DISTRICT OF MISSOURI AWARDS ERISA ATTORNEY FEES EVEN THOUGH THE PLAN VOLUNTARILY REMANDED THE CASE FOR FURTHER CONSIDERATION

The growing trend among federal courts to award attorney fees to plaintiffs in ERISA-benefit litigation continued in the U.S. District Court for the Eastern District of Missouri recently when it awarded the plaintiff fees in a case where the plan administrator unilaterally decided to remand the adverse benefit determination for further review during the pending litigation and then awarded additional benefits while the case was stayed.

In Barfield v. Ascension Health Long-Term Disability Plan, No. 4:12-CV-02116, 2015 WL 581293 (E.D. Mo. Oct. 5. 2015), the plaintiff sought benefits under a long-term disability plan sponsored by her employer and administered through Sedgwick. The claim was originally approved under the “own occupation” definition in the plan but was terminated approximately 10 months later upon Sedgwick’s further review. While the court did not explicitly state it in the opinion, it appears that the plan at issue had the common requirement that the claimant be unable to work at their own occupation at the outset of the disability, which then changes at some point to a more stringent requirement that the claimant be disabled from working at “any occupation” in order to continue receiving benefits. Plaintiff appealed the termination decision under the terms of the plan and when the appeal was denied, she filed her lawsuit seeking judicial review of the decision. After filing the administrative record with the court, Sedgwick determined that it had inadvertently overlooked certain documents in the file and voluntarily remanded the claim for further review and filed a motion to stay the proceedings until it conducted that review, which the court granted.

After Sedgwick reviewed the entire file, it informed plaintiff’s counsel that it had reinstated the own occupation claim, then paid her the entire benefit minus a permitted setoff for Social Security benefits and also paid her attorney’s fees incurred up to that point. While the case was still stayed, Sedgwick also reviewed plaintiff’s claim for ongoing benefits under the more rigorous “any occupation” standard and after initially denying those benefits, granted them following plaintiff’s administrative appeal, in which she was assisted by counsel.

Plaintiff then sought an award of attorney fees over and above those already paid voluntarily by the defendants, claiming that she had achieved “some degree of success on the merits” as addressed in Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242, 246 (2010). While defendants argued that she was not entitled to a fee award because her success was at the administrative level and not as a result of the lawsuit, the court disagreed. In awarding the fees, the court opined that there was no fundamental difference between the mandated remand in Hardt and the voluntary remand here and also stated that it could not say what role the filing of the lawsuit played with regard to the award of benefits.

The court’s reasoning has an odd Alice in Wonderland feel to it though. The court seems to ignore, or at least does not address, that the original suit regarded the initial “own occupation” standard, which the administrator voluntarily reviewed, reversed and for which it voluntarily paid attorney’s fees.  The attorney’s fees that the court actually awarded were for the ongoing, any occupation benefits. As noted, while Sedgwick had initially denied those benefits, during the period of time that the lawsuit was stayed, that decision was administratively appealed and was overturned. The court’s reasoning for awarding these additional fees was its opinion that “but for the suit, the question of Plaintiff’s eligibility for the ‘ongoing benefits’ would not have been reached.” That seems to be, at best, complete conjecture. Furthermore, it completely ignores the facts, that is, that the ongoing benefits were denied, administratively appealed and then awarded on the administrative appeal without any involvement of the court as it happened nearly nine months prior to the stay being lifted.

Unfortunately for ERISA plan administrators and claims administrators, this case appears to once again evidence that they should be prepared to pay attorney fees to the plaintiff if the result in court is anything but a ruling completely in the plan’s favor.

Leave a comment

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: