Employees in Chicago with claims for long-term disability benefits often ask whether they can recover attorney’s fees for challenging the disability denial. ERISA § 502(g) provides a district court may award reasonable attorney’s fees, but that has been interpreted as meaning fees are available in litigation, not during the pre-litigation request for review under 29 C.F.R. § 2560.503-1(h). In Hardt v. Reliance Standard Life Insurance Co., 560 U.S. 242 (2010), the United States Supreme Court held that a party does not have to be a “prevailing party” to obtain attorney’s fees under ERISA § 502(g), but must merely achieve “some degree of success on the merits.” Hardt established a long-term disability claimant need not win the benefits in dispute to achieve some degree of success on the merits, but do courts award fees for something less than winning the benefits? One recent case demonstrates how courts are still reluctant to award fees before seeing whether a remand to the insurer results in a payment of benefits.
In Israel v. Unum Life Insurance Co. of America, No. 1:21-cv-4335, 2023 WL 2390873 (S.D.N.Y. Mar. 7, 2023), Israel sued for benefits under ERISA § 502(a), following an unsuccessful attempt to obtain benefits without litigation. Unum argued Israel failed to exhaust administrative remedies because a letter from Israel’s counsel to Unum was not clearly labeled an appeal of the long-term disability benefit denial. Israel, however, never submitted anything regarding the denial of his claim for waiver of premium benefits under the Life Insurance policy.
The United States District Court for the Southern District of New York held that Unum was required to consider Israel’s submission regarding the long-term disability denial an appeal, and give it consideration. Nothing in the record, however, indicated Irael ever appealed the life insurance waiver of premium denial, so the court granted Unum summary judgment regarding that claim. The Court ordered a remand to Unum to consider the appeal of the long-term disability denial. Israel then sought attorney’s fees for achieving some degree of success on the merits: i.e., enforcing her right to a full and fair review of the long-term disability denial. Though Israel had achieved some degree of success on the merits, the court deferred addressing the question of attorney’s fees until after Unum considered the appeal, so the court would know whether the success resulted in payment of benefits.
If you have a claim for long-term disability benefits, speak to a knowledgeable ERISA long-term disability lawyer about your rights to attorney’s fees in litigation.