obtain and disclose insurance claim information you're asking me to sign is too broad a statement." Matthews Aff. P 24. Again, in a letter dated April 15, 1985, Camarda wrote to Centennial "in response to your letter of March 8, 1985, I had consulted with an attorney and he has advised me . . . all authorizations have been taken care of while the claim was pending. Therefore, I shouldn't be asked for any more authorizations." Matthews Aff. P 24 and Ex. 6.

 Centennial also claims that it made repeated attempts through personal interviews, telephone calls, and correspondence to obtain the authorizations from Camarda and his respective attorneys. Matthews Aff. P 25. Camarda admits that Centennial sent a questionnaire every year or two for his doctor to fill out regarding whether he was receiving any other benefits. Camarda Dep. at 116. Out of embarrassment from having an adjudicated mental impairment, Camarda refused to answer the portion of the questionnaire relating to benefits and further failed to inform his doctor that he was receiving Social Security disability, even though the doctor was required to sign the questionnaire. Camarda Dep. at 117. In addition, Equifax Services, an agent of Centennial, repeatedly met with Camarda in 1991 and attempted to obtain authorizations from him and to ascertain whether he had received any Social Security benefits since 1983. Matthews Aff. P 25; Camarda Dep. at 118. Among other measures, Centennial also sent letters to Camarda dated March 8, 1985, August 8, 1990, and February 6, 1991, requesting that Camarda sign the release authorizations. Matthews Aff. P 25. In addition, Equifax sent Camarda a letter, dated December 21, 1988, providing Camarda a Social Security authorization and requesting that he sign it. Matthews Aff. P 25. Camarda's counsel, in turn, sent four separate letters, dated January 29, 1991, February 14, 1991, August 20, 1991, and September 8, 1992, refusing to provide said authorizations. Matthews Aff. P 25.

 On February 22, 1991, Centennial informed Camarda by letter that it was going to suspend Camarda's benefits until he provided the Plan with an authorization to verify Social Security benefits paid to him or his family. Matthews Aff. P 29. Plaintiff refers to this conduct by the Plan as a "termination of benefits," while the defendants employ the phrase "temporary suspension." The correspondence at issue, which was addressed to Michael A. DeMicco, Esq. (plaintiff's attorney at that time), reads in pertinent part:

 
In response to your letter of February 14, 1991, we feel we have the right to obtain this information to verify if Mr. Camarda's claim was denied or benefits awarded by the Social Security Administration.
 
We are writing to advise that no further benefits can be approved until we receive verification from the Social Security Administration. Also, please inform Mr. Camarda that this could affect his deferred benefit after age 65.

 Matthews Aff. Ex. 12 (emphasis added).

 Plaintiff commenced this ERISA action in early 1993 seeking compensatory and declaratory relief, as well as punitive damages and attorney's fees. Centennial claims that as a result of Camarda's failure to inform the Plan that he was receiving Social Security benefits, the Plan overpaid Camarda approximately $ 57,593 and that it would continue to suspend benefits until the overpayment was resolved. At a discovery conference held on August 5, 1993, Magistrate Judge Michael Orenstein ordered the plaintiff to provide an authorization to the Social Security Administration concerning his disability insurance benefits status. Notwithstanding its receipt of the requested authorization through discovery in this action, the Plan has not reinstated plaintiff's benefits.

 B. Relevant Provisions of the Plan Documents

 In defending its decision to suspend plaintiff's benefits, Centennial relies on certain Plan language that allows it to set off from Plan payments any income received from Social Security. Specifically, the Plan provided in Section A. II. that:

 
The benefit payable for any monthly period of total disability, or portion thereof for which a monthly benefit is payable on the part of the LTD, determined in accordance with Paragraph I above, shall be reduced by the amount of any Other Income Benefit as defined in Paragraph IV of the Definitions as set forth in the Plan of Insurance, available to the Employee for such period.

 Birzon Aff., Ex. F, at 5 (emphasis added). Paragraph IV of the Definitions portion of the Plan went on to provide that:

 
The term "Other Income Benefits" as used herein means income benefits available under . . .
 
(d) The Federal Social Security Act together with all amendments thereto, including benefits thereunder to or for any and all dependents (as therein defined) of the Employee on account of the Employee's disability, but not including any increase in benefits available to the employee or to or for any and all dependents on account of the Employee's disability as a result of amendment of such Act.

 Birzon Aff., Ex. F, at 2 (emphasis added).

 The Plan was amended effective January 1, 1982. The new definition of "Other Income Benefits" now ...


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