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Supreme court upholds fee shifting in ERISA case

By Sarah Miley

[JURIST] The US Supreme Court [official website; JURIST news archive] on Monday ruled [opinion, PDF] unanimously in Hardt v. Reliance Standard Life Insurance Co. [Cornell LII backgrounder; JURIST report] that fee claimants filing lawsuits under the Employee Retirement Income Security Act (ERISA) [materials] are not required to be a "prevailing party" in order to be eligible for an attorney's fees award under 29 USC s. 1132(g)(1) [text]. The fee-shifting statute applies in most ERISA lawsuits and allows the court to use discretion in assigning reasonable attorney's fees to either party. Bridget Hardt filed a claim under ERISA against her employer's insurance carrier, Reliance, after the carrier discontinued long term benefits it had previously awarded for a work-related injury. In pre-trial proceedings, the district court found "compelling evidence" in favor of Hardt but did not grant summary judgment in order to allow Reliance to reassess Hardt's application. Reliance complied with the district court order and upon further evaluation reinstated Hardt's benefits. No judgment was issued, but the district court awarded Hardt attorney's fees under s. 1132. The US Court of Appeals for the Fourth Circuit vacated [opinion, PDF] the fees award granted by the lower court, holding that Hardt had failed to establish that she qualified as a prevailing party. Justice Clarence Thomas, delivering the opinion of the court, held that the circuit court's addition of a prevailing party requirement was "inventing a statute rather than interpreting one" because s. 1132 expressly denotes that the district court can use its discretion to award attorney's fees to either party, and incorporates no "prevailing party" provision. Therefore, a court may award fees and costs under s. 1132(g)(1), as long as the fee claimant has achieved "some degree of success on the merits." The case was reversed and remanded to the Fourth Circuit for proceedings consistent with the Supreme Court's judgment.

In April, the Supreme Court ruled [JURIST report] that a district court has an obligation to defer to an ERISA plan administrator's reasonable interpretation of the terms of the plan if the plan administrator arrived at the interpretation outside the context of an administrative claim for benefits. The US Court of Appeals for the Second Circuit had ruled that a district court is under no obligation to defer to an ERISA plan administrator's interpretation and that a district court has "allowable discretion" to adopt any "reasonable" interpretation of the terms of the plan.

Full post as published by JURIST - The Paper Chase on May 24, 2010 (boomark / email).