You already know that in ERISA cases the court has discretion to award reasonable attorney fees if the claimant shows “some degree of success on the merits” and this success is more than ‘trivial success on the merits’ or ‘purely procedural.’”

So, what happens when the Court remands the claim for further consideration by the administrator, and on remand the claim is still denied? 

Is the Claimant still entitled to attorney fees, even though the remand failed to change the outcome of the claim denial? Yes.

Here’s the case of Host v. First Unum Life Insurance Company, 2019 WL 343255 (D. Mass. January 28, 2019) that highlights the point.

FACTS: Host brought suit after Unum denied his claim for ERISA-governed long term disability benefits. The Court remanded the decision, stating that Unum should conduct “a more thorough inquiry” by “compel[ling] Deutsche Bank to provide any information reasonably required to resolve a benefits claim.”

Unum then reviewed on remand, and denied the claim again. Host then sought attorney fees.

ISSUE:  Whether Plaintiff was entitled to attorney fees when, on remand, his disability claim was denied again?

DISTRICT COURT HELD: Yes.

  1.  “[A] court has the discretion to award ‘a reasonable attorney’s fee and costs of action to either party.’”  Op. at 2.
  2.  “However, a ‘claimant must show some degree of success on the merits before a court may award attorney fees [and] this success must be more than ‘trivial success on the merits’ or ‘purely procedural.’” Op. at 2.
  3.  “Although Unum’s ultimate denial of benefits on remand may be relevant to the Court’s calculation of attorney’s fees, that fact should not prevent Host from recovering fees for getting a second chance at making his case.”  Op. at 3.
  4. “Regardless of what occurred after the remand order, Host successfully demonstrated that Unum’s initial decision was defective, and he is eligible to recover reasonable attorney’s fees as a result of that success.”  Op. at 3.

 

Attorney fees in ERISA cases continue to be a challenge.

What happens when both sides can claim wins during a case?

What is a reasonable hourly rate for Plaintiff’s attorneys?

Here’s the case of Barboza v. California Association of Professional Firefighters, 2016 WL 3125996, (E.D. Ca. June 3, 2016).(This case involved years of litigation and two prior appeals to the Ninth Circuit.)

The case also highlights additional considerations when addressing the attorney fee issue.

FACTS:  The Plan granted Barboza ERISA-governed disability benefits. However, Barboza failed to disclose he operated an alpaca ranch and also settled a worker comp claim for $18,000. The Plan brought an amended counterclaim for offset and an equitable lien on undisclosed earnings. The Ninth Circuit concluded, among other things, that the Plan had not abused its discretion in offsetting undisclosed worker comp settlement amounts. Barboza did overturn a trial court summary judgment and a ruling regarding prejudgment interest.

Both sides sought attorney fees.

ISSUE: Who should be awarded attorney fees, and how much?

DISTRICT COURT HELD: Plaintiff was the “partially prevailing” party, entitled to fees, but fees and hourly rates were reduced.

  1. Although parties achieving “trivial” successes and “purely procedural” victories may not be awarded fees, “partially prevailing parties—parties achieving some success, even if not a major success” may be enough. Op. at 3 (emphasis in original).
  2. Barboza argued he had some success when the Ninth Circuit held he had exhausted administrative remedies. BUT the parties already negotiated a fee award, so that could not be used as a basis for the current attorney fee motion. Op. at 3.
  3. Barboza did overturn a trial court summary judgment and prejudgment interest and therefore had “some degree of success.” Op. at 4.
  4. “The fee applicant bears the burden to document these hours and …the requested hourly rate are reasonable.” Op. at 7.
  5. Plaintiff sought hourly rates of $650, $625 and $600 per hour. Defendant argued the local Sacramento rates are much lower—$300-$400 per hour. The Court concluded that an ERISA practice is more a state-wide practice, and reduced the rates to $500-$550 per hour. Op. at 8.
  6. The Court eliminated hours claimed for the administrative appeal and early stages of the litigation. Op. at 9.
  7. Plaintiff was not entitled to hours for the appeal because he failed to file a timely request for fees with the circuit court. The district court is not authorized to rule on a post-remand request for attorney fees incurred on appeal. Op. at 9.
  8. Plaintiff failed to detail how 21 hours was spent drafting a declaration, and reduced it by 15 hours. Op. at 10.

You already know that in ERISA cases a court may, in its discretion, award attorney fees if a party achieved “some degree of success on the merits.”

Is the mere filing of a lawsuit,  before Plaintiff’s ERISA-governed disability benefit claim is granted, sufficient to win an award attorney fees?  NO.

Here’s the case of Koloff v. MetLife Ins. Co, 2014 WL 3420990 (E. D. Cal. July 14, 2014) [PDF].

FACTS: Koloff brought suit seeking disability benefits under an ERISA-governed plan. The Court dismissed the case (without prejudice) because Koloff had failed to exhaust administrative remedies. On December 5, 2013, MetLife informed Plaintiff’s counsel it was sending payment on benefits and asked for information to the net amounts, because of the offset for Social Security benefits. On December 17, 2013, Koloff brought a second lawsuit seeking disability benefits. On December 20, 2013, MetLife sent Koloff the letter approving her disability claim.

Koloff then moved for attorney fees, contending she achieved “some success on the merits.”

DISTRICT COURT HELDPlaintiff’s Motion for Attorney Fees Denied.

  1. The Plaintiff’s attorney’s time records strongly suggest that “he knew of MetLife’s intention to approve the claim prior to the filing of the complaint on December 17, 2013….”  The administrative record corroborates this, noting the December 5, 2013 conversation in which MetLife advised that it was “getting a check out.”  Op. at 7.
  2. “[T]he Court finds MetLife made the decision to approve plaintiff’s long term disability benefits by December 5, 2013 and, more importantly, made clear to plaintiff’s counsel that the only thing to do was determine the net amount to be paid which would occur once counsel provided MetLife the SSDI and EDD [offset] figures.”  Op. at 8.
  3. “Because there was no dispute as to the merits of the action before the complaint was filed, Plaintiff has shown no “injury in fact.”  Op. at 8-9.
  4. Under ERISA, “fees and costs may be awarded to any party ‘who has achieved some degree of success on the merits.’”  A claimant “does not satisfy that requirement by achieving ‘trivial success on the merits’ or a ‘purely procedural victory[.]’”  Op. at 10.
  5. Plaintiff’s counsel should not get attorney fees in her first lawsuit, which was dismissed without prejudice. “[W]hen an individual fails to exhaust administrative remedies, ‘the proper remedy is dismissal without prejudice.’” The dismissal here was not analogous to a remand.  Op. at 10.
  6. “[F]ees expended during administrative processes are not recoverable.”  Op. at 12, Fn. 13
  7. “T]he Ninth Circuit has not yet determined whether the catalyst theory [for seeking attorney fees] is viable in an ERISA action in light of Buckhannon[.]”  Op. at 12.
  8. [T]he facts do not demonstrate that the suit was [a catalyst] or linked to the decision to approve plaintiff’s benefits….Plaintiff’s counsel was informed that benefits would be paid before the litigation was initiated.”  Op. at 13-14.

You have seen this issue before:  The court remands the ERISA-governed long term disability claim for further consideration by the claims administrator because the administrative record was insufficient for de novo review.

Is a court’s remand for further review of an ERISA-governed claim by the claims administrator a sufficient “degree of success on the merits” to qualify for an award of attorney fees and costs?

Is merely “surviving to fight another day” the same as winning the war or winning a significant battle?   Maybe so.

Here’s the case of Gross v. Sun Life Assurance Company of Canada, __ F.3d __ (1st Cir. Slip. Op. August 14, 2014) (PDF).

You should read this opinion, and the dissenting opinion, because it outlines arguments (and cites the cases nationally) on both sides of the issue…

FACTS:  Gross, age 34, claimed fibromyalgia disabled her and she sought long term disability benefits.  The claim was denied based in part on surveillance.  The court held that de novo review applied, but remanded to the claims administrator because the administrative record was insufficient for de novo review. Plaintiff’s counsel sought $261,000+ in fees and costs.

FIRST CIRCUIT HELD:  (Split decision with dissenting opinion)

  1. “Under ERISA, a court ‘in its discretion may allow a reasonable attorney’s fee and costs to either party’ in a benefits proceeding.  Op. at 5.
  2. To obtain fees the fee-seeker does not have to show she is a “prevailing party, but only that the ‘claimant show[] some degree of success on the merits.'”  Op. at 5.
  3. The United States Supreme Court “declined…to decide ‘whether a remand order, without more, constitutes some degree of success on the merits’ sufficient to make a party eligible for attorney fees under [ERISA].'”  Op. a 6.
  4. “Most courts…have held that a remand to the plan administrator…is sufficient success on the merits to establish eligibility for fees….”  Op. at 7-8 (Cases cited).
  5. Some federal districts courts in Colorado, Michigan, Florida have held remand does not justify fees because remand is “a purely procedural victory” and claimant has yet to achieve any “degree of success on the merits.”  Op. at 8-9 (Cases cited).
  6. “A remand to the claims administrator for reconsideration of benefits entitlement ordinarily will reflect the court’s judgment that the plaintiff’s claim is sufficiently meritorious that it must be reevaluated fairly and fully.”  Op. at 10.
  7. The Court rejected Sun Life’s argument that an award of some amount of benefits is necessary to establish “some degree of success.”  Op. at 10-11.
  8. DISSENT: Remands alone are insufficient “success” to award fees because: “Surviving to fight another day is not the same as winning the war (or even the same as winning a significant battle).” Op. at 31.
  9. DISSENT: “[T]he merits issue in this case is whether the plaintiff is entitled to benefits (and, if so, to what extent).  As long as the plaintiff secures some benefits as a result of litigation, she will be eligible for a fee award. At [remand], however, the benefits claim is entirely up in the air.  We simply do not know whether her claim will prove to be successful in whole, in part, or not at all.”  Op. at 32. (Emph. added).