The Sixth Circuit recently published a case, Rochow v. Life Insurance Company of North America, clarifying several points of law as they relate to damages from a claim made under the Employment Retirement Income and Security Act ("ERISA"). Most importantly, the opinion highlights the need to have counsel who are not only strategic and knowledgeable as to ERISA's substantive laws, but also can minimize (or maximize) the amount of damages in the event that liability ensues.

Daniel Rochow, once the president of Arthur J. Gallagher & Co., suffered a debilitating brain infection, which forced him to resign from his position. Mr. Rochow's life insurance provider, Life Insurance Company of North America ("LINA"), denied his claim for disability benefits, so he sued LINA to recover such amounts. In the end, the district court required LINA to disgorge $3.8 million in profits to Mr. Rochow. This raised a huge dispute between the parties because LINA only withheld $910,000 from Mr. Rochow; the amount Mr. Rochow received above $910,000 turned on how the court calculated LINA's profits obtained from withholding the money.

First, the Sixth Circuit noted that LINA not only arbitrarily and capriciously denied Mr. Rochow benefits, but also LINA breached its fiduciary duties by ignoring the life insurance plan's language. Therefore, under ERISA, Mr. Rochow could recover the $910,000 in benefits and also disgorge LINA's profits. Second, the Sixth Circuit clarified that a district court's decision regarding how to calculate the amount to be disgorged is reviewed for abuse of discretion. Here, Mr. Rochow put forth an expert who testified that LINA utilized the $910,000 to earn an additional several million dollars in profits. The district court rejected LINA's alternative damages model, and LINA did not sufficiently undermine Mr. Rochow's expert. As such, the Sixth Circuit said that the district court did not abuse its discretion by accepting Mr. Rochow's expert's opinion, which amounted to a more than $2 million difference. 

In short, even though a party's liability is often the focal point of litigation, a good attorney knows that a court's decision regarding the amount of damages can sometimes have a much greater financial impact than the fact of liability itself.