Many attorneys and most clients are shocked when we tell them that ERISA does not allow for punitive damages and mental anguish damages, regardless of how bad the insurance company has acted; however, you can ask for attorneys' fees for having to take the case into litigation.
These fees may only be allowed for matters related to litigation, and once in litigation, even if the insurer eventually decides that they were wrong, you can't assume that the court will actually award fees.
When fees are asserted, there will always be a big battle about what plaintiff's counsel should have done instead of what was done. Perfect hindsight is used in argument and in briefs to point out every instance where less money and time could have been spent.
Some of the arguments we've heard:
- Plaintiff's counsel should have used a paralegal – even if you do not have one. In other words, counsel should have immediately found and hired an ERISA-educated, savvy paralegal.
- Plaintiff's counsel should have used an associate billing at a lower rate – even if you do not have one. Again, in other words, counsel should have immediately found and hired an ERISA associate – just for that case.
- Plaintiff's counsel should not have two lawyers at any hearing – even if the insurance company has two or more.
- Plaintiff's counsel should not have made as many copies.
Large firm standards of unlimited resources are imposed on small firms and solo practitioners, with the expectation that the courts should ignore the contingency fee circumstance that most plaintiffs require. This further demonstrates how unfair ERISA can be to both claimants and the attorneys who represent them.
This fact of ERISA is another reason why we have a team approach at our office. But more on that another time.
I did not make these facts up.
In McConnell v. Am. Gen. Life Ins. Co., No. CV 19-0174-WS-MU, 2020 WL 3452983 (S.D. Ala. June 24, 2020), the plaintiff was on claim for 10 years before a rogue adjuster decided to terminate the claim. Rather than acknowledge that the adjuster was wrong and resolve the matter promptly, the insurer fought the case. After fighting hard and losing a major motion, the insurer finally agreed to put the plaintiff on claim. Then, the parties agreed that the plaintiff's counsel was entitled to an award of attorney's fees and costs. But what amount?
The hourly rate sought by plaintiffs' counsel, which was frequently charged in Pensacola, was contradicted by the insurer as it contended “lawyers do not charge as much in Mobile.”
In response to a number of “should'a done this and “should'a done that” arguments by the insurer, the court made reductions (by about 37%) in attorney fees relating to:
- Research performed by partner that could have been performed by associate
- Attorney time spent calculating benefit present values
- Block billing and vague time entries.
Counting on attorney's fees in the 11th Circuit is really not something you can do. That is hard for attorneys and clients alike to understand. Insurers can be as inconsistent and arbitrary as they wish, and then, still beat down the fees. Just adding a bit more unfairness to the world of ERISA.