Who Pays My Attorney Fees Under ERISA?

When you’re unable to work due to a serious health condition or injury, hiring a lawyer may seem like an unwanted expense. However, federal disability insurance laws may allow you to try to collect some attorney fees from your disability insurance carrier to offset your bill for attorney fees if you meet specific criteria.

In this blog, our disability insurance lawyers at Bryant Legal Group outline the essentials of ERISA’s fee-shifting laws and explain how they may impact your claim for long-term or short-term disability benefits.

What Is ERISA?

ERISA (Employee Retirement Income Security Act of 1974) is a federal law that governs employee benefit plans. The law covers most employer-sponsored short-term and long-term disability insurance plans as well as group health insurance plans and other benefit programs.

If you have an ERISA claim, there will be two stages of your disability insurance appeal. First, you’ll need to submit an administrative appeal with the insurance company. At this stage, the insurer will reassess your evidence and issue another decision. If the company decides that it wrongly denied your claim for benefits, it will pay your claim. If the insurance company upholds its original decision, you can file a lawsuit with the federal district court and demand your long-term or short-term disability benefits.

Note that ERISA does not cover private disability insurance policies, plans sponsored by a church or religious organization, or government-sponsored benefits plans. In these cases, different federal or state laws will apply to your legal claims. If you need help deciding whether ERISA or state law applies to your claims, contact Bryant Legal Group for a free consultation.

In Most Legal Claims, You’re Responsible for Your Attorney Fees, But ERISA Can Shift This Responsibility

In the United States, you typically are financially responsible for your attorney fees whether you win or lose. Sometimes called the “American rule,” this principle applies to a wide variety of legal claims, from personal injury cases to Social Security disability appeals. However, some laws change this standard for certain cases, and ERISA is one of those laws.

Under 29 USC §1132(g)(1), it’s within a federal judge’s discretion to award attorney fees to a claimant. However, to get such an award, you’ll need to be a “prevailing party” whose claim had “some degree of success on the merits.”

Who Is a Prevailing Party Under ERISA?

You don’t have to completely win your ERISA claim to become a prevailing party. The U.S. Supreme Court addressed this issue in Hardt v. Reliance Standard Life Insurance. The groundbreaking decision noted that the words “prevailing party” aren’t found in ERISA’s fee-shifting statute. Instead, the law simply says:

“In any action under this subchapter . . . by a participant, beneficiary, or fiduciary, the court in its discretion may allow a reasonable attorney’s fee and costs of action to either party.”

Based on this language and their review of the law, the Supreme Court determined that the courts can award ERISA attorney fees when there is “some degree of success.” Numerous federal court opinions outline situations when the insurance company should pay a claimant’s attorney fees. These situations include:

  • You had a claim remanded (sent back) to the disability insurance company for another review
  • You won a claim for summary judgment
  • The insurer decides during litigation to voluntarily pay disability insurance benefits
  • The insurance company decides to withdraw legal claims it filed against a claimant

However, if you accept a lump-sum settlement, you may not be a prevailing party. No matter your situation, your ERISA lawyer should carefully review your claim and outcomes before they determine whether fee-shifting is appropriate in your case.

Can I Get Reimbursed for all of My Attorney Fees Under ERISA?

Probably not. In most cases, attorney fees awarded under ERISA in federal court will only reduce your out-of-pocket attorney fees and you are still responsible for attorney fees associated with either a disability insurance application or an administrative, insurance-level appeal.

However, there are exceptions to this rule. At Bryant Legal Group, we aggressively seek fee awards under ERISA whenever it’s appropriate.

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I Had “Some Degree of Success!” Will the Court Automatically Shift My Attorney Fees?

Unfortunately, it’s not that easy. According to the Seventh Circuit Court of Appeals, there is a “modest presumption” that you’re entitled to an award of attorney fees; it’s still up to the court. When something is within a judge’s discretion, they have the power to either approve or reject your request.

Typically, you’ll have to show that you filed your lawsuit in good faith and that it wasn’t frivolous or an attempt to harass the insurance company. Other factors that might affect your request for attorney fees include:

  • The extent of the insurance company’s misconduct or bad faith
  • Whether the insurance company can afford to pay your attorney fees
  • Whether an award of attorney fees could discourage similar misconduct in the future
  • Whether the decision in your claim benefits other plan participants or claimants
  • The strength and merits of each side’s legal claims

Bryant Legal Group: Illinois’ Trusted Disability Insurance Lawyers

At Bryant Legal Group, we’ve built a reputation for our practical and client-focused approach. We focus our practice on complex disability insurance claims, especially those that involve severe disabilities and high-income employees. We offer free consultations, and our conversations are confidential.

To schedule your initial consultation, call us at (312) 667-2536 or use our online form.

The content provided here is for informational purposes only and should not be construed as legal advice on any subject.

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