By James M. Leva, JD, Day Pitney LLP
A New Jersey federal court recently dismissed a disabled employee’s state-law contract claim, holding that the Employee Retirement Income Security Act (ERISA) preempted it.
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Kevin Smith worked for Public Service Electric & Gas Company (PSE&G) and participated in its long-term disability (LTD) plan. MetLife funds and administers the plan’s LTD benefits. Under the plan, eligible disabled employees receive a monthly LTD benefit, which is offset by benefits received from other sources, including Social Security disability insurance (SSDI) benefits.
The plan authorizes MetLife to recoup overpayments of LTD benefits by reducing future payments until it recovers all overpayments. Significantly, the plan also contains a provision that prohibits a plan participant from filing a legal action related to the administration of the plan “more than three years after proof of disability” was filed.