Schultz v. Aviall, Incorporated Long Term Disability Plan

Dist. Ct. did not err in dismissing for failure to state cause of action plaintiffs-plan beneficiaries' putative class action under ERISA alleging that defendants-plans wrongfully deducted from disability benefits issued under instant plans Social Security disability benefits under 42 USC section 423 received by plaintiff on their own behalf, as well as amounts payable on behalf of plaintiffs' children under 42 USC section 402(d). While plaintiffs argued that reduction due to receipt of children's benefits was improper since said benefits were not "loss of time disability" benefits as that term was contemplated in plans, Ct. of Appeals found that instant deduction was appropriate since: (1) Social Security disability benefits, whether primary of dependent, are "loss of time disability benefits" because they are based on plaintiffs' disabilities; and (2) offset provision in instant plans referred specifically to Social Security disability benefits paid to children.