Reliance Ordered to Pay Back LTD Benefits to 2013, Using $66,830 Salary, Plus $58,740.00 in Legal Fees
In the case of Cheryl L. Wallace v. Reliance Standard Life Insurance Co., the U.S. District Court for the Eastern District of Michigan, Southern Division, previously held that “the administrative record undisputedly reflects that Plaintiff is totally disabled and entitled to LTD benefits under Reliance’s plan.” In the earlier case, the Court also ordered Reliance to pay Plaintiff’s legal fees and also ordered for the parties to meet and try to settle the case between them.
When the attorneys could not agree on how to calculate the amount due Plaintiff for her back long-term disability (LTD) benefits, the Court stepped in and determined how benefits should be calculated. The Court also awarded attorney’s fees and costs.
Determination of Amount of Back-Due LTD Benefits
The Court calculated Plaintiff’s salary for both the time she could not work in her own occupation and, over Reliance’s objection, also held the “record undisputedly reflects Plaintiff’s inability to work, period.” Her disability was due to her immunosuppressed state and she was not expected to recover. So, the Court’s calculation included LTD benefits to which she was also entitled due to her inability to work in any occupation in addition to the time she was disabled from working in her own occupation.
Over Reliance’s objection, the Court ordered benefits to be calculated on the following terms:
- Plaintiff’s annual salary at the time of her disability was $68,830.40 and that is the figure Reliance must use in determining her benefit of “60 percent of her covered monthly earnings.”
- Plaintiff was owed benefits back to May 2013 when she became disabled.
- Plaintiff was entitled to prejudgment interest on back benefits “to compensate Plaintiff for the wrongful deprivation of her monthly disability benefits since May 2013.”
- Plaintiff was entitled to post-judgment interest “as mandated by statute.”
Plaintiff Also Entitled to Attorney’s Fees and Costs
The Court also held that Plaintiff was entitled to attorney’s fees and costs in the amount of $58,740.00 and costs of $3,861.76. The Court considered five factors set forth in Sixth Circuit precedent and found that Plaintiff:
- Achieved success on the merits.
- Reliance had the ability to pay the award.
- The award may deter other plan administrators from “denying benefits based on reasons unsupported by the facts or plan language and from engaging in conduct to prolong litigation and the payment of those benefits.”
- Plaintiff prevailed on the dispositive issue of the case and Reliance’s “rationale for denying her LTD benefits had little merit.”
Although the Plaintiff sought to vindicate only her own rights, and did not raise any significant legal questions regarding ERISA, since four factors weighed in her favor, the Court used its discretion and ordered Reliance to pay reasonable attorney’s fees and costs.
Fees and Costs Were Reasonable
The Court noted that “A reasonable fee is ‘one that is adequate to compensate counsel, but does not produce windfalls to the attorneys.’” The Court conducted a comprehensive review of the attorney’s billing records and concluded that Plaintiff, in addition to LTD back benefits with both prejudgment and post-judgment interest, she was also entitled to $58,740.00 in attorney’s fees and $3,861.76 in costs.
This case was not handled by our office, but we believe it can be instructive for those seeking back disability benefits, attorneys’ fees and costs. For any question regarding your claim for disability benefits, contact one of our disability attorneys at Dell & Schaefer.