Steven Alfano won his ERISA claim for long-term disability benefits against CIGNA. The district court had previously ruled that there was “no sound basis in the record to support CIGNA’s finding that plaintiff’s back condition … had in fact improved.” Alfano sought attorney’s fees from CIGNA under 29 U.S.C. § 1132(g)(1). In its analysis, the court considered the following factors under Second Circuit jurisprudence:
(1) defendant's culpability or bad faith, (2) defendant's ability to withstand payment, (3) the extent to which an award would deter others from similar conduct, (4) the relative merits of the parties' positions, and (5) whether the action confers a common benefit on a class.
The court applied these factors and awarded attorney’s fees of $105,840 to Alfano.
As to the first factor, the court found that “CIGNA may not have acted outrageously or in subjective bad faith, but the Court's finding that plaintiff was clearly entitled to long-term disability benefits, and that there was no sound basis for CIGNA's termination of such benefits, renders CIGNA culpable. While this factor might weigh more heavily in plaintiff's favor had CIGNA acted in bad faith, it nevertheless counsels in favor of an award of attorney's fees.”
As to the second factor, the court pointed to Second Circuit precedent holding that the ability to pay does not weigh heavily in favor of an attorney’s fee award. Interestingly, the court noted that a defendant’s [and presumably plaintiff’s] inability to pay does weigh against such an award.
The court likewise reasoned that the third factor (deterrent effect) favored Alfano, stating: “It is undisputed that the costs of litigating a denial of benefits under ERISA can be high, even when the benefits themselves may not be generous. Not only must losing plaintiffs pay their own fees, but all plaintiffs assume a risk of an award of fees against them.”
The court ruled that the relative positions of the parties militated in favor of Alfano (the fourth factor), but that Alfano’s case did not confer a common benefit on a group (the fifth factor), since the case did not challenge any across-the-board rule of practice but instead dealt with the facts of his situation.
In arriving at the fee amount, the court approved 235.20 hours (reduced from the 272.20 hours expended by counsel) at the “reasonable hourly rate of $450.” The court also awarded prejudgment interest and costs.
The case is Alfano v. CIGNA Life Ins. Co. of New York, 2009 U.S. Dist. LEXIS 28118 (S.D.N.Y. Apr. 2, 2009).