ERISA Attorney Fees Available for Legal Work During a Court-Ordered Remand in Disability Insurance Cases

Under the “American Rule,” each party to a lawsuit is responsible for the payment of its own legal fees (win or lose), unless a statute or contract provides otherwise. See Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242, 252-53 (2010). The Employee Retirement Income Security Act of 1974 (ERISA) is a statute that provides otherwise. Section 502(g)(1) of ERISA states, “[i]n any action … by a participant, beneficiary, or fiduciary, the court in its discretion may allow a reasonable attorney’s fee and costs of an action to either party” (Fee Shifting Provision). 29 U.S.C. §1132(g)(1). One of the main purposes of ERISA’s Fee Shifting Provision is to encourage counsel to represent plaintiffs in difficult, but meritorious cases “which might otherwise be abandoned” because the cost of litigation would likely outweigh the amount of damages recovered. Anderson v. AB Painting & Sandblasting, 578 F.3d 542, 545 (7th Cir. 2009) (citing City of Riverside v. Rivera, 477 U.S. 561, 578, 106 S.Ct. 2686, 91 L.Ed.2d 466 (1986)). As a result, any award of attorney fees conferred by the court in an ERISA case need not be proportional to the amount of damages (e.g., long-term disability insurance benefits, unpaid contributions, etc.) payable to the plaintiff; indeed, as confirmed in the recently decided case, Spears v. Liberty Life Assurance Company of Boston, courts have the discretion to grant an award of legal fees that is several times the actual award of damages. See Spears v. Liberty Life Assurance Company of Boston, 2020 WL 2404973 at *7-8 (D. Conn. May 12, 2020) (awarding attorney fees over 2.5 times greater than the damages and stating “attorneys’ fee awards are meant, in part, to encourage representation of plaintiffs in difficult cases where the likelihood of a large damages award is low.”). See also Cowan v. Prudential Ins. Co. of Am., 935 F.2d 522 (2d Cir. 1991); Anderson, 578 F.3d 542 at 545-46.

Given the remedial purpose of ERISA’s Fee Shifting Provision, courts routinely grant legal fees for the work performed by counsel during the litigation itself. But many attorneys are unaware that ERISA also permits an award of legal fees for work performed by counsel during the course of a court-ordered remand—that is, fees for both the administrative work necessarily required by the plan administrator/insurer and for any post-remand litigation issues or disputes requiring judicial intervention. And, as with pre-remand legal fees, the award need not be proportional to the amount of damages recovered. This article discusses the standard for obtaining ERISA attorney fees in general and the availability of attorney fees for post-remand administrative and court work on behalf of the plaintiff/beneficiary.

ERISA Attorney Fees in General