Court: Disability can't be offset by VA benefits

2011-10-08T08:00:00Z 2011-10-09T19:35:03Z Court: Disability can't be offset by VA benefitsThe Associated Press The Associated Press
October 08, 2011 8:00 am  • 

OMAHA -- A federal appeals court ruled in favor of a Vietnam veteran Friday, saying his long-term disability insurance carrier can't reduce his monthly payment by the amount he gets from veterans' benefits.

James Riley, 56, of Bellevue, left his job when symptoms of multiple sclerosis made it impossible for him to work. Sun Life and Health Insurance Co., which provided the long-term disability plan for Riley's employer, began paying Riley benefits in January 2005.

But two years later, Sun Life learned Riley also received veterans' benefits for the disease that developed while he was serving in the Vietnam War during the early 1970s. Sun Life reduced the amount it was paying Riley and claimed he owed nearly $21,000 in overpayments.

The company pointed to language in Riley's policy that said monthly disability payments could be reduced by "other income," which were defined in the plan as any amount of disability or retirement benefits under the U.S. Social Security Act, the Railroad Retirement Act or "any other similar act or law provided in any jurisdiction."

Riley objected and eventually sued Sun Life. A federal court in Omaha ruled in favor of Sun Life last year, but a three-judge panel of the 8th U.S. Circuit Court of Appeals reversed the lower court's decision Friday.

The appeals court said the Veterans Benefits Act is different from the Social Security and Railroad Retirement acts.

"The SSA and RRA disability benefits programs are both federal insurance programs based upon employment, and the amount of an award under their terms depends upon how much has been paid in," the appeals panel said in its opinion. "Conversely, the VA benefits Riley is entitled to receive are not from an 'insurance' program, but instead are considered obligatory compensation for injuries to service men and women during military duty."

Federal law says any veteran who develops multiple sclerosis within seven years from the time he or she served during war shall be presumed to have incurred or aggravated the disease during that service.

Judge Steven Colloton dissented, saying the appeals court ignored many of the similarities between the veterans and other programs, including that all three are run by the government and provide regular payments to qualified people who have suffered a physical disability without regard to fault.

"We obviously believe the dissenting decision by Judge Colloton correctly analyzed the issues," said Philadelphia attorney Joshua Bachrach, who represented Sun Life.

Bachrach said he and his clients are considering asking the full 8th Circuit to review the case.

Nora Kane, Riley's Omaha attorney, said she's pleased with the ruling and happy for her client, who she said has not received any disability payments from Sun Life since 2007 and has had to live off Social Security and veterans' benefits.

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