Troiano v. Aetna Life Insurance Company
844 F.3d 35
| 1st Cir. | 2016Background
- Debra Troiano, a former Electric Boat employee, received tax-free long-term disability (LTD) benefits under GDC/Aetna's ERISA-governed plan at 60% of her predisability earnings.
- Troiano was awarded Social Security Disability Insurance (SSDI) benefits retroactively beginning Jan 2004; baseline monthly SSDI was $1,783 (with later COLAs) and a retroactive lump sum was paid.
- From Dec 2003–Apr 2010 Aetna paid unreduced LTD benefits; upon learning of the SSDI award in Apr 2010, Aetna offset Troiano’s monthly LTD by the gross SSDI amount ($1,783) and recouped $126,526 in alleged overpayments.
- Troiano requested Aetna use a net (post-tax) SSDI amount for offset because SSDI is taxable to her while LTD benefits were tax-free; Aetna refused, citing industry practice and administrative burden.
- Troiano sued under ERISA seeking declaration that offsets should be by net SSDI and sought discovery about Aetna’s conflict and practices; the district court granted summary judgment to defendants and denied broad discovery.
- The First Circuit affirmed, holding the plan permitted a gross offset and the district court did not abuse its discretion in denying discovery.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether LTD offset must use SSDI net (post-tax) amount or gross amount | Troiano: offset should be by net SSDI (taxes reduce the relevant income) | Aetna: plan allows offset by SSDI amount payable/eligible (gross); taxing SSDI is outside administrator's role and burdensome | Held: Plan permits offset by gross SSDI; plain language, SPD example, and administrative impracticality support gross offset |
| Appropriate standard of judicial review (de novo vs. deferential) and effect of alleged ERISA procedural violations | Troiano: this is a benefits-denial/reduction -> de novo review; Aetna forfeited deference by failing to respond to her appeal | Aetna: this is not a denial/reduction; Plan grants discretionary authority to Aetna | Held: Court assumed de novo and forgave alleged forfeitures for Troiano’s benefit; even under de novo review Aetna’s gross-offset interpretation was correct |
| Whether Troiano was entitled to discovery into Aetna’s structural conflict or internal practices | Troiano: Glenn and Rule 56(d) justify discovery to probe conflict and procedures | Aetna: no showing that conflict affected decision; discovery is presumptively limited in ERISA cases | Held: District court did not abuse discretion denying broad/unspecified discovery; plaintiff failed to show conflict influenced decision or that discovery would yield useful evidence |
Key Cases Cited
- Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (recognition of standard of review issues for ERISA plan interpretations)
- Metropolitan Life Ins. Co. v. Glenn, 554 U.S. 105 (structural conflict of interest in ERISA administrators may be a factor in review)
- Parke v. First Reliance Standard Life Ins. Co., 368 F.3d 999 (8th Cir.) (upholding gross SSDI offset where plan permitted offset by benefits a claimant was eligible to receive)