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Workers comp offset by disability payment: Court


PORTLAND, Maine--An employer may offset a workers compensation obligation by the lump sum paid to an injured employee under its group life and disability plan, Maine's Supreme Court has ruled.

In Jeanne Nichols vs. S.D. Warren/Sappi et al., the court agreed with a Maine Workers' Compensation Board hearing officer's finding that a $58,000 payment that Jeanne Nichols received under a permanent and total disability feature contained in an employer-funded group policy is subject to coordination.

Court records show that the group policy, labeled a "welfare plan," contained disability features along with life coverage.

Ms. Nichols sustained a work-related injury in 1999. She argued in court that the $58,000 payment should not offset disability or workers comp benefits because the policy it was paid under is primarily life insurance.

The Maine Supreme Court disagreed and said in its Tuesday ruling that the employer is entitled to take the offset. The court's discussion of the issue noted, however, that neither Maine's Workers' Compensation Act nor its Insurance Code contain a definition of "disability insurance policy."