When an insurer wrongly denies a health or disability claim governed by ERISA, the law limits what a court can order it to pay. An experienced ERISA attorney can help claimants and referral sources understand those limits. A recent decision from the U.S. District Court for the District of Utah shows how these remedies work in practice. The case is K.S. v. Cigna Health and Life Insurance Co., No. 1:22-cv-00004. It matters to families fighting for coverage they already paid for. Plaintiffs’ counsel in K.S., Brian S. King, is a friend of the firm with whom we have co-counseled on prior cases. He secured a judgment that illustrates the full range of relief available under ERISA Section 502(a)(1)(B).
This post focuses on the remedies the court awarded rather than the details of the coverage dispute. For claimants and referring attorneys, understanding those remedies is the key to evaluating any ERISA benefits case.
ERISA Attorney Insight: The Remedies the Court Awarded
After finding that Cigna abused its discretion when it denied coverage for residential mental-health treatment, the court entered a judgment that broke down into four distinct categories:
- Benefits owed: $356,718. The parties agreed on this figure, and the court awarded the full amount as the value of the improperly denied claim.
- Prejudgment interest: $97.73 in prejudgment interest per day for each day after the midpoint of the treatment period, until the full amount of benefits owed has been paid. This sum compensated the plaintiffs for the years they went without money that should have been paid when the claim was first submitted.
- Attorneys’ fees: $66,265. The court shifted a substantial portion of the plaintiffs’ litigation costs onto the insurer.
- Costs: $400.00. This covered the recoverable court costs of bringing the action.
The Foundation: A Claim for Benefits Under Section 502(a)(1)(B)
The plaintiffs’ core claim arose under ERISA Section 502(a)(1)(B). Congress codified it at 29 U.S.C. § 1132(a)(1)(B). The statute lets a plan participant or beneficiary sue to recover benefits due under the plan. It also lets them enforce plan rights or clarify future benefits. Courts compare this remedy to a contract claim under the terms of the plan.
That contractual framing defines the primary remedy: the benefits themselves. When a court finds that an administrator wrongly withheld coverage, it can order the plan to pay the amount the participant should have received. In this case, that meant the denied residential treatment benefits.
Why Prejudgment Interest Matters
A claim for benefits paid years late is worth less than the same claim paid on time. Prejudgment interest closes that gap. It compensates claimants for the lost use of their money during the dispute. In the Utah court’s earlier ERISA rulings, judges have awarded interest as high as 10% per year. That rate can enlarge a final judgment by a wide margin.
The prejudgment interest award in this case demonstrates the point. Because litigation against an insurer can stretch across several years, the interest component grows steadily and can rival the value of the benefit itself. For claimants, this means that an insurer’s decision to fight rather than pay carries a rising price tag the longer the delay continues.
Attorneys’ Fees as the Central Deterrent
ERISA lets a court award reasonable attorneys’ fees and costs to either party. This power appears in 29 U.S.C. § 1132(g)(1). In the Tenth Circuit, courts apply a five-factor test known as the Gordon factors. Every circuit uses these facts, but each circuit calls them by a different name. Those factors weigh the losing party’s culpability and its ability to pay. They also weigh the deterrent effect of an award, whether the party sought to benefit all plan participants, and the relative merits of each side’s position.
Fee awards under ERISA carry an important limit. They generally cover only work performed in court. They do not cover the time spent on the internal claim and appeal before litigation begins. Even so, the fee award here sends a message. Courts will shift meaningful sums onto insurers who force claimants to sue for benefits they were owed.
This is where the true accountability lies. ERISA sharply limits the remedies available to claimants. A participant suing under Section 502(a)(1)(B), 29 U.S.C. §1132(a)(1)(B), generally recovers the benefits due, plus prejudgment interest and possibly fees. The statute does not allow compensatory or punitive damages for the harm a wrongful denial can cause. Those punishing categories of damages are off the table. As a result, a bad denial exposes an insurer to just three costs. It must pay the benefit it should have paid anyway. It must pay prejudgment interest on that amount. And it must pay the claimant’s attorneys’ fees.
The Risk of Bad Law and Fees as the Only Real Check
Two forces discourage insurers from denying valid claims, and the K.S. judgment puts both on display.
First is the risk of attorneys’ fees. Specifically, when an insurer knows a court can order it to pay the claimant’s legal bills on top of the benefit, the calculus changes. Otherwise, without fee-shifting, an insurer could deny claims freely, betting that most claimants cannot afford to sue. However, the prospect of a fee award removes much of that incentive. As a result, it helps make competent representation available to claimants on a contingency basis.
Second is the risk of creating bad law. For instance, every litigated denial that reaches judgment produces a written opinion. Consequently, when an insurer loses, that decision becomes precedent. As a result, other claimants and courts can cite it against the insurer in future disputes. Moreover, a published finding that a carrier “abused its discretion” is an outcome insurers work hard to avoid, because it can undermine their position in other analogous cases. Therefore, the threat of bad precedent and a fee award together keep insurers honest when they evaluate an ERISA claim.
How an ERISA Attorney Helps Claimants and Referring Attorneys
Ultimately, the K.S. judgment offers a clear lesson. ERISA remedies are limited. Nevertheless, they can still add up to a significant recovery when a case is developed and litigated well. Indeed, the combined award of benefits, prejudgment interest, fees, and costs approached $287,000. Notably, the insurer could have avoided most of that by paying the claim when it was first submitted.
At The Garner Firm, our attorneys handle ERISA benefit denials on an individual and class-wide basis. As an ERISA attorney team, we regularly co-counsel with respected practitioners across the country on complex claims. We know how to build a record that maximizes every category of relief the statute allows. That includes the benefit itself, prejudgment interest, and attorneys’ fees under 29 U.S.C. § 1132(a)(1)(B).
If your ERISA disability claim has been denied, or if you are an attorney with a client facing an ERISA denial, contact The Garner Firm today to discuss your options and how we can help you pursue the full remedies the law provides.
This post discusses a specific court decision for informational purposes and does not constitute legal advice. Every case turns on its own facts.