Texas District Court Recommends Significant ERISA Fee Award, Approves Out-of-District Rates and Rejects Proportionality Arguments

In Dwyer v. UnitedHealthcare Insurance Co., No. 1:17-cv-00439-RP (W.D. Tex. Jan. 21, 2026), on remand from the Fifth Circuit, a magistrate judge in the Western District of Texas issued a detailed Report and Recommendation largely granting the plaintiff’s motion for attorneys’ fees, costs, and prejudgment interest in a long-running ERISA health-benefits dispute involving residential treatment for a child with anorexia nervosa.

Attorneys’ Fees Warranted Under ERISA

The court had little difficulty concluding that a fee award was appropriate under 29 U.S.C. § 1132(g)(1). Applying Hardt and the Fifth Circuit’s Iron Workers factors, the court emphasized that the plaintiff prevailed in full on appeal, that UnitedHealthcare was “entirely culpable” for the denial of benefits, and that an award would serve an important deterrent function. The court further noted that the Fifth Circuit had already determined United’s position lacked merit, underscoring that the plaintiff’s victory was substantive rather than symbolic.

Hourly Rates: Out-of-District ERISA Rates Approved

A central dispute concerned the applicable hourly rates. Plaintiff’s counsel—primarily based in California—sought rates ranging from $500 to $900 per hour. United argued that Texas rates should apply and that the requested rates were excessive.

The court rejected those arguments, finding that the plaintiff had demonstrated the necessity of retaining out-of-district counsel with specialized experience in ERISA mental health and eating-disorder claims. The court credited evidence showing that such representation was difficult to obtain in Texas and approved the following rates as reasonable under prevailing California ERISA market standards:

• $900/hour for senior partners Glenn R. Kantor and Lisa S. Kantor
• $800/hour for senior attorneys Elizabeth Green and Peter Sessions
• $500/hour for Texas-based co-counsel Amar Raval

The court also approved the use of current market rates, rather than historical rates, to account for the nearly decade-long delay in payment where counsel litigated entirely on a contingency basis.

Fees Need Not Be Proportional to Benefits Recovered

United argued that the fee request was unreasonable because it exceeded four times the amount of benefits recovered. The court squarely rejected that proportionality argument in language likely to be cited frequently by plaintiff-side ERISA practitioners:

United argues ‘No reasonable person would be willing to pay any attorney hourly rates that would result in attorney’s fees that are more than four times the amount of benefits being sought in the lawsuit.’ Notably, United did not illustrate its point by sharing how much it spent in fighting to deny $109,063.50 in benefits of life-saving treatment for a child. Fee-shifting statutes exist because without them plaintiffs would often not be able to find counsel to pursue their claims. The court is not going to lower the fee rate on this basis alone.

The court emphasized that ERISA’s fee-shifting provision exists precisely to ensure access to counsel in complex and risky benefits litigation and declined to reduce rates or hours based solely on the relationship between fees and damages.

Hours Reasonably Expended with Limited Reductions

The court largely upheld the hours billed over eight years of litigation, rejecting arguments that the case was overstaffed or that attorney collaboration was excessive. It stressed that contingency-fee representation cuts against any inference of “churning” and deferred to counsel’s billing judgment.

The court recommended limited reductions for:

• Travel time, compensated at 50% of the hourly rate absent proof of work performed during travel;
• Certain pre-suit time deemed too attenuated from litigation;
• Clearly clerical tasks.

The court rejected broad challenges based on block billing, local counsel participation, or unsuccessful motion practice, noting that the plaintiff ultimately should have prevailed at trial.

Costs and Prejudgment Interest

The court recommended awarding $6,517.27 in litigation costs, including travel expenses for out-of-state counsel, and $87,596.77 in prejudgment interest. The interest award was calculated using an 8% prime rate compounded annually as of the Fifth Circuit’s decision date, reflecting the court’s view that prejudgment interest is compensatory and necessary to make the plaintiff whole after a decade-long deprivation of benefits.