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Labor & Employment — Public Employees – Disability Benefits – Social Security Reduction – COLA Glitch

Where the defendant-treasury department was statutorily required to recoup overpayments of disability benefits, defendant did not breach any contract with plaintiffs when it recouped overpayments made to them because of an error in defendant’s computer programming.

We affirm the superior court’s dismissal of plaintiffs’ complaint.

Plaintiffs, a former University of North Carolina employee and a former Wake County public school teacher, receive long-term disability benefits pursuant to G.S Chapter 135. In accordance with the relevant statutes, plaintiffs’ state disability benefits were reduced by the amount of social security benefits they received, and their state benefits were to be reduced commensurate with any cost of living increases to their social security benefits.

Between 2006 and 2017, the defendant’s computer programming failed to account for cost of living increases to plaintiffs’ social security benefits. Defendant reduced plaintiffs’ disability benefits in order to recoup the resulting overpayments.

Under G.S. § 135-106(b), the amount of long-term disability benefits received were supposed to be offset dollar-for-dollar by the social security disability benefit for which plaintiffs would otherwise be eligible. Additionally, each plaintiff’s contract contained a recoupment provision pursuant to G.S. § 135-9. Moreover, the state has a duty under G.S. § 143-64.80 to pursue the recoupment of any overpayment.

In other words, the statutory terms of plaintiffs’ right to receive disability payments included a recoupment clause which mandated defendant to seek reimbursement from any overpayment.

Plaintiff Shuford’s evidence as to the social security offset amount differed from defendant’s evidence. However, a defense witness testified that this was because defendant used the gross amount of benefits and Shuford’s evidence failed to account for amounts withheld by the Social Security Administration. The administrative law judge had substantial evidence to support her decision.


Moss v. N.C. Department of State Treasurer (Lawyers Weekly No. 011-077-22, 19 pp.) (April Wood, J.) Appealed from Wake County Superior Court (Paul Ridgeway, J.) John Taylor, Robert Zaytoun and Clare Kurdys for plaintiffs; Katherine Murphy for defendant. 2022-NCCOA-206

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