If you’ve been paying attention to our updates on long term disability, you already know that it’s extremely difficult to convince judges to force insurers to pay your attorney fees. And you also know that even if you are awarded fees, the award may only partially cover what you owe for the trial and legally can’t include anything you owe for using a lawyer through the administrative process.
The whole thing blatantly favors insurance companies and we’re long overdue for a change in the law, but in order for that to happen, enough people have to complain to Congress. Until that day, we have to live with the current rules, and that means understanding how they work – understanding the Five Factor Test.
How the Five Factor Test Works
What is the Five Factor Test? These are the factors that a district court is required to consider when looking at whether or not to award a claimant attorney fees. The factors include:
- To what degree your insurers acted in bad faith. Were they blatantly violating rules to keep from paying you or just bending them a bit?
- Whether or not they can afford to pay. Unless the insurer is in danger of going out of business, this is rarely an issue when claimants win. However, if you lose the case and your insurer tries to demand that you pay their legal fees, this is something nice to have on your side.
- Whether the award will act as a deterrent. Essentially, this factor wants to know if forcing your insurer to pay your legal fees will make them think twice about violating laws again.
- Are you willing to share the award with other plan beneficiaries and/or resolving legal questions about ERISA? This one is fairly complicated. The first part only really applies if you’re filing a joint lawsuit, and the second part is up to the judge’s discretion.
- The merits of each party’s position. Is this a case where your insurer really had no basis for denying your claim, or could a reasonable person understand their position?
Neither side has to satisfy all of these factors to win attorney fees under the law, but seeing them laid out like this does make it easier to understand why having your fees paid for is so tough. For more information regarding your long term disability claim check out our free e-book and be sure to check back regularly for more blogs regarding what you can do to win your case!