ERISA: Administrator’s Roadmap To Oppose Attorney Fees Even When Court Grants Long Term Disability Claim – Employee Benefits & Compensation

15 September 2023

Lane Powell

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You already know that the final battleground in lawsuits seeking
ERISA-governed long term disability (LTD) benefits is whether a
prevailing plaintiff should be awarded prevailing party attorney
fees.

Should plaintiffs always recover attorney fees when the
ultimate decision to deny benefits “was a close call”
…and both sides’ positions had merit? No.And
this new case explains the point.

There is no guarantee that a prevailing plaintiff should
be awarded fees, even when a court awards benefits in a
plaintiff’s favor.

This is especially true when the decision to deny
benefits is well supported in the administrative record (with
independent medical reviewers), and both parties’ positions had
merit. Messing v. Provident Life and Accident Ins.
Co., 2023 WL 5497946 (W.D. MI August 25, 2023)(Plaintiff
won reinstatement of LTD benefits. But court, applying five factor
test on whether to award attorney fees, denied plaintiff prevailing
party attorney fees.)

FACTS: Messing, a trial attorney, filed suit
and won reinstatement of ERISA-governed term disability benefits.
Plaintiff’s counsel then sought attorney fees under Section
1132.

DISTRICT COURT: Plaintiff’s Motion for
attorney fees denied even though Plaintiff won reinstatement of
benefits.

RATIONALE:

1. “[T]he Court must first determine that the movant has
   achieved ‘some success on the merits.'” The Court
   concluded Plaintiff satisfied this factor. Op. at 6. The Court then
   applies five factors to determine whether attorney fees should be
   awarded.




2. Applying the five factors to determine whether to award
   attorneys’ fees under ERISA:
   

   • Degree of Opposing Party’s Culpability or Bad
     Faith.
     

     • The administrator’s labeling Plaintiff a “trial
       attorney” or “attorney” did not show bad faith
       because ” ‘[w]e need not fret over the difference between
       the meaning of ‘personal injury trial attorney‘ and
       ‘attorney‘ because the Plan requires that we focus our
       analysis on what duties Messing performed, not what title he
       held.” Op. at 7.

     
     

     • “[T]he Sixth Circuit has found culpability ‘where the
       administrator terminated benefits based primarily on the opinions
       of doctors employed by the company’s own claim
       department.'” But Provident “terminated
       Plaintiff’s benefits after review and/or consultation by four
       different professionals….” This included at least one
       “independent medical expert hired by Defendant.” Op. at
       8.

     
     

     • The Court noted that Provident considered Plaintiff’s
       submitted evidence from other attorneys that the practice of law
       was stressful, and that Plaintiff “had practiced law while
       disabled.” Op. at 9.

   
   

   • Opposing Party’s Ability to Satisfy an Award of
     attorney‘s Fees. Both parties agreed Provident was
     “capable of satisfying an award of attorneys’ fees”
     but this factor “is of limited value here where fees are
     sought by a successful claimant from a plan administrator.”
     Op. at 10.

   
   

   • Deterrent Effect of Award on Other Persons Under
     Similar Circumstances. This factor “is one that is
     likely to have more significance in a case where the defendant is
     ‘highly culpable.'” Op. at 10. This Court found this
     factor “cuts both ways.” Op. at 12. “‘Honest
     mistakes are bound to happen from time to time, and fee awards are
     likely to have the greatest deterrent effect when deliberate
     misconduct is in the offing.'” Op. at 10-11. Provident was
     “not highly culpable in incorrectly weighing the evidence of
     Plaintiff’s disability. Even though Defendant ultimately came
     to the wrong decision, there was evidence to support its conclusion
     that Plaintiff was no longer disabled.” “[L]osing
     records,” or asserting a counterclaim, for examples, “do
     not constitute ‘highly culpable’ conduct.” Op. at 11.
     But administrators should “ensure that the opinions on which
     they rely…are based on a thorough review of the administrative
     record.” Op. at 11 (emph. added).

   
   

   • Conferring a Common Benefit or Resolving Significant
     Legal Questions Regarding ERISA. “Plaintiff neither
     sought to confer a common benefit…nor sought to resolve a
     significant legal question by suing to have his benefits
     reinstated.” Op. at 12. The only possible novel legal issue
     resolved by the case pertained to Provident’s counterclaim
     “which is not attributable to Plaintiff. When he filed his
     claim Plaintiff did not seek to answer a question that was raised
     by Defendant’s subsequent counterclaim.” Op. at 12.

   
   

   • Relative Merits of the Parties Position.
     “[F]or the relative merits of the parties’ positions to
     favor an award of attorneys’ fees, Plaintiff must show more
     than simply prevailing on the merits.” Op. at 13 (multiple
     cases cited). Plaintiff has proved by a preponderance of the
     evidence that he remains disabled. In close cases, a victory under
     this standard is almost evenly split….Both parties’ positions
     had merit. Therefore the fifth factor does not weigh in favor of
     granting fees.” Op. at 14.

In those close cases, where the administrative record presents
strong support for denial of benefits, consider challenging an
award of attorney fees, even when the Court rules in favor of
plaintiff.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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