In a case not handled by Attorneys Dell & Schaefer, but which can be utilized to our clients’ advantage in the future, a Long Term Disability (LTD) Claimant has earned a partial victory against Standard Insurance Company. Ms. Annina Puccio was forced to make a claim for disability benefit after suffering from numerous disabling medical… Continue Reading
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A recent ruling in a California ERISA lawsuit against Hartford discusses 2 interesting issues: 1) retroactive benefit awards when a case is remanded back to the carrier for a full and fair review; and 2) awards for attorneys fees and costs.
A recent California Court ruling in an ERISA lawsuit filed by Ms. Duncan against Hartford and Lorillard Tobacco Company, raises questions as to 1) when is it proper to seek an award for past and future disability benefits when a case is remanded back to the disability insurance company to conduct a full and fair review of the claim, and 2) under what circumstances will a court award a claimant attorney’s fees and costs?
Background of the Duncan v. Hartford & Lorillard ERISA lawsuit
The Plaintiff, Ms. Duncan, was receiving long-term disability benefits pursuant to the Disability Plan provided by her employer and administered by Hartford. After a period of time, Hartford decided to terminate Ms. Duncan’s disability benefits. Ms. Duncan submitted a letter to Hartford, within the proper time frame, which should have been considered an appeal of Hartford’s denial. However, Hartford failed to consider Ms. Duncan’s letter as an appeal of the benefits denial, the appeal period expired, and the ERISA lawsuit was filed thereafter. Because Ms. Duncan, in fact, submitted an appeal within the required timeframe and Hartford erred procedurally by failing to consider her appeal as per the Plan provisions, the district court remanded the claim back to Hartford to perform a full and fair review. Subsequently, Ms. Duncan filed additional motions to clarify the remand order, for prejudgment interest and for an award of attorney’s fees. The Court denied Ms. Duncan’s motions but, in doing so, discussed under what circumstances awards, such as retroactive benefit payments and attorney’s fees and costs, should be awarded.
If a case is remanded back to the disability insurance company to re-review, can the claimant receive past and future benefits until the review is completed?
To answer this question, the Court cited from the case Pannebecker v. Liberty Life Assurance Co of Boston. In Pannebecker, the Plaintiff received long-term disability benefits for a number of years before Liberty Life, based on an “arbitrary and capricious” review of the claim, terminated Pannebecker’s benefits. The Court remanded the matter back to Liberty Life and ordered a full and fair review of Pannebecker’s claim and entitlement to continued long-term disability benefits. Additionally, the Court determined that, “but for” Liberty Life’s arbitrary and capricious conduct (which was their failure to properly apply the terms of the Plan), Pannebecker would have continued to receive her disability benefits. In light of this fact, Pannebecker was entitled to receive payment of retroactive benefits (from the date of the improper benefit denial up to the date of the court’s ruling), as well as future benefits until such time as Liberty Life completes their full and fair review of her claim.
In Ms. Duncan’s case, however, the Court determined that Hartford erred by failing to properly consider Ms. Duncan’s appeal. Ms. Duncan’s benefits had already been terminated. Therefore, it was not the procedural error that terminated her benefits. The “but for” rule that was applied in Pannebecker cannot be applied in Ms. Duncan’s case: but for the error of Hartford, Ms. Duncan would have continued to receive benefits – she would not have continued to receive benefits because Hartford had already terminated them prior to making the error of not considering her appeal letter. It should also be noted that an award of past and future benefit payments can only be made when a claimant had already been receiving long term disability benefit payments prior to the denial. Cases where the initial application for benefits is denied, without benefits ever having been paid, do not qualify for awards such as this.
Under what circumstances do courts award attorney’s fees and costs?
The ERISA statute, § 1132 (g)(1), grants district courts “discretion” to award attorney’s fees to either party and does not specifically require a claimant to be a “prevailing party” to be eligible for an award of attorney’s fees. However, pursuant to Ruckelshuas v. Sierra Club, 463 US 680, 694, 103 S.Ct. 3274, 77 L.Ed.2d 938, a court may award fees and costs under ERISA § 1132 (g)(1), “as long as the fee claimant has achieved some degree of success on the merits.” In order to determine whether a claimant achieved success on the merits and whether an award of attorney’s fees is appropriate, five factors must be examined:
1. The degree of opposing parties’ culpability or bad faith.
2. Ability of opposing parties to satisfy an award of attorneys’ fees.
3. Whether an award of attorneys’ fees against the opposing parties would deter other persons acting under similar circumstances.
4. Whether the parties requesting attorneys’ fees sought to benefit all participants and beneficiaries of an ERISA plan or to resolve a significant legal question regarding ERISA itself.
5. The relative merits of the parties’ positions. Quesinberry v. Life Ins. Co. of North Am., 987 F.2d 1017, 1029 (C.A.4 1993) The Supreme Court determined that a party seeking an award of attorneys’ fees and costs under ERISA does not necessarily have to fulfill the criteria of being the “prevailing party”, but rather the party must have achieved “some success, even if not major success.” 463 US, at 688, 103 S.Ct. 3274.
Further, a claimant does not qualify for an attorneys’ fees award if he achieved a trivial success or a purely procedural victory. The court must be able to fairly call the outcome of the lawsuit success on the merits without going to great lengths to question whether the party’s success was “substantial” or occurred on a “central issue”. Id. At 688, n.9, 103 S.Ct. 3274. For example, in the matter of Hardt v. Reliance, 130 S.Ct. 2149 (2010), the ERISA lawsuit was filed after Reliance denied Ms. Hardt’s claim for long term disability benefits and upheld the denial upon review of her administrative appeals. Although the district court denied both parties’ motions for judgment, the court remanded Ms. Hardt’s claim back to Reliance to perform a full and fair review. The court also found “compelling evidence that Ms. Hardt is totally disabled due to her neuropathy”, and that it was “inclined to rule in Ms. Hardt’s favor” on her benefits claim, but instead chose to remand the claim back to Reliance to give it the opportunity to address the deficiencies in its review of the claim.
The Supreme Court found that, even though the district court did not award disability benefits and rather ordered a remand, Ms. Hardt still prevailed “on the merits” because the district court found evidence that she was totally disabled and was “inclined” to rule in her favor. As such, Ms. Hardt was eligible for an award of attorney’s fees and costs. In the matter of Duncan v. Hartford, however, the district court remanded the claim back to Hartford to correct the procedural error that occurred when Hartford failed to properly consider Ms. Duncan’s appeal letter. The remand was not made based on substantial evidence that Hartford was deficient in its review of the substance of Ms. Duncan’s claim. As such, the court found that the remand in this circumstance did not qualify as a success on the merits for Ms. Duncan and, accordingly, found that she was not eligible for an award of attorney’s fees and costs.
Attorneys Dell & Schaefer did not represent Ms. Duncan in her disability claim, appeal or lawsuit. If you have questions regarding your claim for disability benefits, or if your disability claim has been denied, feel free to call Disability Attorneys Dell & Schaefer for a free consultation.
A recent ruling in a California ERISA lawsuit against Hartford discusses 2 interesting issues: 1) retroactive benefit awards when a case is remanded back to the carrier for a full and fair review; and 2) awards for attorneys fees and costs. A recent California Court ruling in an ERISA lawsuit filed by Ms. Duncan against … Continue Reading