Long-term disability ("LTD") claimants who are forced to bring suit against their insurer after
negotiations fail are understandably concerned about the attorney fees and expenses they would incur. The good news is that a claimant's attorney fees and expenses are paid by the in-surance company if and when the claimant prevails. In determining whether to award attorney fees under the Employee Retirement Income Security Act of 1974 (ERISA), a court considers the following:
- the degree of the carrier's culpability or bad faith;
- degree of ability of it to satisfy an award of attorney fees;
- whether award against the carrier would deter other persons acting under similar circumstances;
- amount of benefit conferred on the claimant or other participants; and
- relative merits of parties' position.
Court's routinely award attorney fees to the prevailing claimant. At the outset of the case, claimants are usually offered the option to retain a disability benefits attorney on a contin-gent fee, hourly, or flat fee basis, depending on the needs of the client. The court's fee to file suit is $350 and the process server will charge about $25 to serve the suit on the insurance carrier. These expenses are also recoverable from the carrier pursuant to ERISA.
If I lose do I have to pay the insurance company's legal fees?
The same factors outlined above apply to a claimant's duty to pay the prevailing carrier's legal fees. An order for fees against the claimant is extremely rare due to the fact that LTD clai-mants are, by definition, unable to work and unable to pay such fees. More importantly, as long as the LTD claim had arguable merit, i.e. evidence to support the disability claim, the carrier would not be eligible to recover its fees from the claimant. As the courts have held, allowing a counterclaim for fees against the disability claimant would compromise the efficacy of ERISA. If such an award were allowed in an ERISA case, an LTD claimant would be compelled to weigh the benefits of pursuing ERISA claims against the burdens of paying opposing counsel's fees. Requiring an LTD claimant to engage in such a calculation would create a clear disincentive to the assertion of ERISA claims, a result at odds with the statute's purpose and goals. See, e.g., Varity Corp. v. Howe, 516 U.S. 489, 496-98, 116 S.Ct. 1065, 134 L.Ed.2d 130 (1996) (holding that an important purpose of ERISA is to protect employee [disability] benefits).
The purpose of ERISA is to protect long-term disability benefit entitlement. To fulfill this purpose, advocates for long-term disability benefits claimants must be willing to support their client by investing the time and money necessary to pursue the claim aggressively all the way to fruition.
Alan C. Olson practices disability law from his offices in New Berlin, Wisconsin, and throughout the United States. AOlson@GetMyLTDbenefits.com
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