A California federal magistrate judge has awarded over $20 million in attorney fees and costs to class counsel in its ERISA suit win over United Behavioral Health (UBH), a UnitedHealth Group unit. Although the magistrate judge slightly reduced their request, the award largely satisfied the class counsel’s request for fees and costs.
Justification of the Attorneys’ Fees and Costs Awards
The court justified the massive attorney fees and costs award at least in part on the fact that the class “had at least some success on the merits” of its case. In doing so, the court cited a U.S. Supreme Court ruling in Hardt v. Reliance Standard Life Insurance Co., 130 U.S. 2149 (2010), that sets forth a test for awarding fees in similar cases.
Likewise, the court rejected UBH’s argument that a remand order in an ERISA case does not justify an award of attorneys’ fees and costs. The judge referred to the results in this case as “substantial” and “not purely procedural,” as the judgment involved not only remand but also injunctive and declaratory relief.
The judge made only minor reductions in the multiplier request of class counsel. The class argued that the lodestar amount was insufficient due to the lack of incentive for class action lawyers to take on cases seeking only injunctive and declaratory relief and the delay in reimbursing their out-of-pocket costs. The judge rejected the first argument, but he did accept the second argument in minimally reducing the multiplier from 1.5 to 1.05. Justification for the reduction stemmed from the multiplier request being over seven times greater than the class’s cost.
Background of the Case
In November 2020, the court ordered UBH to reprocess insurance claims for a certified class of more than 50,000 plan holders. The court found that UBH had violated its fiduciary duty under ERISA in denying plan holders coverage for mental health and substance abuse treatment by using treatment guidelines that failed to follow accepted standards of care. The court also ordered UBH to alter its handling of these types of claims and mandate employee training on the claims.
Appeal Still Pending at the Ninth Circuit
UBH appealed the federal district court ruling and is awaiting a decision from the U.S. Court of Appeals for the Ninth Circuit. A panel of the Ninth Circuit heard arguments in Wit et al. v. United Behavioral Health and Alexander et al. v. United Behavioral Health, case numbers 20-17363, 20-17364, 21-15193 and 21-15194, Ninth Circuit, in August 2021.
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