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In a case involving the wrongful denial of life insurance benefits that arose in 2015, federal district court judge Anthony Trenga awarded the plaintiff over $35,000 in prejudgment interest. The case is Morris vs. Lincoln National life insurance Company. The Fourth Circuit appellate decision on the original claim for life insurance benefits is here.

Mrs. Morris requested that the Court award her pre-judgment interest, compounded annually, on the principal amount of $500,000, in an amount that fairly makes her and her family whole for the five-and-a-half-year period she and her three children have been denied use of the $500,000.

Because Mrs. Morris and her three children should have received life insurance benefits shortly after September 16, 2015, the date of her husband and their father’s death, and Lincoln did not pay those benefits to them until May 25, 2021, she contended that Lincoln owed she and her family prejudgment interest on the principal amount of $500,000 in order that she be made whole. Mrs. Morris submitted that a reasonable and fair interest rate would be 10.9%—a rate that fairly reflects what that money could have done for her over the last 5 ½ years.

Morris argued that during this lengthy litigation, Lincoln invested the $500,000 it owed Mrs. Morris, growing it by 10.9% on average. The interest it earned on the $500,000 judgment it has already paid now rightfully belonged to Mrs. Morris and her children

Judge Trenga explained his decision to award only 10% of the requested amount to Morris and her children:

  • Whether to award prejudgment interest In a case involving life insurance benefits under ERISA is committed to the sound discretion of the court
  • The plaintiff has been denied the use of her awarded funds for an extended period of time
  • Lincoln has benefited from the delay in paying over those funds.
  • The federal post-judgment rate of interest is the appropriate rate to use in calculating prejudgment interest on ERISA awards comparable in nature to the plaintiff's award
  • Even though the funds should've been given to the plaintiff in 2015, it was "speculative to predict how someone in plaintiff's position would have utilized those funds had they been paid promptly."
  • The Supreme Court has emphasized that the principles of predictability and uniformity are important to achieving ERISA's objectives
  • The court ordered prejudgment interest to be paid from the date that Lincoln had made its initial decision to deny benefits through the date which the underlying judgment was entered against Lincoln
  • the court ruled that prejudgment interest should be calculated on simple rather than compound interest
  • the court ruled that post-judgment interest should be calculated based upon the entire award including the prejudgment interest.
  • With respect to prejudgment interest, the court use the average federal post-judgment rate for the period for which prejudgment interest was awarded.

After over seven years of litigation, this claim is now closed.

BenGlassLaw is a nationally recognized law firm in ERISA benefits litigation. It represents employees and their families in disputes and litigation involving the wrongful denial of ERISA life insurance and long-term disability claims. If your claim has been denied, reach out to us for a free review and strategy advice on your claim

Ben Glass
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Ben Glass is a nationally recognized ERISA disability & life insurance attorney in Fairfax, VA.
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