In litigation against American United Life Insurance Company (AUL), an award of attorneys fees is typically governed by the Employee Retirement Income Security Act (ERISA) for group policies. To receive an award, a claimant must achieve "some degree of success on the merits," which triggers judicial discretion to grant reasonable legal costs and fees.
American United Life Insurance Company, a OneAmerica company, is a major provider of group life and disability insurance across the United States. When a policyholder or beneficiary disputes a claim denial, the resulting litigation often centers not just on the benefit amount, but on who bears the cost of the legal battle. As of 2026, the landscape of insurance litigation remains heavily influenced by federal statutes that provide specific pathways for plaintiffs to recover their legal expenses from the insurer.
Understanding the Legal Landscape of American United Life Insurance
American United Life Insurance Company (AUL) operates primarily within the employer-sponsored benefit space. Because most of these benefits are provided through an employer, they are governed by the Employee Retirement Income Security Act of 1974 (ERISA). This federal law preempts most state laws that might otherwise allow for punitive damages or traditional "bad faith" claims against an insurer.
In an ERISA-governed case against AUL, the "American Rule"—where each party pays its own legal fees—is superseded by a specific fee-shifting provision. Under 29 U.S.C. § 1132(g)(1), the court has the discretion to allow a reasonable attorney's fee and costs of action to either party. Understanding how courts exercise this discretion is vital for any claimant considering a lawsuit for denied disability, life, or accidental death benefits.
ERISA vs. Non-ERISA (Individual) Policies
If the policy with American United Life is an individual policy (not purchased through an employer) or falls under certain exemptions (such as government or church plans), state law applies instead of ERISA. In these "bad faith" jurisdictions, the standards for awarding attorney fees are often tied to proving that the insurer acted unreasonably or in bad faith. However, for the vast majority of AUL litigants, ERISA remains the primary framework.
The Standard for Awarding Attorneys Fees: "Some Success on the Merits"
For many years, courts were divided on whether a plaintiff had to be a "prevailing party" to win attorney fees. In 2010, the U.S. Supreme Court clarified this in Hardt v. Reliance Standard Life Insurance Co. The Court ruled that a fee claimant need not be a "prevailing party" but must show "some degree of success on the merits."
This is a lower threshold than winning a final judgment on the entire claim. For example, if a court finds that American United Life’s denial was "arbitrary and capricious" and remands the case back to the insurance company for a fair review, the plaintiff has achieved "some success." This procedural victory can be enough to trigger an award of attorney fees, even if the benefits haven't been paid out yet.
What Does Not Count as Success?
"Trivial success" or "purely procedural victories" do not qualify. If a court allows a plaintiff to amend their complaint but ultimately dismisses the case, that is not success on the merits. The court must find that the insurer’s process was flawed or that the plaintiff’s position had substantive legal weight.
The Five-Factor Test (Hummell Factors)
Even if a plaintiff achieves some success on the merits, an award is not automatic. Judges in most federal circuits apply a five-factor test (often called the Hummell factors or a variation thereof) to decide if American United Life should be ordered to pay the plaintiff's lawyers.
- Degree of Culpability or Bad Faith: Did AUL act with a high degree of culpability? While "bad faith" in the criminal sense isn't required, a showing that the company ignored medical evidence or used biased reviewers weighs heavily in favor of a fee award.
- Ability to Satisfy the Award: This factor is almost always met when dealing with a large entity like American United Life. As a multi-billion dollar enterprise under the OneAmerica umbrella, they have the financial capacity to pay fee awards.
- Deterrent Effect: Would awarding fees deter AUL and other insurers from making similar errors in the future? Courts often use fee awards to signal that improper claim handling has financial consequences.
- Benefit to All Participants: Did the lawsuit resolve a significant legal question or benefit a broader group of people covered under the same ERISA plan?
- Relative Merits of the Parties: Did the plaintiff have a strong case while the insurer’s defense was weak?
How Attorneys Fees Are Calculated: The Lodestar Method
Once a court decides that an award is appropriate, it must determine the "reasonableness" of the fees. The standard mechanism for this is the Lodestar Method.
The Lodestar is calculated by multiplying the number of hours reasonably expended on the litigation by a reasonable hourly rate.
- Reasonable Hourly Rate: This is based on the prevailing market rate in the legal community where the court sits for attorneys of similar experience and skill.
- Hours Expended: The court will scrutinize the attorney’s billing records. Time spent on administrative tasks, excessive conferencing, or redundant research may be "shaved" or excluded from the final award.
In 2026, many courts also consider the use of legal technology and paralegals to ensure that the hours billed reflect modern, efficient legal practice. If American United Life can prove that the plaintiff's counsel spent 50 hours on a task that should have taken 10, the court will reduce the award accordingly.
Comparison of Fee Award Contexts
| Feature | ERISA Litigation (AUL Group Policy) | State Law Litigation (AUL Individual Policy) |
|---|---|---|
| Statutory Basis | 29 U.S.C. § 1132(g)(1) | State Bad Faith Statutes / Common Law |
| Standard | Some success on the merits | Prevailing party / Proof of Bad Faith |
| Discretion | High (Judicial discretion) | Varies by state; sometimes mandatory if bad faith is proven |
| Fee Calculation | Lodestar (Hours x Rate) | Lodestar or Percentage of Recovery |
| Punitive Damages | Generally Not Available | Available in many jurisdictions |
| Purpose | Remedial and Deterrent | Punitive and Compensatory |
Common Challenges in Fee Petitions Against AUL
American United Life, represented by experienced defense counsel, often challenges fee petitions on several grounds. Understanding these challenges can help plaintiffs prepare a more robust application.
The "Partial Success" Reduction
If a plaintiff wins on one claim (e.g., short-term disability) but loses on another (e.g., long-term disability), AUL will argue that the fee award should be reduced. Courts often look at whether the claims were "inextricably intertwined." If the work done on the losing claim contributed to the winning claim, the court may still award the full fee.
Challenges to Hourly Rates
AUL may present evidence of lower "standard" rates to argue that the plaintiff's attorney is overcharging. To counter this, plaintiffs must provide affidavits from other local attorneys and references to recent court cases confirming that their requested rate is consistent with the market for ERISA specialists.
Pre-Litigation Fees
Under ERISA, fees are generally only awarded for work done after the lawsuit is filed. Time spent during the internal administrative appeal process—the stage where the claimant must "exhaust" their remedies with American United Life before suing—is typically not recoverable under federal law. This makes the administrative appeal phase particularly costly for claimants, as they often pay their attorneys out of their own pockets or through a contingency fee arrangement that doesn't get reimbursed by the insurer.
Procedural Steps for Obtaining a Fee Award
- Entry of Judgment or Remand: The process begins once the court issues an order that constitutes "some success."
- Filing a Motion for Attorney Fees: Local court rules usually require this motion to be filed within 14 days of the judgment.
- Submission of Evidence: This includes detailed billing logs, biographies of the legal team, and expert declarations regarding market rates.
- Opposition Brief: AUL will file a response arguing why the fees should be denied or reduced.
- Court Ruling: The judge may hold a hearing or rule based on the written submissions.
Expert Guidance: Maximizing the Likelihood of an Award
When litigating against American United Life, the way a case is handled from the start affects the eventual fee award. Attorneys who document "bad behavior" by the insurer during the claim process—such as ignored phone calls, lost documents, or conflicting medical opinions—build a stronger case for the "culpability" factor of the fee test.
Furthermore, claimants should be aware that many ERISA attorneys work on a contingency fee basis (taking a percentage of the back-pay). If a court awards statutory attorney fees, that award usually goes to offset the contingency fee, meaning more of the insurance benefit stays in the pocket of the claimant rather than going to the lawyer.
FAQs
Can American United Life recover attorney fees from me if I lose?
Technically, yes. 29 U.S.C. § 1132(g)(1) allows for fees to be awarded to "either party." However, in practice, it is very rare for a court to order a disabled or individual claimant to pay an insurance company's fees unless the lawsuit was deemed frivolous or filed in bad faith. Courts recognize the "chilling effect" this would have on valid claims.
Does a settlement with AUL include attorney fees?
Most settlements are "all-inclusive." This means the lump sum offered by American United Life is intended to cover the benefits, interest, and attorney fees. When settling, it is critical to calculate exactly how much will remain for the claimant after the lawyer is paid.
How much are typical attorney fees in an AUL case?
Fees vary wildly based on the complexity of the case. A straightforward life insurance dispute resolved at summary judgment might result in $20,000 to $50,000 in fees. A protracted long-term disability case that goes through multiple appeals and discovery disputes could easily exceed $150,000 in legal costs.
What if my case was remanded back to AUL instead of a direct award of benefits?
Under the Hardt standard, a remand is often considered "some success on the merits." This means you can petition for fees immediately after the remand order, rather than waiting to see if AUL approves the claim during the second review.
Are costs like expert witness fees covered?
Under ERISA, the recovery of "costs" is generally limited to standard court costs (like filing fees and service of process). Expert witness fees are often not recoverable as "attorney fees" under current Supreme Court precedents, which can be a significant out-of-pocket expense for claimants.
Practical Recommendation
If you are facing a claim denial from American United Life Insurance Company, do not attempt to navigate the fee-shifting complexities of ERISA alone. Prioritize finding an attorney who specializes specifically in ERISA litigation. During your initial consultation, ask for their "Lodestar" history—specifically, whether they have successfully obtained court-ordered fee awards against major insurers like AUL.
Because the administrative record (the documents AUL uses to deny your claim) is the only evidence allowed in most ERISA court cases, the work done before the lawsuit is filed is critical. Ensuring your attorney handles the internal appeal correctly will set the stage for achieving the "success on the merits" necessary to shift the financial burden of your legal representation onto the insurance company.
