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KORNARDY v. CARGILL

September 18, 2003

CRAIG A. KORNARDY, PLAINTIFF,
v.
CARGILL, INC., UNICARE LIFE AND HEALTH INSURANCE CO., AND CARGILL INC. AND ASSOCIATED COMPANIES LONG TERM DISABILITY PLAN. DEFENDANT



The opinion of the court was delivered by: Philip Reinhard, District Judge

MEMORANDUM OPINION AND ORDER

I. Introduction

Plaintiff, Craig Konrardy, filed a complaint against defendants, Cargill, Inc., Unicare Life and Health Insurance Co. (Unicare), and Cargill, Inc. and Associated Companies Long Term Disability Plan, alleging that defendants offset of social security benefits against disability payments under defendants' disability plan (the plan) constituted an unlawful denial of benefits under section 1132(a)(1)(B) of the Employment Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1132(a)(1)(B), and that defendants' failure to provide a copy of the plan and other pertinent information as requested by plaintiff should result in defendants being penalized up to $100 per day under section 1132(C)(1) of ERISA. The parties have submitted a written stipulation to the dismissal of Unicare as a defendant, and the court, therefore, dismisses Unicare as a party.

The parties also stipulated to a trial based on the administrative record and have [ Page 2]

submitted trial briefs in that regard. Plaintiff contends the following: (1) defendants wrongfully offset social security benefits that were based on his paraplegia when he was rendered disabled in 1993 within the meaning of the plan because of new and different medical conditions; (2) even if defendants properly offset social security benefits beginning in 1993, it was not permissible to increase the amount of the offset based on an increase in social security benefits in 1996 because the increase caused a change in his "personal status" which could not provide a basis for an increase of the offset; (3) defendants either waived, or are estopped from claiming, their right to increase the offset because they made no attempt to inquire about or recalculate his social security benefits between 1993 and 2001; (4) defendants should be estopped from increasing the offset more than three years after he qualified for a disability under the plan because there is a three-year limitations period that applies to a claimant when he initially seeks a disability; and (5) defendants failed to provide plaintiff with a copy of the applicable plan and other requested information within 30 days of his request and should be required to pay $100 per day for each day they were late.

For the following reasons, the court finds for defendants, enters judgment pursuant to Rule 52(c) in favor of defendants and against plaintiff on all claims in the complaint, and dismisses this cause in its entirety.

II. Facts

The court finds the following relevant facts to be undisputed. Plaintiff was rendered a paraplegic due to a fall in 1981. He thereafter began receiving disability benefits from the Social Security Administration (SSA). In 1992, plaintiff was hired by Cargill as a computer programmer. In 1993, plaintiff sought and received disability benefits under the plan. As part of [ Page 3]

the application process, plaintiff indicated that he received a disability benefit from SSA. As a result, and under the terms of the plan, defendants applied an offset to reduce his benefit under the plan in an amount equal to his social security benefit. This offset was stated on the disability check he received each month from defendants, and plaintiff never objected to the offset.

In 1996, plaintiff was notified by the SSA that his disability payment would be increased because of the increased payments to the SSA while he was employed at Cargill from 1992 to 1993. Also in 1996, plaintiff received a lump sum payment from the SSA for the years 1993-1996 in the amount of $25,050. Plaintiff did not, however, notify defendants of the increase in his social security benefit or the lump sum payment. Plaintiff continued to receive and accept a disability payment from defendants based on the original(and lesser) offset.

In late 2000, as part of a routine update of plaintiff's file, defendants became aware that plaintiff had been receiving a social security benefit greater than he had reported at the time he originally applied for a disability under the plan. At that time, defendants asked plaintiff to sign two social security forms which would allow defendants to ascertain the actual amount of social security benefits received by plaintiff. Rather than sign the forms, plaintiff had his attorney write defendants on February 8, 2001, questioning the calculation of plaintiff's benefit and asking for "all information utilized by your company and/or Cargill in determining the amount of benefits to be paid initially, and currently, to [plaintiff]." By way of response, on March 30, 2001, Unicare, the plan administrator, sent plaintiff a letter explaining that his benefits were to be suspended because of his failure to return the signed forms. Plaintiff eventually returned the signed forms to Unicare.

In early April of 2001, plaintiffs' counsel asked via telephone for a copy of the applicable [ Page 4]

plan. Unicare faxed the then-current plan instead of the plan in effect at the time of plaintiff's original claim. On the next day, April 3, 2001, plaintiff's attorney sent Unicare a letter stating the wrong version of the plan had been faxed and requesting a correct copy of the plan as well as "any and all documents and information which were utilized to calculate [plaintiff's] long term disability benefits initially, and anything utilized since then to recalculate the benefits." On April 5, 2001, Unicare sent plaintiff a copy of the applicable plan as well as a written explanation of how the increased offset was determined.

After receiving updated information from the Social Security Administration, Unicare recalculated plaintiff's monthly social security benefit and the related offset. It further determined that based on the increased social security benefit paid in the past (applying a cost of living adjustment factor), plaintiff had been overpaid under the plan in the amount of $41, 574.75. It further calculated plaintiff's new disability payment under the plan to be $280.95 after deducting the increased offset and the appropriate amount of federal tax. Defendants then began applying ...


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