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How to double the interest rate on your LTD benefit award

In a long-term disability (LTD) benefits case, the district court has discretion to grant an award of prejudgment interest. Prejudgment interest has become a familiar remedy widely recognized by federal courts as a means to make a plaintiff whole against a malingering. The reason for adding interest to the award of LTD benefits is that money has a time value, and prejudgment interest is therefore necessary in the ordinary case to compensate a plaintiff ERISA for a loss suffered on a certain date but not compensated until later. Moreover, prejudgment interest is a well-established remedy for LTD claimants. Interest is not recovered according to a rigid theory of compensation for money withheld, but is given in response to considerations of fairness, the Supreme Court has ruled.

In the Employee Retirement Income Security Act (ERISA) context (this is the federal law under which LTD cases are brought), the district court may award prejudgment interest to compensate a plaintiff for the loss he incurred as a result of the defendant's nonpayment of benefits. Legal precedent dictates that the decision whether to award such interest is "a question of fairness, lying within the court's sound discretion, to be answered by balancing the equities." Such equities for a court to consider are, "bad faith or ill will," and the "financial strain" that an award of prejudgment interest would cause.

In a California LTD case that our client won this afternoon, the basis for our request for prejudgment-interest at the rate of 10% was that the Court held that MetLife abused its discretion and violated ERISA in its failure to pay our client 24 months of long-term disability benefits pursuant to the terms of the LTD Plan after considering the administrative record as a whole, including:

1. the consistency of our client's pain complaints from the time of his fall onward,

2. the MRI demonstrating a disc injury,

3. the opinions of five different doctors who treated or examined our client,

4. the absence of any evidence of malingering,

5. the fact that MetLife's doctors did not examine our client,

6. the fact that discretion has an inherent conflict of interest because it both administers and funds the long-term disability Plan, and

7. as a direct result of MetLife's violation of ERISA, our client lost his home and was forced to move-in above a friend's garage on a trade-for-services arrangement.

Where the trial judge finds, on substantial evidence, that the equities of that particular case require a different rate, a district court has discretion to choose a local rate of interest which in our case was a doubling of 5% to 10% prejudgment interest. The icing on the cake was that the court also awarded our firm every dime of the requested attorney fees and costs we have incurred in prosecuting our client's suit for long-term disability benefits.

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Alan Olson writes this web-log to provide helpful information regarding long-term disability cases. He practices long-term disability law throughout the United States from his offices in New Berlin, Wisconsin. Attorney Olson may be contacted at AOlson@GetMyLTDbenefits.com with questions about the information posted here or for advice on specific disability benefit claims.

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