2nd Circuit says judge abused discretion by denying attorney fees in ERISA case

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A federal appeals court says a district court abused its discretion by denying attorney fees in an Employment Retirement Income Security Act case in which an insurance company was found to have been arbitrary and capricious in refusing benefits to the plaintiff, John Donachie.

Liberty Life Insurance “ignored substantial evidence from Donachie’s treating physicians that he was incapable of performing his current occupation, while failing to offer any reliable evidence to the contrary,” the New York-based 2nd U.S. Circuit Court of Appeals said in its Tuesday opinion (PDF). Hence, the trial judge, who denied attorney fees on the theory that the insurer had not acted in bad faith in denying long-term benefits, committed an error of law, the New York Law Journal (sub. req.) reports.

Donachie became anxious and was unable to sleep after having a prosthetic aortic valve surgically implanted that he and others could hear working with each beat of his heart.

Updated at 4:21 p.m. to add needed text to a sentence.

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