On March 11, 2021, I reported about the recent district court decision in Gray v. Minnesota Life Insurance Company, No. CV H-19-4672, 2021 WL 861298 (S.D. Tex. Mar. 8, 2021). In Gray, the court had to decide whether a dismemberment is payable under the terms of an ERISA-governed accidental death and dismemberment (“AD&D”) policy. Ruling in favor of Minnesota Life Insurance Company, the court determined that the dismemberment was not caused by an accident. You can read about the court’s decision here.
ERISA is known for its limited remedies but one benefit it does offer successful parties is the ability to have their attorneys’ fees paid by the other side in the Court’s discretion. See 29 U.S.C. § 1132(g)(1). Some jurisdictions, like the Ninth Circuit, liberally award fees to successful claimants, while others are more conservative about a fee award. As a general matter, courts do not award attorneys’ fees to ERISA defendants (usually big insurance companies with plenty of resources) against individual claimants (usually disabled or of limited means). Thus, it is not often where you see ERISA defendants seeking fees against an unsuccessful claimant.
However, in this case, defendant Minnesota Life decided it was worth taking the chance. It filed a fee motion on March 22nd, which the court denied three days later. Gray v. Minnesota Life Insurance Company, No. CV H-19-4672, 2021 WL 1141171 (S.D. Tex. Mar. 25, 2021).
The court explained that an award of attorney’s fees is “purely discretionary,” but a court must explain its decision to deny fees. N. Cypress Med. Ctr. Operating Co., Ltd. v. Aetna Life Ins. Co., 898 F.3d 461, 485 (5th Cir. 2018) (quoting Todd v. AIG Life Ins. Co., 47 F.3d 1448, 1458 (5th Cir. 1995)). To qualify for fees, a claimant “must show ‘some degree of success on the merits.’” Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242, 255, 130 S. Ct. 2149 (2010) (quoting Ruckelshaus v. Sierra Club, 463 U.S. 680, 694, 103 S. Ct. 3274 (1983)). District courts within the Fifth Circuit are urged to weigh the five Bowen factors (the other circuits have some version of these factors):
(1) the degree of the opposing parties’ culpability or bad faith; (2) the ability of the opposing parties to satisfy an award of attorneys’ fees; (3) whether an award of attorneys’ fees against the opposing parties would deter other persons acting under similar circumstances; (4) whether the parties requesting attorneys’ fees sought to benefit all participants and beneficiaries of an ERISA plan or to resolve a significant legal question regarding ERISA itself; and (5) the relative merits of the parties’ positions.
Iron Workers Loc. No. 272 v. Bowen, 624 F.2d 1255, 1266 (5th Cir. 1980).
The court disagreed with Minnesota Life that all factors weigh in favor of an award of fees. The court found that: (1) Gray’s arguments were not made in bad faith; (2) there is no evidence showing that Gray could pay an award of fees; (3) an award in this case would not deter others in similar circumstances because Gray acted in good faith and advanced substantive arguments; (4) Minnesota Life did not seek to benefit all participants or resolve a significant legal question; and (5) while Minnesota Life ultimately prevailed here, which weighs “slightly in favor” of a fee award, Gray had good faith arguments for her position. For these reasons, the court concluded that a discretionary award of attorney’s fees is not warranted here.
While claimants should be aware of the possibility that attorneys’ fees may be awarded against them if they are unsuccessful in their lawsuit, that possibility is a remote one.
LEAVE YOUR MESSAGE
We know how to get your insurance claim paid. Call today at: