ERISA does allow for your legal fees to be paid, but that happens a lot more in theory than in practice. Why? Because the way the disability laws are written makes it very hard for anyone to get their attorney paid for – even if they win their claim!
What Does ERISA Say About Attorneys’ Fees?
The language in this part of the statute is yet another way that this law hurts policyholders. Not only is the decision about whether or not your fees are covered left to the judge’s discretion, he or she has the ability to decide on the amount you will receive as well. To put that in plain English, if you owe $5,000 in fees, the judge doesn’t have to tell your insurer to pay that. Instead, they can say that it’s fair for the insurance company to pay for half of that and make you cover the rest!
But in many cases that doesn’t even matter. Why? Because if you hire your disability attorney on a contingent basis (they don’t get paid unless you win your claim), those fees aren’t covered at all. The law only works for “reasonable” hourly fees. Even worse, you’ll never get fees reimbursed for any work that your lawyer did during the administrative appeal. Just like contingent fees, this simply isn’t covered.
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There’s only one thing that can really be done to make this fairer for policyholders: Congress needs to alter the way the disability laws are written. But they aren’t going to do that unless they’re under pressure, and that comes from you. If you really want this ridiculous process to change, everyone needs to write or call their Congressperson and demand that they fix it. Until then, there’s not much that lawyers or judges can do other than follow the ERISA statutes and try to win your case.
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