In Micha v. Sun Life Assurance Company of Canada and Group Disability Benefits Plan (Sun Life v. Group Disability), plaintiff John Paul Micha, M.D., was covered by a disability benefit policy through Sun Life which had been purchased by Group Disability, an employee welfare plan maintained to provide disability benefits to the employees of the medical group of which Micha was a part.

When Sun Life denied Micha disability benefits, he filed an ERISA lawsuit against Sun Life. According to the law at the time, which has since been changed, he was also required to file suit against Group Disability. Group Disability supported Micha’s claim. After the District Court “informed Sun Life it had serious concerns regarding Sun Life’s handling of Micha’s claim for disability benefits, Sun Life settled the suit. When it did so, Sun Life fully vindicated Group Disability’s interests in the lawsuit.”

The District Court awarded Group Disability attorney’s fees and Sun Life appealed. It lost the appeal and Group Disability filed a motion in the District Court requesting an award of its appellate attorneys’ fees, a motion the District Court denied.

Group Disability appealed and the U.S. Court of Appeals for the Ninth Circuit reversed “the district court’s denial of appellate attorney’s fees and REMANDS the matter to the district court for calculation of a reasonable award of fees and costs.”

Factors Courts Consider in Ruling on Entitlement to Appellate Attorney’s Fees

The Ninth Circuit held that when a Court is analyzing a party’s request for appellate attorney’s fees, the Court must “consider the entire course of the litigation, rather than focusing exclusively on the prior appeal.” An appellate Court will reverse a lower court’s ruling on appellate attorney’s fees in an ERISA case if “it has a definite and firm conviction that the district court committed a clear error of judgment.” In this case, the Ninth Circuit considered the five factors it previously articulated when determining if appellate attorney’s fees should be awarded.

1. Degree of Culpability or Bad Faith
Sun Life was culpable in that Group Disability was forced into litigation due to Sun Life wrongfully denying benefits to Micha.

2. Ability to Pay
There was no dispute over Sun Life’s ability to pay. Even Sun Life did not argue it could not pay.

3. Deterrence
The Ninth Circuit found the district court’s ruling that it would not be a deterrent “manifestly unreasonable” since an award of fees at the district court level would be meaningless if a defendant could exhaust those fees by pursuing an appeal and forcing the expenditure of more funds by a litigant who was trying to defend the award.

4. Significance of Legal Issue to All Plan Participants
The Ninth Circuit found that this factor weighs in favor of awarding Group Disability its appellate attorney’s fees since “Sun Life vigorously pursued an appeal with limited practical significance all the way through a petition for a writ of certiorari.”

5. Relative Merits of the Parties’ Positions
This factor favored an award to Group Disability since it “prevailed on every matter at issue in Micha.”

The Ninth Circuit reversed the denial of appellate attorney’s fees on the grounds that the District Court’s “denial of appellate attorney’s fees amounts to an abuse of discretion.”

If you have any questions concerning your disability claim or whether or not you qualify for attorney’s fees, contact one of our disability attorneys at Dell & Schaefer for a free consultation.