because there is nothing to manifest the intent that the Plan terms should control over the summary, and because Camarda himself relied on the terms of the summary, the Court finds that the terms of the Summary Plan Description control the rights and obligations of the parties.
2. The Summary Plan Allows Centennial to Offset Social Security Benefits
The language of ERISA does not provide the courts with guidance as to how group insurance and disability plans are to be interpreted. Vanvolkenburg, 944 F. Supp. at 201. Federal courts, however, have developed a federal common law to help guide such interpretation. Id. (citing Dedeaux, 107 S. Ct. at 1558); see also Masella v. Blue Cross & Blue Shield of Conn., 936 F.2d 98, 107 (2d Cir. 1991); Burnham v. Guardian Life Ins. Co. of America, 873 F.2d 486, 489 (1st Cir. 1989). In particular, the language in an insurance policy governed by ERISA should first be given its plain meaning, and then any ambiguous terms should be strictly construed against the insurer. Masella, 936 F.2d at 107. This presumption favoring the insured, however, is a principle of last resort, to be invoked only when there is no other indication of the intent of the parties. O'Neil v. Retirement Plan for Salaried Employees of RKO General, Inc., 37 F.3d 55, 61 (2d Cir. 1994) (citing Record Club of America, Inc. v. United Artists Records, Inc., 890 F.2d 1264, 1271 (2d Cir. 1989)).
The Court finds that the plain language of the summary required Camarda to disclose his Social Security disability benefits to Centennial. In particular, the summary required that participants inform Centennial of any Social Security disability benefits that the participant received. Indeed, such proof was a condition precedent to payment under the Plan.
Centennial attempted to monitor whether such awards were made by sending questionnaires to Camarda every year or two.
When Camarda failed to answer these questionnaires accurately, Centennial began to seek an authorization to review Camarda's Social Security file. Notwithstanding Camarda's obligation to report the award to Centennial, however, he failed to cooperate in providing the authorization until after this litigation began. The Court finds, therefore, that because Camarda failed to satisfy his disclosure obligations under the Plan, Centennial acted within the terms of the Plan in suspending or even terminating Camarda's benefits until a full investigation of the Social Security award and repayment of the nearly five years of benefit overpayments made by Centennial.
3. The Plan Language Also Permits a Setoff
Even if guided by the language in the Plan itself, the Court finds that the Plan language also required Camarda to notify Centennial of the Social Security award. A review of the actual policy is also merited to address plaintiff's arguments regarding the priority of the language in the summary. First, regardless of the alleged language conflict between the documents, plaintiff asserts that to be consistent with ERISA's goals, the Court should apply the language most favorable to the plan participant. Plaintiff points out that the rule allowing summary plans to supersede actual policies was designed to protect employees, and should not be extended to serve as a sword for employers. Second, plaintiff raises the argument that the summary plan cannot control if it constitutes an improper modification of the terms of the Plan by reducing Camarda's available benefits. Finally, the Court takes note of the Fourth Circuit's decision in Hendricks v. Central Reserve Life Insurance Company, 39 F.3d 507 (4th Cir. 1994), which found that where the summary plan description and the plan itself do not directly conflict, there is no prohibition against review of the official plan itself for a fuller understanding of the plan's terms. Id. at 512. The court went on to note that "in those circumstances the plan is the controlling document for determining the scope of the benefits provided." Id.
As noted earlier, the Plan language indicated that disability benefits conferred under the Plan would be reduced by "any Other Income Benefit," which included Social Security benefits awarded "on account of the Employee's disability." Plaintiff contends that this language is ambiguous because it is unclear whether a participant is subject to an offset only for Social Security received for the same disability that he received benefits for under the Plan, or whether a participant is subject to an offset for any Social Security disability benefit. In this regard, he claims that the award he received from Social Security was unrelated to the disability under the Plan because the Social Security award related to a mental impairment.
The defendant, on the other hand, asserts that both the summary and the Plan are consistent and unambiguous and allow an offset for any Social Security disability benefit.
The Court finds that regardless of which interpretation the Court follows, Camarda was required to report his Social Security award to Centennial because the award was "on account of [his] disability." The facts of this case reveal that the Social Security benefits awarded in 1986 related to the injuries for which Camarda received benefits from Centennial. First, Camarda in his deposition conceded that when he reapplied for Social Security benefits in 1984, he only applied for benefits resulting from injuries to his foot, hip and back, just as he had before. Camarda Dep. at 90. The decision of the ALJ also reflects this fact. See ALJ Decision, at 2. Second, although the ALJ was precluded from finding a disability based on the initial impairments from the hip, foot and back injuries,
the ALJ could consider evidence of disability from these injuries beginning from the day after the first denial of Social Security benefits. ALJ Decision, at 3. Reviewing the evidence presented of injury since 1983, therefore, the ALJ noted that Camarda had pain in the hip and the back, and that later back scans revealed spine damage that had gone undetected prior to 1983. Id. at 4. In addition, the ALJ noted that Camarda's doctors had found he suffered from anxiety and depression. Moreover, the ALJ considered evidence that Camarda had suffered chronic lower back pain since his on-the-job accident in 1981. Id. at 5. Consultative examinations ordered by the ALJ further indicated that Camarda was unable to lift and carry more than five pounds and that there was evidence of an anxiety-related disorder. Id. at 6. Accordingly, the ALJ awarded Camarda benefits retroactive to June 17, 1983, the date immediately following the prior ALJ's denial decision, and concluded that "from a physical standpoint alone, the claimant has lacked the residual functional capacity to perform either his past relevant work or any other type of substantial gainful activity contemplated in [the Social Security Regulations]." Id.
The language and analysis of the ALJ's decision, therefore, reveals that the Social Security award was made on the basis of impairments related to the hip, foot and back injuries, for which Camarda also received Plan benefits. These impairments were manifested in several ways, including, inter alia, the inability to lift heavy weights, back pain, anxiety and depression. Although the indicia of Camarda's disability may have changed over the years, the cause (the on-the-job-accidents) and the result (total disability) are the same. Moreover, the Plan specifically states that multiple injuries arising from the same accident are to be considered as one successive injury when ascertaining disability:
For the purposes of the insurance under [the Plan], all injuries sustained in connection with any one accident shall be considered as one injury.
Birzon Aff., Ex. H and I, at 10. The identical language was included in the summary plan description. See Matthews Aff., Ex. 2. Furthermore, at a minimum, Camarda's mental impairments relate to his disability to the extent they arose from his inability to work and function as he did prior to his accidents. As a consequence, the Court concludes that the award of Social Security disability benefits was "on account of the Employee's disability," that Centennial was entitled to deduct the award from Camarda's benefits, and that Camarda should have reported to Centennial that he received the award so that it could offset such benefits from the benefits it was distributing to the Camarda family.
In addition, the Court rejects plaintiff's arguments that Centennial could not suspend his benefits because of his refusal to supply the Social Security authorizations. As noted above, Camarda had an obligation under the Plan to disclose to Centennial any Social Security award relating to his disability. Once Centennial had this information, it could make the appropriate deductions as described in the Plan. Because Camarda obstructed Centennial's ability to ascertain if he was receiving Social Security benefits, it had no other choice but to suspend the payment of benefits until it obtained the information it needed to perform its rights and obligations under the Plan, and the further right to seek reimbursement of the overpayments it made. See also Christiansen v. Metropolitan Life Insurance Co., 1990 U.S. Dist. LEXIS 17261, No. 89- CV-761, 1990 WL 209650, at *1 (N.D.N.Y. Dec. 14, 1990) (finding that under either a de novo or an arbitrary and capricious standard of review, the decision of a plan administrator to terminate benefits was proper after the participant failed or refused to provide proof of her disability as required under the disability plan in issue).
The Court concludes, therefore, that either under the summary plan or the Plan itself, Centennial had the right to set off the benefits Camarda received from Social Security, Camarda had a duty to inform Centennial of the award, and Camarda's failure to provide this information, either on the questionnaires or through an authorization, was grounds for Centennial to suspend his benefits. In addition, Centennial has the right to recoup any overpayment it made to Camarda on the basis of Camarda's breach of his obligations under the Plan.
C. Notice Due for Suspension of Benefits
Although the Court finds that Centennial was entitled to set-off plaintiff's Social Security benefits from his disability benefits under the Plan, the Court must also consider plaintiff's allegations that Centennial failed to give proper notice that his benefits would be reduced or withheld. Camarda argues that Centennial was required to give written notice of any suspension pursuant to Section 2560.503-1(f) of the Code of Federal Regulations ("CFR").
ERISA does not expressly provide a notice requirement for termination of benefits conferred under an ERISA plan. It does, however, provide a detailed mechanism for the processing of benefits claims and sets certain minimum requirements for the provision of notice to a beneficiary when a plan administrator denies a claim for benefits in whole or in part. ERISA § 503, 29 U.S.C. § 1133. The contents of a notice of denial of benefits, however, is specified in Department of Labor regulations, codified at 29 C.F.R. § 2560.503-1(f). Under the regulations, the plan administrator must provide written notice of a benefits claim and the notice must include: (1) the reason for the denial; (2) reference to the plan provisions on which the denial is based; (3) a description of any additional information necessary to perfect the claim and an explanation of why such material is necessary; and (4) appropriate information as to the steps to be taken if the participant or beneficiary wishes to submit his or her claim for review. 29 C.F.R. § 2560.503-1(f).
The purpose of this provision is to ensure that a participant who was denied benefits can receive a meaningful review of his claim by pinpointing the issues to address. Wolfe v. J. C. Penney Co., 710 F.2d 388, 392 (7th Cir. 1983). Thus, a notice of benefits denial is inadequate if it does not provide the beneficiary and the courts with a sufficiently precise understanding of the grounds for the denial to permit a realistic possibility of review. Halpin v. W.W. Grainger, Inc., 962 F.2d 685, 689 (7th Cir. 1992). In assessing whether notice was adequate as required under the CFR, therefore, the courts have found that precise compliance with the regulations is not necessary as long as the plan administrator has substantially complied with such regulations and has provided the beneficiary with sufficient information to appeal the denial. As such, the cases finding defective notice of denial of benefits focus on whether the plaintiffs were apprised of why their benefits were being altered and what they could do to correct the deficiencies of their benefit claims. See Dawes v. First Unum Life Insur. Co., 1992 U.S. Dist. LEXIS 17426, 91-C V-103, 1992 WL 350778, at *2 (S.D.N.Y. Nov. 13, 1992) (citing Vanderklok v. Provident Life and Accident Insur. Co., 956 F.2d 610, 616 (6th Cir. 1992); Grossmuller v. International Union, Local 813, 715 F.2d 853, 858 (3d Cir. 1983); Wolfe, 710 F.2d at 392; Richardson v. Central States, Southeast & Southwest Areas Pension Fund, 645 F.2d 660, 665 (8th Cir. 1981)).
In the present action, the notice sent to Camarda's attorney on February 22, 1991 informing him that his benefits would be suspended read as follows:
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.