Employees May Recover Attorneys’ Fees Under ERISA Cases, Says Supreme Court

Employees that sue for disability and other benefits under ERISA may recover attorneys’  fees and costs if they demonstrate “some degree of success on the merits,” according to the US Supreme Court.   Unlike other federal statues, ERISA does not contain a fee-shifting provision.  However, in Hardt v. Reliance Standard Life Insurance Co., Hardt incurred $58,920 in attorneys’ fees and recovered $55,250 in disability benefits.  The district court awarded attorneys’ fees, but the 4th Circuit reversed the lower Court. 

On appeal to the US Supreme Court, Justice Clarence Thomas wrote that the words “prevailing party” do not appear in ERISA’s fee-award provision. That provision, he said, “expressly grants district courts’  discretion’ to award attorney’s fees ‘to either party.’ ”  Thus, attorneys’ fees are subject to the discretion of the district courts in ERISA cases.  See also Ruckelshaus v. Sierra Club.

READ THE SUPREME COURT SLIP OPINION HERE

$20 MILLION SETTLEMENT FOR WORKERS COMP FRAUD

The LA Times is reporting a temporary agency has settled a workers compensation fraud lawsuit filed by the California Insurance Commission for $20 million.  The Insurance Commission alleged the temporary agency, Staffing Services Inc., misrepresented the number of its employees and their job duties in order to pay less in insurance premiums.  The regulators filed the lawsuit in November 2008 and the Los Angeles County district attorney’s office prosecuted the case. 

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FAMILIES STRUGGLE AFTER INSURANCE CLAIM DENIED

Families on the Houston coast are still struggling to resolve insurance claims after Hurricane Ike, according to the Houston Chronicle.  Insurance companies are telling their insureds that they refuse to go to appraisal, a type of alternative dispute resolution used to settle insurance claim denial disputes.  The insurance companies are declining appraisal because they disagree with insureds on what was damaged.

As a result, insureds are left with damaged homes and out-of-pocket expenses for appraisal fees.

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Attorney General files $405 Million Lawsuit Against Comp Third Party Administrator

The New York Times is reporting that the New York State Worker’s Compensation Board filed a lawsuit against a third-party workers compensation administration company, CRM Holdings.  The lawsuit alleges $405 million in damages for fraudulent business practices and accused CRM of fraud, breach of fiduciary duty, deceptive acts and mismanagement.

The New York Attorney General’s Office will also file a $150 million lawsuit, claiming CRM underestimated the workers’ compensation liabilities of many companies to help increase new business.  As a result, the companies were left with improper funds to cover compensation claims.  CRM agreed to surrender its NY third-party administrator license in June 2008.

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WORKER AWARDED $70 MILLION AFTER INSURANCE DENIES CLAIM

Discover Property and Casualty Insurance Company was ordered by a Texas court to pay a San Antonio tree worker after the insurance company delayed payment for rehabilitative job training.  The worker, Charles Tate, an apartment supervisor, fell while trimming trees with a chainsaw at a San Antonio apartment complex.  After filing a claim for vocational benefits, Tate’s employer delayed paying him for his vocational retraining.

The jury found that the insurance company and the insurance company’s third party administrator knowingly engaged in an unfair and deceptive act.  On at least six occasions, the Texas Department of Insurance’s workers’ compensation division agreed with the injured employee, who suffered severe neck and shoulder injuries that made physical tasks impossible.  The agency ruled that he had a right under the law to have the insurance company pay for him to be retrained as a real estate agent, a career he wanted to pursue.

Of the $70 million verdict, $20 million was awarded for past and future mental anguish, $20 million in attorneys fees and $30 million in punitive damages.

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