High Court Smooths Path to Plaintiff Fees in Disability Cases

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High Court Smooths Path to Plaintiff Fees in Disability Cases

Marcia Coyle

05-25-2010

Workers suing over disability and other benefits under _the federal law

known as ERISA_ (http://www.dol.gov/dol/topic/health-plans/erisa.htm) may win

attorney fees and costs if they achieve " some degree of success on the

merits, " a unanimous U.S. Supreme Court ruled on Monday. In _Hardt v. Reliance

Standard Life Insurance Co. (pdf)_

(http://www.supremecourt.gov/opinions/09pdf/09-448.pdf) , the justices rejected

a _tougher standard imposed by the

4th U.S. Circuit Court of Appeals (pdf)_

(http://pacer.ca4.uscourts.gov/opinion.pdf/081896.U.pdf) on fee claimants

under the Employee Retirement and

Income Security Act. The lower appellate court had ruled that a claimant

must be a " prevailing party " before seeking a fee award.

The justices' ruling came in a case brought by Bridget Hardt, who sought

long-term disability benefits as a result of job-related carpal tunnel

syndrome. Hardt was awarded the benefits, but in March 2006, Reliance informed

her that she was ineligible for continued long-term benefits. She sued the

insurance company, claiming ERISA violations.

The district court ordered Reliance to reconsider its decision based on

evidence that the court had found. The order said that, if Reliance did not

adequately consider all of the evidence within 30 days, judgment would be

entered in favor of Hardt.

On reconsideration, Reliance reinstated full benefits to Hardt. When Hardt

moved for attorney fees and costs, Reliance objected, arguing she was not a

" prevailing party " because the insurance company had agreed to pay the

benefits. Hardt incurred $58,920 in attorney fees to recover $55,250 in

disability benefits, according to briefs in the case. The district court

awarded

fees, but the 4th Circuit reversed.

In the Supreme Court, Justice Clarence wrote that the words

" prevailing party " do not appear in ERISA's fee-award provision. That provision,

he said, " expressly grants district courts ‘discretion' to award attorney

fees 'to either party.' "

Because the Court's " prevailing party " precedents did not apply here,

said a line of fee precedents that do not rely on prevailing-party

status

should apply, with 1983's Ruckelshaus v. Sierra Club being the principal

case. Under Ruckelshaus, a fees claimant must show some degree of success on

the merits before a court may award attorney fees, said. That

success must be more than " trivial " or a " purely procedural victory. "

Hardt met the standard, according to the Court, by persuading the district

court that the insurance company had failed to comply with ERISA guidelines

nor had it given the type of review required by the law. She also had

obtained a judicial order requiring Reliance to reconsider the evidence

adequately or face judgment in Hardt's favor.

Hardt's counsel, Ates of the Law Firm of Ates in Arlington, Va.,

had argued that the 4th Circuit's rule encouraged ERISA plan administrators

to engage in scorched earth " you sue, you lose " tactics, then give in when

they realize a court will force them to abide by the law.

The solicitor general of the United States had filed an amicus brief urging

the Court to interpret the ERISA fee provision broadly so that claimants

who obtain benefits on remand may be awarded fees and costs.

Rosenkranz of town University Law Center argued the case for

Reliance.

Roughly 10,000 ERISA benefit lawsuits are filed annually.