MetLife Wrong to Use IRA Rollover to Offset Disability Benefits

Metropolitan Life Insurance Co. must repay a long-term disability plan participant the $23,945 it claimed he’d been overpaid, plus interest, after a California federal court ruled the participant’s retirement plan rollover couldn’t be used to offset his disability benefits.

A MetLife disability plan provision allowing benefits to be offset by income “received” under a participant’s retirement is ambiguous and shouldn’t have been used to reduce Baseem Syed’s benefits, the court said.

It reached this conclusion by applying the legal doctrine contra proferentem, which instructs courts to interpret ambiguous terms in insurance contracts in favor of the insured party.

The ...