Under the Employee Retirement Income Security Act of 1974 (“ERISA”), an employee who prevails in a lawsuit against his insurance company to collect ERISA-governed plan benefits – including life, health, disability or accidental death benefits – is entitled to recover his attorneys’ fees incurred in the lawsuit. The Supreme Court in Hardt v. Reliance Standard Life Insurance Co., 560 U.S. 242, 245 (2010) concluded that a plan participant is eligible to recover “reasonable attorneys’ fees” if he achieved “some degree of success on the merits” of his claim. What constitutes a reasonable fee in an ERISA case will vary greatly depending on the experience and skill of the attorney involved and the complexity of the case. The two main components of a reasonable fee are reasonable hourly rates and reasonable time expenditures.
In the matter of Earl Durham v. Aetna Life Insurance Company, Case No. 8:19-cv-01494-DOC-DFM, the McKennon Law Group PC filed a motion to recover attorneys’ fees after prevailing in the ERISA lawsuit. Aetna had wrongfully terminated our client’s long-term disability benefits based on an improper interpretation of a plan limitation asserting that the alcohol limitation in the plan limited our client’s claim to two years because he had alcohol induced liver damage. Shortly after we filed the complaint asserting that Aetna’s interpretation was wrong, Aetna reversed its denial decision, reinstated our client’s disability claim and paid him all past-due disability benefits. We then filed a motion seeking attorneys’ fees, costs and interest, which Aetna vigorously opposed. In granting the motion, the Court approved hourly rates of $750 for Managing Shareholder Robert McKennon and $525 and $375 for associates Andrea Soliz and Nicholas West, respectively.
The Court found that our client had achieved “some degree of success on the merits” because Aetna ultimately reinstated his LTD claim, issued payment for past-due benefits and continued to pay benefits. The Court concluded, “Durham litigated his claim and caused Aetna to reconsider its position and grant him his benefits, thereby obtaining full relief through settlement.” The Court also rejected several of Aetna’s arguments for a reduction of fees, including that our client should not recover fees for work done after the administrative denial but prior to filing the Complaint. Aetna’s argument was based on the well-settled principle that recovery under ERISA is limited to work done in connection with a formal action. Cann v. Carpenter’s Pension Trust Fund for Northern California, 989 F.2d 313, 316 (9th Cir. 1993). Aetna claimed that McKennon Law Group PC’s work done after the administrative denial but five months prior to filing the lawsuit was not done in connection with the formal action. The Court disagreed and determined that all of McKennon Law Group PC’s pre-filing efforts were in direct pursuance of the litigation and were, thus, recoverable. The Court also rejected Aetna’s argument that fees incurred after Aetna made a $35,000 settlement offer were not compensable, finding that there was no precedent to support this argument and that Aetna’s $35,000 offer was not reasonable. In the end, the Court awarded our client almost $90,000 in fees, costs and interest.
Because ERISA permits claimants to recover attorneys’ fees when they prevail in litigation, claimants should not be deterred from hiring experienced, well-qualified ERISA lawyers like the McKennon Law Group PC to help them recoup their wrongfully denied benefits in court. In these instances where attorneys’ fees are awarded, the insurance company pays the fees and the claimants are able to keep all of their life, health, disability or accidental death benefits. This result affords claimants fair access to federal courts and is consistent with ERISA’s underlying purpose, which is to protect the interests of participants in employee welfare benefit plans.