All long term disability (LTD) insurance policies provide that, when the claimant gets “other benefits” like Social Security Disability, there is an offset, which means the LTD has to pay less for any month in which the claimant was entitled to other benefits. Since LTD is often granted first, by the time the claimant gets SSD, the back SSD benefits received may cause an offset for past months in which LTD has already paid full benefits. So there’s an overpayment of LTD benefits, and the LTD carrier wants the claimant to pay it back.
This decision means that, when a claimant on LTD gets SSD back benefits and spends those benefits before the LTD carrier can grab some of them under the “other benefits” clause in the LTD policy, the LTD carrier cannot take the money out of other assets claimant may have.
Caveats:
(1) The decision does not address whether the LTD carrier can reduce future benefits to recoup the overpayment.
(2) Since it’s a decision of a District Court in Maryland, it has limited relevance in Oregon. However it’s now clearly an argument to be made.