Wednesday, January 20, 2010
Supreme Court to Hear ERISA Attorney Fee Case
The United States Supreme Court granted certiorari on Friday in Hart v. Reliance Standard Insurance Company where the issue before the Court will be whether only "prevailing parties" are entitled to attorneys fees in ERISA benefits actions. By way of background, Hardt sued Reliance Standard claiming that the insurer violated ERISA by wrongfully denying her long-term disability benefits. As is often the case in benefits matters, the district court did not overturn or approve Reliance Standard's benefits denial. Rather, the district court remanded the matter to Reliance Standard for reconsideration of Hart's disability benefits claim. Reliance Standard subsequentlyreversed its earlier decision and awarded Hardt full benefits. The district court then awarded Hardt $39,149 in attorney fees. The United States Court of Appeals for the Fourth Circuit ("4th Circuit") reversed the District Court's award of attorneys' fees to Hart. The 4th Circuit's holding was that (1) ERISA § 502(g)(1) provides a district court discretion to award attorney fees only to a "prevailing party," and (2) Hardt was not a "prevailing party" because her only request for relief was the award of benefits, which the District Court did not award (rather, as noted, the District Court remanded the case back to Reliance Standard). The Fourth Circuit's decision is in conflict with decisions of the Second, Fifth and Eleventh Circuits, who have declined to read a "prevailing party" requirement into § 502(g)(1). The two specific issues that will be presented to the Supreme Court are: (1)whether the Fourth Circuit erred in holding that ERISA § 502(g)(1) provides a district court discretion to award reasonable attorney’s fees only to a prevailing party; and (2) whether a party is entitled to attorney’s fees pursuant to § 502(g)(1) when, as in Hart's case, she persuades a district court that a violation of ERISA has occurred, successfully secures a judicially-ordered remand requiring a redetermination of entitlement to benefits and subsequently receives the benefits sought on remand.