Sun Life Accused of Shorting Veterans’Disability Benefits

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By Jacklyn Wille

Oct. 25 — A new lawsuit accuses Sun Life Assurance Co. of Canada of underpaying disability benefits owed to veterans and service members who also received disability benefits from the Department of Veterans Affairs ( Martinez v. Sun Life Assurance Co. of Canada , D. Mass., No. 1:16-cv-12154, complaint filed 10/25/16 ).

The proposed class action, filed Oct. 25 in Massachusetts federal court, claims that Sun Life engaged in a practice of reducing the disability benefits it pays veterans to account for the benefits those veterans receive from the U.S. government. According to the seven-count complaint, this benefit offset—which allegedly affects “thousands” of veterans and service members who receive disability benefits from Sun Life—violates federal laws protecting service members’ benefits and isn’t authorized by the insurer’s disability plans.

This is the first lawsuit brought under the Uniformed Services Employment and Reemployment Rights Act challenging Sun Life's alleged practice of offseting the disability benefits of veterans. Similar claims have been brought under other laws. In 2014, the U.S. Court of Appeals for the Tenth Circuit blessed the insurer’s offset practices in a case brought by a physician who served in the army. The Eighth and First circuits have reached different conclusions, disapproving of Sun Life’s offset practices.

The U.S. Department of Justice also has expressed disapproval over how Sun Life has administered benefits to veterans.

Like the earlier lawsuits, this newest complaint focuses on language in Sun Life’s disability plans allowing the insurer to offset disability benefits to account for other benefits received pursuant to “any Compulsory Benefit Act or Law,” other laws of “like intent” or laws similar to the U.S. Social Security Act. The lawsuit claims that this language doesn’t encompass veterans’ benefits received from the government.

The lawsuit was filed in the U.S. District Court for the District of Massachusetts by Block & Leviton LLP, Cohen Milstein Sellers & Toll PLLC and Crotty & Son Law Firm PLLC.

To contact the reporter on this story: Jacklyn Wille in Washington at jwille@bna.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bna.com

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