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2nd Circuit: Disabled Attorney Entitled to Fees for 10-Year Fight for Benefits
Left with memory loss and severe pain as a result of a car accident while on business as a Weil associate, the lawyer stopped working in '91
New York Law Journal
January 27, 2009
Bad faith by an insurance company means that a disabled lawyer will receive attorney fees incurred during the 10 years he fought for long-term disability benefits.
Zbigniew Slupinski, formerly of Weil Gotshal & Manges, prevailed in his lawsuits in 2005 and 2006 against the First Unum Life Insurance Co. for long-term benefits, but he was denied fees and prejudgment interest by Southern District of New York Judge Thomas P. Griesa.
However, the 2nd U.S. Circuit Court of Appeals said Griesa erred and it reversed him in Slupinski v. First Unum Life Insurance Co., 05-5849 and 06-4178-cv. The appeal was decided by Judges Amalya Kearse, Guido Calabresi and Robert Katzmann, with Judge Kearse writing for the court.
Slupinski was working for the firm as an associate in August 1991 when, while on business in Poland, the taxi he was riding in collided with another vehicle. Slupinski was thrown from the taxi into the street, where he was run over by another car. He suffered several injuries, including what turned out to be permanent damage to his left arm.
Despite a number of operations, when Slupinski tried to resume work at the firm after retuning to the United States, severe pain and memory loss left him unable to do so. He stopped working in December 1991.
First Unum initially paid long-term disability benefits but on Dec. 1, 1995, it informed Slupinski that it was terminating his benefits based on the word of two physicians who found the lawyer was capable of working full time because he could "sit/stand/walk" for eight hours at a stretch.
He was given 30 days to respond to the denial and was in the process of marshaling the opinions of several other physicians he had seen when, 28 days into the response period, First Unum said it would not continue benefits past Jan. 1, 1996.
Judge Griesa rejected First Unum's argument that Slupinski only claimed he was in severe pain after he was told benefits would be terminated. He said the record "overwhelmingly supports plaintiff's claim that his severe and chronic pain prevents him from engaging in 'any gainful occupation for which he is reasonably fitted.'"
The judge also said the doctors used by First Unum were not credible and, even if they were, the judge said their opinions "could not possibly outweigh the numerous other medical opinions confirming Slupinski's pain and inability to work."
Although Griesa found that the company's termination of benefits was improper under the Employee Retirement Income Security Act (ERISA) 29 U.S.C. §1001, he denied attorney fees because he found a lack of bad faith or culpability and "the absence of a common benefit conferred upon a group of pension plan participants."
In a decision issued in September 2005, the judge also denied prejudgment interest because Slupinski failed to file suit until almost two years after his benefits were terminated.
DISABLING PAIN
Slupinski was forced to sue again when First Unum insisted it need only pay benefits through March 1997, and Griesa ruled in August 2006, that he was entitled to both retroactive and prospective payments, but again denied attorney fees.
The 2nd Circuit's 41-page opinion focused principally on the five factors for awarding fees under Chambless v. Master, Mates & Pilots Pension Plan, 815 F. 2d 869 (2nd Cir. 1987): (1) the degree of culpability or bad faith, (2) the ability to pay the fee award, (3) whether the fee award would deter others from acting in bad faith, (4) the relative merit of each party's position and (5) the conferral, or not, of a common benefit on a group of pension plan participants.
Judge Kearse said the circuit had "considerable difficulty" with the lower court's finding as to the lack of bad faith or degree of culpability and the relative merit of each party's position.
"Given that a person's ability to sit/stand/walk for a given period says nothing about his ability to concentrate, and given the uniform and consistent view of Slupinski's doctors that his pain was disabling because it prevented him from concentrating, First Unum could not reasonably rely on the sit/stand/walk evaluation to override the explicit statement that Slupinski was unable to work," Kearse said.
She said it was inconsistent for the lower court to find that proof of continuing disability was "overwhelming" and the reports relied on by First Unum had "little value" or were not credible and yet find that the relative-merits factor did not decisively favor Slupinski.
It did little good for the lower court to find that First Unum's position was "not frivolous," she said, because that standard is more pertinent to a sanctions award than to the issue of fees for someone who has prevailed under ERISA.
"The position taken by a defendant in violation of ERISA need not descend to the level of frivolity in order to be sufficiently culpable to weigh in favor of awarding fees to the ERISA claimant," she said.
Noting that Slupinski had been unable to work for nearly 10 years from the time benefits were halted to the entry of judgment in the case, the circuit also had little trouble reversing the lower court and instructing the award of prejudgment interest.
The amount of the fees is to be determined on remand.
David S. Preminger represented Slupinski.
Louis M. Lagalante of Gallagher, Harnett & Lagalante represented First Unum.
