Fortelney v. Liberty Life Assurance Co. (790 F. Supp. 2d 1322, 2011)

United States District Court for the Western District of Oklahoma 2011-05-16

Labor The Public Health and Welfare

Citations

Full opinion text

ORDER

STEPHEN P. FRIOT, District Judge.

Before the court are Defendant Liberty Life Assurance Company of Boston’s Motion to Dismiss Plaintiffs’ First Amended Class Action Complaint (doe. no. 54), Defendants Bassett Law Firm LLC, Greta Bassett, and John R. Nelson’s Motion to Dismiss Plaintiffs’ First Amended Complaint (doc. no. 56) and Defendant Integrated Benefits, Inc.’s Motion to Dismiss Plaintiffs’ First Amended Class Action Complaint (doc. no. 74). Upon review of all of the parties’ submissions in support of and in opposition to the motions, the court makes its determination.

Introduction

Plaintiffs, Larry Fortelney, Brandon Stoup, David Carter and Chelsea Carter, bring this action individually and on behalf of similarly situated individuals who received long term disability benefits from defendant, Liberty Life Assurance Company of Boston, and were required to pay defendant, Liberty Life Assurance Company of Boston, for alleged “overpayments” after receipt of social security and/or workers’ compensation benefits. In their First Amended Class Action Complaint (“Amended Complaint”), plaintiffs allege both statutory and common law claims against defendant, Liberty Life Assurance Company of Boston (“Liberty”), defendants, The Bassett Law Firm, LLC, Greta Bassett and John R. Nelson (collectively “the Bassett defendants”) and defendant, Integrated Benefits, Inc. (“IBI”). Plaintiffs seek actual and punitive damages and injunctive relief against defendants. Defendants, in their motions, seek dismissal of the Amended Complaint pursuant to Rule 12(b)(6) and Rule 9(b), Fed.R.Civ.P.

Standard of Review

The inquiry under Rule 12(b)(6), Fed. R. Civ.P., is whether the Amended Complaint “ ‘contains enough facts to state a claim for relief that is plausible on its face.’” Ridge at Red Hawk, L.L.C. v. Schneider, 493 F.3d 1174, 1177 (10th Cir.2007) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). To survive a motion to dismiss, plaintiffs must nudge their claims across the line from conceivable to plausible. Id. The mere metaphysical possibility that some plaintiff could prove some set of facts in support of the pleaded claims is insufficient; the Amended Complaint must give the court reason to believe that these plaintiffs have a reasonable likelihood of mustering factual support for these claims. Ridge at Red Hawk, 493 F.3d at 1177. The court assumes the truth of plaintiffs’ well-pleaded factual allegations and views them in the light most favorable to plaintiffs. Id. Pleadings that are no more than legal conclusions are not entitled to the assumption of truth; while legal conclusions can provide the framework of the Amended Complaint, they must be supported by factual allegations. Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1950, 173 L.Ed.2d 868 (2009). When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief. Id.

Rule 9(b), Fed.R.Civ.P., governs the pleading of certain special matters. Rule 9(b) provides in pertinent part: “In alleging fraud ... a party must state with particularity the circumstances constituting fraud.... Malice, intent, knowledge, and other conditions of a person’s mind may be alleged generally.” The requirements of Rule 9(b) are to be read in conjunction with the general pleading principles of Rule 8, Fed.R.Civ.P., calling for the pleadings to be “simple, concise, and direct, ... [and] be construed so as to do justice.” Rule 8(d) and (e), Fed.R.Civ.P.; Schwartz v. Celestial Seasonings, Inc., 124 F.3d 1246, 1252 (10th Cir.1997). As with Rule 8, Rule 9(b)’s purpose is to afford the defendant fair notice of plaintiffs’ claim and the factual ground upon which it is based. Id. In order to plead fraud with particularity, plaintiffs’ Amended Complaint must “set forth the time, place, and contents of the false representation, the identity of the party making the false statements and the consequences thereof.” Koch v. Koch Indus., 203 F.3d 1202, 1236 (10th Cir.2000) (quotations omitted). This means “ ‘the who, what, when, where, and how: the first paragraph of any newspaper story.’ ” Caprin v. Simon Transportation Services, Inc., 99 Fed.Appx. 150, 158 (10th Cir.2004) (quoting DiLeo v. Ernst & Young, 901 F.2d 624, 627 (7th Cir.1990)). Allegations of Plaintiffs’ First Amended Class Action Complaint

Plaintiffs make the following factual allegations in the Amended Complaint, which, as previously stated, the court assumes for present purposes to be true, viewing them in a light most favorable to plaintiffs. Ridge at Red Hawk, L.L.C. v. Schneider, 493 F.3d at 1177.

Liberty, an insurance company, issues group disability income policies through numerous employers throughout the United States. These policies provide long term disability benefits (“LTD benefits”) to covered employees if they are unable to perform the material and substantial duties of their occupation due to injury or sickness.

One such policy (“LTD policy”) is issued through OGE Energy Corp. (“OG & E”) for its employees. See, Amended Complaint, ¶¶ 15, 21, and 22.

A. Plaintiff Larry Fortelney

Plaintiff, Larry Fortelney (“Fortelney”), worked for OG & E. Fortelney contributed to the LTD policy issued by Liberty. In March or April of 2005, Fortelney was injured at work. He thereafter applied for LTD benefits under the LTD policy. See, Amended Complaint, ¶ 23.

By letter dated November 16, 2005, Liberty informed Fortelney that he qualified for LTD benefits. Liberty stated that Fortelney’s date of disability was June 21, 2005, making him eligible for LTD benefits beginning on December 18, 2005, pursuant to the 180 day elimination period standard in the LTD policy. Liberty stated that the LTD policy required Fortelney to apply for social security benefits should his disability be expected to extend for twelve months. Liberty requested Fortelney to complete an enclosed Social Security/Reimbursement Agreement (“SSRA”) and referred to an enclosed fact sheet about the advantages of applying for social security benefits. Id., ¶ 24.

The fact sheet enclosed in the November 16th letter encouraged the filing of a claim for social security benefits and stated that recipients “typically receive a large retroactive payment from Social Security shortly after their claim is approved.” It advised that “[m]uch of this money is essentially money that Liberty [has] advanced to you while you were awaiting Social Security’s decision, and you must pay it back to Liberty immediately.” The fact sheet, however, advised that the social security cost of living increases are “yours to keep” and that it could amount to over $238,000 in additional benefits over 26 years. See, Amended Complaint, ¶ 24.

The fact sheet additionally stated that it was not necessary to hire a lawyer to assist with the social security process. It advised that if a Liberty case manager believed legal assistance waü necessary, Liberty would provide it and would pay for it. It further stated that Liberty had identified legal representatives throughout the United States with a strong track record in securing social security benefits for their clients and if necessary, Liberty would put that expertise to work for the policyholder. See, Amended Complaint, ¶ 25.

On November 25, 2005, Fortelney signed the SSRA which provided in part:

If disability benefits are approved I request that Liberty Life Assurance Company of Boston (Liberty Life) pay me my benefits with no reduction for estimated Social Security Disability benefits until Social Security makes a decision. I understand that this may result in an overpayment of disability benefits paid to me if Social Security subsequently awards benefits to me, and I understand that I must repay this overpayment to Liberty Life. In consideration of Liberty Life paying me a disability benefit with no reduction for estimated Social Security benefits until Social Security makes a decision, I agree to the following:

I agree to apply for Social Security benefits within 45 days of Liberty Life’s written request and provide proof of such application.

If Social Security awards benefits to me, I agree that Liberty Life has a first lien on all such benefits to the extent of any overpayment or debt, and I agree to hold such Social Security benefits in a trust for the benefit of Liberty Life until the amount of Liberty Life’s overpayment has been repaid in full.

I agree to repay Liberty Life in full within the time period specified in my policy/plan provision.

If I do not repay any overpayment due to Liberty Life in full, I understand Liberty Life will discontinue payment of benefits to me, including payments for insurance premiums and other deductions paid on my behalf, and Liberty Life may withhold future disability benefits until the overpayment is recovered in full. In addition, Liberty Life may also pursue other means permitted by law to collect the overpayment amount owed.

Id., ¶ 26; see also, Ex. 2 to Liberty’s supplement to motion to dismiss (doc. no. 64).

A Liberty case manager placed Fortelney in contact with the law firm Bassett, Nelson & Associates (“BNA”), now known as defendant, Bassett Law Firm, LLC, to assist with filing a claim for social security benefits. In a letter dated March 3, 2006, defendant, John R. Nelson (“Nelson”), an attorney and then principal of BNA, enclosed several forms for Fortelney to complete, along with a document that listed and explained the forms he was asked to sign. The forms included the Appointment of Representative, the Social Security Fee Agreement, the Social Security Representation Agreement, the Consent to Share Information Regarding Social Security Disability Claim and the Client Overpayment Assistance Program Authorization. The Social Security Representation Agreement was described as the “contract [that] officially hires the BNA representative as your attorney and states the ‘rules’ governing our relationship.” The Client Overpayment Assistance Program Authorization was described as follows:

While you wait to receive a favorable decision on your Social Security Disability claim, your insurance company has advanced you benefits. As a result, when your Social Security claim is allowed, this creates an overpayment of long term disability benefits. To assist you in your repayment obligation to the insurance company, BNA will verify that the amount to be repaid was correctly calculated by the long term disability insurance carrier and send the repayment on your behalf. This added service is offered at no cost to you and frees you from the frustration of repaying the insurance company on your own. By sending the Social Security retroactive benefit amount to your attorney at BNA, you are relieved of the burden and confusion of the LTD repayment process. Your attorney will then return the balance of the funds not due to the carrier directly to you.

See, Amended Complaint, ¶ 27. On March 13, 2006, Fortelney executed the Client Overpayment Assistance Program Authorization, which specifically stated:

I, Larry Fortelney, hereby retain Bassett, Nelson & Associates LLP (“BNA”), in the event that I am awarded Social Security Disability benefits, to assist me in meeting my contractual obligation to reimburse Liberty Life Assurance Company of Boston — AZ under the terms of my Long Term Disability Insurance Policy. ...

I promise to undertake the following actions:

Notify BNA when I receive retroactive benefits from the Social Security Administration and the amount received.

Forward a check made payable to Bassett, Nelson & Associates, LLP to be deposited in a trust account, for the total amount received for me and all eligible dependents.

I authorize BNA to take the following actions on my behalf:

Notify Liberty Life Assurance Company of Boston — AZ of the amount of Social Security Disability benefits received for myself and all eligible dependents.

Verify the correct amount of my Long Term Disability overpayment.

Disburse funds to Liberty Life Assurance Company of Boston — AZ for reimbursement of LTD overpayment.

(Emphasis in original). See, Amended Complaint, ¶ 28.

Fortelney also executed the Consent to Share Information Regarding Social Security Disability Claim which provided:

I understand that by signing this form, I am authorizing Bassett, Nelson & Associates, LLP, to share information about my Social Security Disability Claim, including medical, vocational, and award data, with my long-term disability claims administrator....

See, Amended Complaint, ¶ 29.

Fortelney further executed the Social Security Representative Agreement which provided:

BASSETT, NELSON & ASSOCIATES, LLP, ATTORNEYS AT LAW, hereinafter referred to as “BNA” will provide legal services to the undersigned, Larry Fortelney ... “Client,” on the terms set forth below.

Scope of Services: Client retains BNA for the sole purpose of pursuing a claim for disability benefits under the Social Security Act ...

* # *

Client: BNA is representing the Client, Larry Fortelney only in this matter. It is understood by Client ... that BNA’s duty is to act in the best interests of the Client ...

BNA will maintain Client’s file for two years after this matter is concluded ... Two years after the conclusion of this matter, the file may be destroyed without further notice to Client.

* * *

This Agreement contains the entire agreement of the parties. No other agreement, statement or promise made on or before the effective date of this Agreement will be binding on the parties.

See, Amended Complaint, ¶ 30.

On March 17, 2006, Nelson sent a letter to Fortelney notifying him that he had received the forms and authorizations. He stated that “I want you to know that my goal is to provide you with the finest representation. At the conclusion of your social security claim, I hope you will feel that I have represented you in a professional and efficient manner.” See, Amended Complaint, ¶ 31.

On April 13, 2007, Leah Kanne, an attorney with BNA, sent a letter to Fortelney stating that due to reorganization of caseloads, she would be handling his case and hearing. She requested that he sign two forms to change his representation with the Social Security Administration. On May 1, 2007, Fortelney signed the Third Party Fee Agreement which stated that Fortelney, the client, retained Leah Kanne to represent him for his claims for disability benefits under the Social Security Act. On May 7, 2007, Fortelney executed the Appointment of Representative, appointing Leah Kanne, as his representative in connection with his claim for social security benefits. See, Amended Complaint, ¶32.

On January 10, 2008, Fortelney received a letter from Maren Mellem, an attorney with BNA, stating his case had been transferred to her. Fortelney executed another Third Party Fee Agreement retaining Maren Mellem to represent him in his claim for social security benefits. See, Amended Complaint, ¶ 33.

Fortelney received a letter from Maren Mellem dated March 18, 2008 with a “friendly reminder” to advise BNA if his long term disability benefits with Liberty end at any time because it would better equip her to assist him with his social security claim. It further stated: “We want to be sure that you realize that we are here to assist you and our services will not end solely because your insurance company has stopped your benefits for long-term disability.” (Emphasis in original). See, Amended Complaint, ¶ 34.

On May 19, 2008, Liberty sent a letter to Fortelney thanking him for notifying it that he was awarded social security benefits. The letter instructed Fortelney to notify Liberty immediately when he received his social security benefits check. Liberty stated that “during the time it took Social Security to make its decision, Liberty has paid you full disability benefits. In effect, we advanced you the money we expected Social Security would ultimately pay, and you signed an agreement to repay the advance upon receiving Social Security benefits.... You must repay any overpayment immediately....” See, Amended Complaint, ¶ 35.

On July 16, 2008, defendant, Bassett Law Firm, LLC, sent a letter to Fortelney advising of the receipt of a favorable decision on Fortelney’s claim for social security benefits and enclosing the notice of award of $60,671.40 in past due benefits. The letter further stated:

As we discussed previously, your disability plan requires Liberty ... to reduce your ... benefits by the amount of income received from Social Security. Because you received ... benefits with no reduction for Social Security benefits, Liberty ... in effect advanced you the money they expected Social Security would ultimately pay to you. You also signed an agreement with your insurance provider to repay this advance upon receiving Social Security benefits. Now that you have been awarded Social Security benefits, the Bassett Law Firm is here to assist you in repaying Liberty....

Please check your bank account for a deposit from the U.S. Treasury or for a paper check in the mail from Social Security. When you receive the past due benefits from Social Security, please prepare a check, made payable to The Bassett Law Firm, in the amount of $60[,]671.40 and forward to our office .... In accordance with our Client Overpayment Assistance Program ... we will then confirm the net overpayment due under the terms of your ... policy and contact you for permission to pay that amount to Liberty ... Any remaining monies will be returned to you without delay.

Please note that if full reimbursement is not made to Liberty ... they may refer your account to a collection agency. To avoid such action by the disability carrier, please forward the above amount to our office at your earliest convenience. Remember, our job is to make the repayment process as simple and pain-free as possible....

We look forward to receiving your payment or response by July 31, 2008.

See, Amended Complaint, ¶ 36 (Emphasis in original).

Two days later, on July 18, 2008, Liberty sent a letter to Fortelney regarding the “Overpayment Calculation and Repayment.” In that letter, Liberty made statements (similar to the statements made by defendant, Bassett Law Firm, LLC) about Fortelney’s obligation to repay Liberty because Liberty had “in effect advanced [him] the money [it] expected Social Security would ultimately pay.” Liberty however specifically informed Fortelney of what his reduction in benefits would be and attached an exhibit that “explain[ed] the calculation of [his] $59,121.30 balance.” Liberty also stated that it would work with defendant, Bassett Law Firm, LLC, in collecting the overpayment. See, Amended Complaint, ¶ 38.

According to plaintiffs, Liberty’s calculation of the alleged overpayment was grossly overstated. See, Amended Complaint, ¶ 39.

Fortelney wrote a check to defendant, Bassett Law Firm, LLC, for $59,121.30 on July 28, 2008. The check was deposited on August 7, 2008. Subsequently, on August 18, 2008, defendant, Greta Bassett, a principal of defendant, Bassett Law Firm, LLC, sent a letter to Liberty enclosing a check in the amount of $59,121.30, stating it “eover[ed] the Net Overpayment Due for Fortelney.” Maren Mellem advised Fortelney by letter that defendant, Bassett Law Firm, LLC, had forwarded the payment of $59,121.30 to Liberty and that it was the “amount due under the terms” of his LTD policy. She also advised that the firm considered his case closed and they were no longer representing him in the matter. See, Amended Complaint, ¶¶ 17, 40-41.

According to plaintiffs, despite representing that it would confirm the net overpayment due, defendant, Bassett Law Firm, LLC, never informed Fortelney that $59,121.30 was not the correct amount due to Liberty and never returned any funds to him.

On August 21, 2008, Liberty sent Fortelney a letter stating that it had received his check and it satisfied Fortelney’s overpayment in full. See, Amended Complaint, ¶ 42.

B. Plaintiff Brandon Stoup

Plaintiff, Brandon Stoup (“Stoup”), also worked for OG & E. On October 21, 2005, Stoup sustained injuries at work. On August 10, 2006, he was awarded workers’ compensation benefits for those injuries. Liberty notified Stoup on June 7, 2007 that he was eligible for LTD benefits under the LTD policy. Liberty informed Stoup that his date of disability was November 21, 2006, making him eligible to receive LTD benefits as of May 20, 2007. Liberty requested that Stoup complete an Agreement Concerning Benefits and provide his notice of award of workers’ compensation benefits. See, Amended Complaint, ¶¶ 43-44.

On June 12, 2007, Stoup executed the Agreement Concerning Benefits. The agreement provided:

In return for the advance payment of group disability benefits made to me by the Liberty Life Assurance Company of Boston which may be in excess of the amount due to me under the terms [of the LTD policy], I ... agree:

1) That I am not currently receiving any benefits from ... Workers’ Compensation.

2) If I apply for Social Security benefits and/or Workers’ Compensation benefits[,] I will notify Liberty Life Assurance Company of Boston.

3) If I ... receive any benefits payments ... I ... will immediately notify Liberty Life Assurance Company of Boston of such benefits payments and pay back any overpayment resulting from this award in accordance with my Policy provisions.

4) I understand that thereafter Liberty Life Assurance Company of Boston is entitled to integrate any amounts received from Social Security and/or Workers’ Compensation with the benefits payable under the Policy in accordance with the terms of the Policy.

See, Amended Complaint, ¶ 45, Ex. 3 to Liberty’s supplement to motion to dismiss. According to plaintiffs, Liberty’s “advanced payment of group disability benefits” statement was made for the purpose of getting Stoup to sign the agreement. Plaintiffs allege that Stoup was already eligible for his benefits from Liberty when he signed the agreement. See, Amended Complaint, ¶ 45.

On September 15, 2008, the Workers’ Compensation Court determined that Stoup had sustained consequential injuries as a result of the accident at work and awarded him additional benefits for permanent partial disability and disfigurement. See, Amended Complaint, ¶ 46.

On December 10, 2008, Liberty sent a letter to Stoup seeking $6,782.33 because of an alleged overpayment by Liberty due to Stoup’s receipt of workers’ compensation benefits. The letter demanded that Stoup send payment by December 24, 2008. See, Amended Complaint, ¶ 47.

On January 7, 2009, Stoup and his attorney sent a letter questioning the validity of the requested reimbursement. Liberty responded on January 8, 2009, attaching a copy of the Agreement Concerning Benefits signed by Stoup. On February 2, 2009, Liberty sent a “Second Request” letter to Stoup threatening that Liberty would refer the overpayment balance to their “external collection agency to assist with the recovery of this overpayment balance See, Amended Complaint, ¶48.

Stoup’s attorney sent a letter to Liberty on February 5, 2009, stating that workers’ compensation benefits were exempt from collection under Oklahoma law. The attorney “also requested authority for the action so as to avoid harm to Stoup.” See, Amended Complaint, ¶ 49.

Liberty responded on September 17, 2009, again enclosing the Agreement Concerning Benefits and citing policy provisions that allegedly entitled Liberty to the overpayment. Liberty stated that “[i]f we do not receive payment or a response from you by October 1, 2009, we will refer the overpayment balance to our external collection agency____” See, Amended Complaint, ¶ 50.

C. Plaintiffs David and Chelsea Carter

Plaintiff, David Carter (“Carter”), also worked for OG & E and contributed to the LTD policy issued by Liberty. Carter suffered major heart problems and applied for LTD benefits under the LTD policy. See, Amended Complaint, ¶ 60.

In a letter dated July 9, 2008, Liberty informed Carter that he qualified for LTD benefits. Liberty stated that Carter’s date of disability was February 1, 2008, making him eligible for benefits beginning on July 30, 2008. The letter stated that the policy required Carter to apply for social security benefits should his disability be expected to extend for twelve months. As with Fortelney, Liberty requested Carter to complete an enclosed SSRA. Liberty enclosed fact sheet advising about the advantages of applying for social security, and informed Carter that if legal assistance was required, Liberty would provide and pay for it.

Insisting that Carter apply for social security benefits, a Liberty case manager placed Carter in contact with defendant, IBI. In a letter dated July 10, 2008 from attorney Otis L. Darby to Carter, Mr. Darby enclosed several forms for Carter’s signature, including Appointment of Representative and Representation Agreement. The Representation Agreement provided that Carter retained Otis L. Darby, John Burris, Timothy J. Peters and Ted Norwood to represent him in his claim for social security disability income benefits. IBI also enclosed a Social Security Electronic Repayment Authorization form, which stated:

To satisfy my responsibility under the terms of the Social Security repayment agreement I signed with Liberty Mutual, I authorize Integrated Benefits, Inc. (IBI) to take the following actions: Withdraw from my bank account, designated below, Social Security amounts deposited for me and all my dependents and transfer those payments to an account established at Premier Bank in Jefferson City, MO for the purpose of satisfying my repayment agreement....

See, Amended Complaint, ¶ 62.

IBI also enclosed an Application for Disability Insurance Benefits that IBI had already completed for Carter’s signature, as well as an Application for Child’s Insurance Benefits for Carter’s daughter, plaintiff, Chelsea Carter. See, Amended Complaint, ¶ 63.

When Carter did not immediately respond to IBI’s letter of July 10, 2008 and return the enclosed forms, IBI sent another letter on July 30, 2008, with the same completed forms for Carter’s signature. An IBI representative told Carter he had to apply for social security benefits in order to receive his disability benefits under his LTD policy. See, Amended Complaint, ¶ 64.

On August 8, 2008, Carter signed the SSRA that Liberty sent to him so that he could obtain his benefits under the LTD policy. The SSRA Carter signed was identical to that signed by Fortelney. See, Amended Complaint, ¶ 65; Ex. 2 to Liberty’s supplement to motion to dismiss.

On August 10, 2008, Carter also executed the forms requested by IBI, including the Representation Agreement and Social Security Electronic Repayment Authorization. Carter also signed the Appointment of Representative that named Timothy J. Peters, attorney, as his main representative. It also listed, as accepting the appointment, John Burris, Otis L. Darby, Timothy J. Peters, “Esq.” and Ted Nor-wood, “Esq.” The box indicating the representative is an attorney was also checked. See, Amended Complaint, ¶ 66.

On December 17, 2008, Liberty sent a letter to Carter thanking him for providing a copy of his notice of award from the Social Security Administration. The letter stated that Liberty would begin reducing his benefit to offset his social security benefits. It further stated that Carter had to repay any overpayment immediately. Liberty strongly suggested that he set aside his retroactive payment from social security to repay the obligation. See, Amended Complaint, ¶ 67.

On December 28, 2008, Liberty sent a letter to Carter which stated:

As you know, your employer’s disability plan calls for us to reduce your disability benefits by the amount of income received from other sources, including Social Security, for you and any eligible dependents. Since you received disability benefits for the period July 30, 2008 to November 30, 2008, with no reduction for Social Security benefits, we in effect advanced you the money we expected Social Security would ultimately pay. You also signed an agreement to repay this advance upon receiving Social Security benefits.

Your notice states that you currently receive monthly Social Security Disability benefits of $1,893.00. It also indicates that Social Security paid you retroactive benefits of $7,098.75 for the period of July 1, 2008 to November 30, 2008. Thereafter as outlined on the attached exhibit:

1. We have reduced your net benefit from Liberty from $3,133.81 to $1,240.81, to reflect your Social Security benefit.

2. The attached exhibit explains the calculation of your $5,323.72 overpayment balance. *Note: You will have an additional overpayment once your dependent is awarded benefits.

3. Liberty Life will work with IBI in regards to collecting this overpayment. You will be contacted by a representative from IBI regarding repayment of this overpayment....

(Emphasis in original). The attachment stated that the overpayment due was $7,690.97 after Liberty deducted the amount it claimed it should have paid. Liberty then deducted $2,366.25 for “attorney fees” to calculate a “net overpayment due” of $5,324.72. See, Amended Complaint, ¶ 68.

IBI also contacted Carter to tell him he had to pay Liberty from his social security lump sum. IBI recovered the alleged “overpayment” directly from Carter’s bank account by using the Social Security Electronic Repayment Authorization. See, Amended Complaint, ¶ 69.

On January 18, 2009, the Social Security Administration sent a notice of award to “David Carter for Chelsea Linn Carter” stating that plaintiff, Chelsea Carter, is entitled to child’s benefits beginning July 2008. The notice also stated: “We have chosen you to be her representative payee. Therefore, you will receive her checks and use the money for her needs.” The Social Security Administration stated that it would pay $5,731.00 around January 24, 2009 for the money due from July 2008 through December 2008. See, Amended Complaint, ¶ 70; Ex. 6 to Liberty’s supplement to motion to dismiss.

On January 28, 2009, IBI e-mailed Liberty stating that it had mailed a check for $5,323.72 to Liberty. IBI stated that it was continuing to follow up on the dependent award information. IBI e-mailed Liberty on February 19, 2009 with the social security award information with respect to plaintiff, Chelsea Carter, stating that she had been paid on January 21, 2009. See, Amended Complaint, ¶ 71.

On February 23, 2009, Liberty sent a letter to Carter regarding the overpayment calculation because his “dependents were awarded Social Security benefits.” The letter stated:

As you know, your employer’s disability plan calls for us to reduce your disability benefits by the amount of income received from other sources, including Social Security, for you and any eligible dependents. Since you received disability benefits for the period July 30, 2008 to January 31, 2009, with no reduction for Social Security Dependent benefits, we in effect advanced you the money we expected Social Security would ultimately pay you.

Your notice states that you currently receive monthly Social Security Dependent Disability benefits of $1,001.00. Thereafter as outline on the attached exhibit:

1. We have reduced your net benefit from Liberty from $3,133.81 to $294.81, to reflect you and your dependents Social Security benefit.

2. The attached exhibit explains the calculation of your $5,735.44 overpayment balance.

3. Liberty Life will work with IBI in regards to collecting this overpayment. You will be contacted by a representative from IBI regarding repayment of this overpayment....

The attachment stated that the overpayment due was $13,426.41 after Liberty deducted the amount it alleged it should have paid. Liberty then deducted $2,366.25 for “attorney fees” and $5,324.72 for recovery of prior overpayment to calculate a “net overpayment due” of $5,735.44. According to plaintiffs, this amount was more than the lump sum amount the Social Security Administration stated it would pay for plaintiff, Chelsea Carter. See, Amended Complaint, ¶ 72.

During this time, IBI was also telling Carter that he was obligated to pay Liberty from Chelsea Carter’s social security lump sum payment. See, Amended Complaint, ¶ 73.

On February 28, 2009, Carter received only $206.81 in benefits from Liberty after it offset $2,839.00 and withheld $88.00 in federal income taxes. See, Amended Complaint, ¶ 75.

On March 10, 2009, Liberty sent a letter to Carter which advised that Liberty would begin applying the monthly benefit of $294.81 toward the outstanding overpayment of $5,735.44 resulting from the dependent award. Liberty further advised that the reduction would remain in place until the overpayment was recovered. See, Amended Complaint, ¶ 76.

Carter called the Social Security Administration and informed it that Liberty wanted him to send plaintiff, Chelsea Carter’s social security benefits to them for an alleged overpayment. The representative for the Social Security Administration told Carter that it was illegal for him to use plaintiff, Chelsea Carter’s money for anything other than her needs. See, Amended Complaint, ¶ 77.

On March 12, 2009, the Social Security Administration provided a Report of Confidential Social Security Benefit Information. The Social Security Administration representative stated the following:

David Carter receives a benefit from Social Security for his disability. His daughter is also entitled to receive a benefit. He is her payee. That means that he is to use the money for her food, clothing and shelter. The money is not his income. It is not to be used as his income. It is not to be used to pay his bills or debts. The cash benefits used in any other way besides her needs is fraud. If you have any questions please contact me.

See, Amended Complaint, ¶ 78.

On March 30, 2009, Liberty ceased paying Carter any disability benefits. The explanation of benefits stated that it offset $2,839.00 for social security benefits and applied $294.81 as a benefit adjustment amount. Liberty also applied the $88.00 it previously withheld for taxes to pay itself, as opposed to paying it to the government as Carter had directed. See, Amended Complaint, ¶ 79.

On May 7, 2009, Liberty sent a letter to Carter after receiving correspondence from the Social Security Administration regarding social security benefits paid to Carter and his daughter. Liberty stated in the letter:

The Social Security Administration is correct in stating that benefits paid to you on behalf of your daughter must be used for her welfare. You receive those benefits from Social Security and I am sure you are using them appropriately. When calculating the long-term disability benefit due you from Liberty, we are offsetting amounts identified as your dependent’s SS disability benefit, which reduces the benefit amount you are entitled to receive from Liberty. Neither this provision nor this action in any way affects what you receive from Social Security or how you choose to use those funds. Further, any overpayment of disability benefits is against funds we have previously paid you for the same period that Social Security is now paying retroactively, and this amount includes the offset for dependent benefits as stated above. How you choose to pay this overpayment is your decision; should you not repay us by personal check or other means, we are administrating the contract language in Section 7, General Provisions, which states:

Right of Recovery

* # *

Liberty may recover an overpayment by, but not limited to, the following:

1. requesting a lump sum payment of the overpaid amount;

2. reducing any benefits payable under this policy;

3. Taking any appropriate collection activity available including any legal action needed; and

4. placing a lien, if not prohibited by law, in the amount of the overpayment on the proceeds of any Other Income Benefits, whether on a periodic or lump sum basis.

It is required that full reimbursement be made to Liberty.

Therefore, we will continue to apply your net benefit of $294.81 towards this balance due.

See, Amended Complaint, ¶ 80.

Carter spoke to an IBI representative who told him he must pay Liberty from the lump sum attributable to plaintiff Chelsea Carter. Carter told the IBI representative about the Social Security Administration’s notice that use of the funds in such a manner was fraud. Subsequently, a different IBI representative contacted Carter and told Carter that IBI had nothing more to do with the issue. The IBI representative said that IBI had not received any payment from plaintiff, Chelsea Carter and were not representing her. See, Amended Complaint, ¶ 81.

According to plaintiffs, Liberty has taken Chelsea Carter’s past due social security benefits by withholding all benefits owed to Carter that he would have otherwise been paid. Liberty offsets Carter’s LTD benefits by the amount of benefits plaintiff, Chelsea Carter, receives. However, plaintiffs allege that Liberty does not pay any extra benefits to policyholders who have dependents. Liberty also charged Carter the same premium it charged other policyholders whose benefits were not reduced by dependents’ social security benefits. See, Amended Complaint, ¶¶ 82, 83.

D. Other Class Members

Plaintiffs allege, on information and belief, Liberty seeks recoupment from all of its policyholders who receive funds from social security or workers’ compensation for “overpayments.” According to plaintiffs, the policyholders, entitled to LTD benefits, are induced to execute agreements to repay Liberty for the “overpayments” from their social security or workers’ compensation benefits.

Plaintiffs also allege, on information and belief, that Liberty seeks recoupment of “overpayments” from all of its policyholders whose dependents receive social security benefits. Plaintiffs allege that Liberty has either directly taken the lump sum social security payments received by these dependents or Liberty has obtained the funds by other means, such as deducting all of the policyholders’ benefits to recoup the alleged “overpayments.”

In the Amended Complaint, plaintiffs seek to prosecute a class action under Rule 23, Fed.R.Civ.P., and propose six subclasses. The first five subclasses are all individuals who received long term disability benefits from Liberty and

(1) assigned or paid funds to Liberty from payments received from the Social Security Administration (“Liberty/SS subclass”);

(2) assigned or paid funds to Liberty from payments received from the Social Security Administration for the benefit of their dependents (“Liberty/SS payee subclass”);

(3) assigned or paid funds to Liberty from payments received pursuant to Oklahoma Workers’ Compensation law (“Liberty/WC subclass”);

(4) retained the Bassett Law Firm, LLC, Greta Bassett, Leah Kanne, Maren Mellem or John Nelson as their legal counsel (“Bassett subclass”);

(5) retained IBI as their legal counsel or social security representative (“IBI subclass”).

The sixth subclass proposed by plaintiffs consists of all dependents of Liberty policyholders whose social security benefits were taken by Liberty (“Liberty/SS dependent subclass”).

Claims Against Liberty

The Amended Complaint (Counts I through X) alleges one federal claim and nine state law claims against Liberty. The claims and the plaintiffs who allege the claims are as follows:

A. Federal Claim — Statutory

Count I — Violation of Social Security Act, 42 U.S.C. § 407 — Fortelney, Carter, Chelsea Carter, Liberty/SS subclass, Liberty/SS payee subclass and Liberty/SS dependent subclass

B. State Claims — Statutory and Common Law

Count II — Violation of the Oklahoma Workers’ Compensation Act, 85 O.S. § 48 — Stoup and Liberty/WC subclass

Count III — Fraud Under Oklahoma and Massachusetts Law — Fortelney, Stoup, Carter, Liberty/SS subclass, Liberty/SS payee subclass and Liberty/WC subclass

Count TV — Violation of 76 O.S. § 2— Deceit — Fortelney, Stoup, Carter, Liberty/SS subclass, Liberty/SS payee subclass and Liberty/WC subclass

Count V — Conspiracy Under Oklahoma and Massachusetts Law — Fortelney, Carter, Bassett subclass and IBI subclass

Count VI — Breach of Contract — Fortelney, Stoup, Carter, Liberty/SS subclass, Liberty/SS payee subclass and Liberty/WC subclass

Count VII — Violation of Massachusetts Unfair Trade Practices Act, Mass. Gen. Laws Ch. 93A § 2 — All plaintiffs and all subclasses

Count VIII — Violation of 36 O.S. § 902 — Excessive Premiums — Fortelney, Stoup, Carter, Liberty/SS subclass, Liber-

ty/SS payee subclass and Liberty/WC subclass

Count IX — Unjust Enrichment — All plaintiffs and all subclasses

Count X — Conversion—All plaintiffs and all subclasses

Claims Against Bassett Defendants

The Amended Complaint (Counts XI-XVIII) alleges one federal claim and seven state law claims against the Bassett defendants. The federal claim and state law claims are alleged by Fortelney and the Bassett subclass.

A. Federal Claim — Statutory

Count XI — Violation of Social Security Act, 42 U.S.C. § 407

B. State Claims — Statutory and Common Law

Count XII — Fraud under Oklahoma and Missouri Law

Count XIII — Violation of 76 O.S. § 2— Deceit

Count XIV — Conspiracy under Oklahoma and Missouri Law

Count XV — Breach of Contract

Count XVI — Breach of Fiduciary Duty under Oklahoma and Missouri Law

Count XVII — Negligence under Oklahoma and Missouri Law

Count XVIII — Conversion

Claims Against IBI

The Amended Complaint (Counts XIX-XXV) alleges one federal claim and six state law claims against IBI. The federal law claim is alleged by Carter, Chelsea Carter and the IBI subclass. The state claims are alleged by Carter and the IBI subclass.

A. Federal Claim — Statutory

Count XIX — Violation of Social Security Act, 42 U.S.C. § 407

B. State Claim — Statutory and Common Law

Count XX — Fraud under Oklahoma and Missouri Law

Count XXI — Violation of 76 O.S. § 2— Deceit

Count XXII — Conspiracy under Oklahoma and Missouri Law

Count XXIII — Breach of Fiduciary Duty Under Oklahoma and Missouri Law

Count XXIV — Negligence Under Oklahoma and Missouri Law

Count XXV — Conversion

In sum, twenty-five claims are alleged in plaintiffs’ Amended Complaint. Defendants, as stated, seek to dismiss all of the claims. Specifically, defendants seek to dismiss the federal statutory claims (violation of the Social Security Act, 42 U.S.C. § 407) under Rule 12(b)(6), Fed.R.Civ.P., for failure to state a claim upon which relief can be granted. As to the state statutory and common law claims, defendants seek dismissal on the basis that the claims are either preempted by the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. §§ 1002-1461 (“ERISA”) or they fail to state a claim upon which relief can be granted. Defendants further assert that the fraud and deceit claims are subject to dismissal because they are not alleged with particularity as required by Rule 9(b), Fed.R.Civ.P.

Pertinent Provisions of LTD Policy

The LTD Policy provides in pertinent part:

When Liberty receives Proof that a Covered Person is Disabled due to Injury or Sickness and requires the Regular Attendance of a Physician, Liberty will pay the Covered Person a Monthly Benefit after the end of the Elimination Period, subject to any other provisions of this policy.

“Monthly Benefit ” means the monthly amount payable by Liberty to the Disabled ... Covered Person.

i): ^ ❖

To figure the amount of Monthly Benefit:

1. Take the lesser of:

a. the Covered Person’s Basic Monthly Earnings multiplied by the benefit percentage shown in the Schedule of Benefits; or

b. the Maximum Monthly Benefit shown in the Schedule of Benefits; and then

2. Deduct Other Income Benefits and Other Income Earnings, (shown in the Other Income Benefits and Other Income Earnings provision of this policy), from this amount[.]

The Monthly Benefit payable will not be less than the Minimum Monthly Benefit shown in the Schedule of Benefits. However, if an overpayment is due to Liberty, the Minimum Monthly Benefit otherwise payable under this provision will be applied toward satisfying the overpayment.

Ex. 1 to Liberty’s motion, Section 2, DEF-6/7, Section 4, LTD-1 (Emphasis added).

Other Income Benefits means:

1. The amount for which the Covered Person is eligible under:

a. Workers’ or Workmen’s Compensation Laws

4. The amount of Disability and/or Retirement Benefits under the United States Social Security Act ... which

a. the Covered Person receives or is eligible to receive; and

b. his spouse, child or children receives or are eligible to receive because of his Disability

Other Income Benefits ... must be payable as a result of the same Disability for which Liberty pays a benefit. The sum of Other Income Benefits ... will be deducted in accordance with the provisions of this policy.

Ex. 1 to Liberty’s motion, Section 4, LTD-22, LTD-23 (Emphasis added).

Liberty will reduce the Covered Person’s Disability ... benefits by the amount of Other Income Benefits that we estimate are payable to the Covered Person and his dependents.

The Covered Person’s Disability benefit will not be reduced by the estimated amount of Other Income Benefits if the Covered Person:

1. provides satisfactory proof of application for Other Income Benefits;

2. signs a reimbursement agreement under which, in part, the Covered Person agrees to repay Liberty for any overpayment resulting from the award or receipt of Other Income Benefits;

3. if applicable, provides satisfactory proof that all appeals for Other Income Benefits have been made on a timely basis to the highest administrative level unless Liberty determines that further appeals are not likely to succeed; and

4. if applicable, submits satisfactory proof that Other Income Benefits have been denied at the highest administrative level unless Liberty determines that further appeals are not likely to succeed.

In the event that Liberty overestimates the amount payable to the Covered Person ..., Liberty will reimburse the Covered Person for such amount upon receipt of written proof of the amount of Other Income Benefits awarded (whether by compromise, settlement, award or judgement) or denied (after appeal through the highest administrative level).

Liberty may help a Covered Person in applying for Social Security Disability Income Benefits. In order to be eligible for assistance the Covered Person must be receiving a Monthly Benefit from Liberty. Such assistance will be provided only if Liberty determines that assistance would be beneficial.

Ex. 1 to Liberty’s motion, Section 4, LTD-24 (Emphasis added).

Liberty has the right to recover any overpayment of benefits caused by, but not limited to, the following ...

3. the Covered Person’s receipt of any Other Income Benefits.

Liberty may recover an overpayment by, but not limited to, the following:

1. requesting a lump sum payment of the overpaid amount;

2. reducing any benefits payable under this policy;

3. taking any appropriate collection activity available including any legal action needed; and

4. placing a lien, if not prohibited by law, in the amount of the overpayment on the proceeds of any Other Income Benefits, whether on a periodic or lump sum basis.

It is required that full reimbursement be made to Liberty.

Ex. 1 to Liberty’s motion, Section 7, GNP-4.

Discussion

A. Social Security Claims

Fortelney, Carter, and Chelsea Carter allege claims for violation of the Social Security Act, specifically, 42 U.S.C. § 407(a). See, Amended Complaint (Counts I, XI and XIX). Under § 407(a), the right to future payment of social security benefits is not “transferable or assignable” and funds paid or payable for social security benefits are not “subject to execution, levy, attachment, garnishment, or other legal process.”

Defendants assert that § 407(a) does not bar Liberty’s practice of offsetting social security benefits against the amount of LTD benefits payable under the LTD policy. According to defendants, the social security offset against LTD benefits reduces a participant’s LTD benefits but does not alter the social security benefits received by a participant or his dependents. Moreover, defendants assert that Liberty’s implementation of the offset through the recoupment of LTD benefits advanced pending the receipt of social security benefits (the “overpayment”) is permissible under § 407(a). Defendants maintain that case law specifically authorizes an insurance company, such as Liberty, to recoup the amounts it has advanced to a participant. In so doing, defendants contend that Liberty is not asserting a right to the participant’s social security benefits, rather it is seeking the return of the overpayment. Defendants also argue, as an additional basis for dismissal, that § 407(a) does not create a private right of action in favor plaintiffs.

In response, plaintiffs argue that defendants have mischaracterized the basis for their § 407(a) claims. Plaintiffs assert that their claims are not premised upon Liberty’s contractual offset of social security benefits. They assert that their claims are based on the “illegal agreements assigning their Social Security money, the unlawful taking of their lump sum retroactive Social Security funds awarded to the policyholders and their dependents, and Liberty’s practice of offsetting dependents’ funds, which are not the policyholders’ income under the law.” See, plaintiffs’ omnibus response, (doc. no. 73), p. 20. Specifically, plaintiffs assert that the SSRAs executed by Fortelney and Carter are prohibited under § 407(a). These agreements, plaintiffs assert, gave Liberty “a first lien” on their social security benefits and stated that the social security benefits were to be held “in trust” for the benefit of Liberty. Moreover, plaintiffs assert that while they do not have any evidence that defendants enforced the “lien” by way of a court action, defendants threatened to do so and these threats also constitute a violation of § 407(a).

In addition, plaintiffs assert that the Bassett defendants demanded that Fortelney execute the Client Overpayment Assistance Program Authorization, which required Fortelney to “promise” to forward a check to BNA for the total amount received as social security benefits. Plaintiffs contend that by such action, defendants were trying to do indirectly that which it was impermissible to do directly and therefore defendants’ actions violated § 407(a). Plaintiffs further assert that IBI required Carter to execute the Social Security Electronic Payment Authorization which gave IBI the authority to withdraw his social security benefits directly from his bank account to pay Liberty. Plaintiffs maintain that this agreement expressly assigned the social security benefits to IBI for the benefit of Liberty. Finally, plaintiffs contend that Liberty’s recoupment of plaintiff Chelsea Carter’s social security benefits by offsetting plaintiff Carter’s LTD benefits in the amount of her social security benefits violated § 407(a). Plaintiffs assert that it is unlawful to take or deduct a dependent’s social security benefits from her parent’s LTD benefits because those social security benefits belong to the dependent and not the parent. Plaintiffs maintain that the dependent’s social security benefits are not part of the parent’s income stream and therefore cannot be used to calculate the parent’s LTD benefits.

In them papers, plaintiffs additionally argue that the cases cited and relied upon by defendants to support their arguments in regard to the § 407(a) claims are from outside the Tenth Circuit. Plaintiffs contend these cases are not controlling, the factual circumstances are distinguishable and the cases were erroneously decided. Although the Supreme Court and the Tenth Circuit have not directly addressed the issues in this case, plaintiffs contend that the Supreme Court’s decision in Philpott v. Essex County Welfare Bd., 409 U.S. 413, 416, 93 S.Ct. 590, 34 L.Ed.2d 608 (1973), and the Tenth Circuit’s decision in Tom v. First Amer. Credit Union, 151 F.3d 1289, 1292 (10th Cir.1998), are instructive and support plaintiffs’ claims that defendants’ actions violated § 407(a).

Upon review, the court concludes that dismissal of the § 407(a) claims is appropriate. Although defendants have challenged whether plaintiffs may bring a private right of action under § 407(a), the court, assumes without deciding, that § 407(a) creates a private right of action in favor of plaintiffs. Nonetheless, the court concludes that the allegations in the Amended Complaint fail to establish a violation of § 407(a) by the defendants.

Initially, the court finds that Liberty was authorized to require the offset of social security benefits paid to a policyholder and any dependents against the amounts payable to the policyholder under the LTD policy. Under the specific terms of the LTD policy, LTD benefits are reduced by “Other Income Benefits,” which includes social security benefits that the policyholder “receives or is eligible to receive” and that “his spouse, child or children receives or are eligible to receive because of [the policyholder’s] Disability.” See, Liberty’s motion, Ex. 1, LTD-1, LTD-22. Courts have enforced disability benefit plans which include such offset provisions. See, Leonelli v. Pennwalt Corp., 887 F.2d 1195, 1198-99 (2nd Cir.1989); Lamb v. Conn. Gen. Life Ins. Co., 643 F.2d 108, 109-12 (3rd Cir.1981), cert denied, 454 U.S. 836, 102 S.Ct. 139, 70 L.Ed.2d 116 (1981); Dowell v. Aetna Life Ins. Co., 468 F.2d 802, 804-05 (4th Cir.1972). Moreover, courts have determined that such an offset provision does not violate section 407(a). Lamb, 643 F.2d at 111.

The court additionally concludes that Liberty was entitled to seek reimbursement of LTD benefits paid to Fortelney and Carter, without a reduction for social security benefits, when they received their lump-sum retroactive social security benefits. The LTD policy expressly provides that Liberty has a right to recover any “overpayment of benefits” caused by the policyholder’s receipt of “Other Income Benefits.” See, Liberty’s motion, Ex. 1, GNP-4. The LTD policy also provides that Liberty may recover an overpayment by “requesting a lump sum payment” of the overpaid amount; reducing “any benefits payable” under the policy; taking any “appropriate collection activity available” or “placing a lien, if not prohibited by law, in the amount of the overpayment.” Id. It further provides that full reimbursement is to be made to Liberty. Id. Plaintiffs additionally signed a reimbursement agreement which provided for the repayment in full of an overpayment. Courts have permitted equitable claims to be filed against claimants, seeking restitution of the overpayments under ERISA, 29 U.S.C. § 1132(a)(3). See, Cusson v. Liberty Life Assur. Co. of Boston, 592 F.3d 215, 230-232 (1st Cir.2010); Dillard’s Inc. v. Liberty Life Assur. Co. of Boston, 456 F.3d 894, 900-901 (8th Cir.2006); Gilchrest v. Unum Life Insurance Co. of America, 255 Fed.Appx. 38, 44-46 (6th Cir.2007). Courts have found these claims not to violate § 407(a) because the insurance company did not seek to recover the policyholder’s social security benefits (although the amount in question was the same as the amount of the claimant’s social security benefits), rather, the insurance company was seeking to recover in equity from funds the plan has already paid under the long term disability benefits plan. See, Cusson, 592 F.3d at 232; Parent v. Principal Life Ins. Co., 763 F.Supp.2d 257, 261-62 (D.Mass.2011); Schlenger v. Fidelity Employer Services Co., LLC, 785 F.Supp.2d 317, 334-35, 2011 WL 1236156 *13 (S.D.N.Y. Mar. 31, 2011); Mugan v. Hartford Life Group Ins. Co., 765 F.Supp.2d 359, 373-75 (S.D.N.Y.2011); Bosin v. Liberty Life Assur. Co. of Boston, 2007 WL 1101187 *11 (W.D.Mich. April 11, 2007).

In addition, a district court has permitted recoupment of an overpayment by withholding future benefit payments under a long term disability plan, finding that such action did not violate § 407(a). Stuart v. Metropolitan Life Ins. Company, 664 F.Supp. 619, 625 (D.Me.1987). The court concluded that the recoupment for amounts not reimbursed was not a “transfer” under § 407(a). Id. Moreover, another district court decision permitted an insurer to receive a policyholder’s retroactive social security benefits to reimburse the insurer for an overpayment when the policyholder chose to pay the benefits instead of having the insurer recover the overpayment by reducing the policyholder’s future benefit payments. Poisson v. Allstate Life Insurance Co., 640 F.Supp. 147, 149 (D.Me.1986) (“The Defendant did not assert entitlement to the Plaintiffs Social Security benefits in any way. Rather, the Defendant asserted that its contractual obligation to the Plaintiff is payment of a dollar amount which maintains her income at a contractually agreed upon level, depending on other benefits she receives. The fact that Plaintiff ultimately received Social Security benefits for months past rather than present does not change the nature of the contract. Allstate sought return of an alleged overpayment, not a right to Plaintiffs Social Security benefits as such.”).

In the case at bar, Liberty did not seek reimbursement of the overpayments to Fortelney and Carter by filing an equitable claim for restitution under § 1132(a)(3). The allegations of the Amended Complaint, however, reveal that as to the overpayment of LTD benefits to Carter based upon Chelsea Carter’s receipt of retroactive social security benefits, Liberty withheld all LTD benefits owed to Carter to recover the overpayment. The court, agreeing with the district court in Stuart, finds that the withholding of future disability benefits until the overpayment based upon the social security benefits paid to Chelsea Carter was recouped was permissible and did not violate § 407(a). Stuart, 664 F.Supp. at 625. Moreover, such action was in accordance with the LTD policy and the SSRA executed by Carter. See, Liberty’s motion, Ex. 1, GNP-4; Ex. 2 to Liberty’s supplement to motion to dismiss. In so finding, the court rejects plaintiffs’ arguments urging the court to disallow any offsetting of social security benefits of a policyholder’s dependent against the policyholder’s long term disability benefits as unlawful and unfair. See, Lamb, 643 F.2d at 112 (The offset of payments received by an insured’s “dependents on account of [his] disability does not transgress the policy undergirding the Social Security Act.”); see also, Fahringer v. Paul Revere Ins. Co., 317 F.Supp.2d 504, 519 (D.N.J.2003); see, Fortime v. Group Long Term Disability Plan for Employees of Key span Corp., 391 Fed.Appx. 74, 79-80 (2nd Cir.2010).

Turning to defendants’ actions in recovering the overpayments to Fortelney and Carter based upon their receipt of retroactive social security benefits, the court finds that those actions likewise do not violate § 407(a). Although Liberty required plaintiffs to sign the SSRAs, the court concludes that those agreements are not assignments. While the SSRAs provide that Liberty has a “first lien” on the social security benefits and that the benefits are to be held “in trust,” they cannot be construed so as to assign “the right of future payment” of social security benefits to Liberty. And although the SSRAs provide for a “first lien” on the awarded social security benefits, there are no allegations in the Amended Complaint that Liberty ever sought to enforce its “first lien” against plaintiffs. Therefore, none of the funds paid under the Social Security Act were subject to “execution, levy, attachment, garnishment, or other legal process.” 42 U.S.C. § 407(a).

The court also finds that neither the Client Overpayment Assistance Program Authorization nor the Social Security Electronic Repayment Authorization agreements constitute an assignment of “the right of future payment” of soc