Court: LTD Recipient Cannot File Suit Seeking Legal Fees

January 12, 2004 ( - Having exhausted all the remedies available through the insurance plan provider and ultimately winning the case, a plan participant cannot file a suit solely for the purpose of recouping attorney fees.

US District Judge Michael Baylson of the US District Court for the Eastern District of Pennsylvania determined Schaffer v. Prudential Insurance Co. , was sufficiently remedied through Prudential’s appeals process. Thus the plaintiff’s quest for attorney’s fees could not be handled in the federal courts, which have no jurisdiction over such a case, according to a report in The Legal Intelligencer.  

“Where a plaintiff’s claim has been fully resolved at the administrative level, such as in the case at hand, courts may not make an award of attorney fees and costs,” Baylson wrote.

Originally, plaintiff Beth Schaffer filed a suit seeking long-term disability (LTD) payments due to a disability.   Schaffer says Prudential, the provider of the LTD plan, denied her claims.

However, the same court found the original lawsuit was filed “prematurely” since Schaffer had not used all of the internal appeals with Prudential Insurance Co.   Thus, the original suit never presented any justiciable cause of action.   Even with dismissing the original suit though, the court said Schaffer could present the case again should all of the appeals with Prudential fail.

Under the LTD policy, Schaffer was required to pursue a second appeal and had the right to pursue a third appeal before going to court.   In Schaffer’s first administrative appeal, the denial of benefits was upheld.