Compliance August 10, 2007

ME Court Allows for Disability Offset to Workers Comp

August 10, 2007 (PLANSPONSOR.com) - The Maine Supreme Court has ruled that an employer may offset a workers compensation obligation to an injured employee by the lump sum paid to the employee under its group life and disability plan.
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Business Insurance reports that, in its decision, the court affirmed a Maine Workers’ Compensation Board hearing officer’s finding that a $58,000 payment Jeanne Nichols received under an employer-funded group policy is subject to coordination. The group policy, offered as a “welfare plan” by the employer, contained disability features along with life coverage.

Though the court records indicated Nichols was paid under a permanent and total disability feature of the plan, she argued that the payment could not offset disability or workers compensation benefits because it fell under the plan’s primary life insurance, Business Insurance said.

While the state Supreme Court rejected Nichols’ argument, it noted in its decision that neither Maine’s Workers’ Compensation Act nor its Insurance Code contain a definition of “disability insurance policy.”

The case is Jeanne Nichols vs. S.D. Warren/Sappi et. al., and will be posted on the Maine Courts Web page .

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