ERISA disability claimants can receive attorney fees with “some degree of success”

On May 24, 2010, the United States Supreme Court rendered an opinion in the case of Hardt V. Reliance Standard, which is a major victory for disability insurance claimants that have a long-term disability policy governed by ERISA. Reliance Standard, a disability insurance carrier attempted to argue that a disability claimant was not entitled to attorney fees because she was not a “prevailing party” after her case was remanded back to Reliance. For a background summary of this case see Can I recover attorney fees if my long-term disability claim is governed by ERISA?

The United States Supreme Court rejected Reliance Standard’s argument and held that “a claimant need not be a prevailing party to be eligible for attorney’s fees award under 29 USA 1132(g)(1). The court stated the following circumstances under which a court may award attorney’s fees:

“a claimant must show some degree of success on the merits before a court may award attorney’s fees under § 1132(g)(1). A claimant does not satisfy that requirement by achieving trivial success on the merits or a purely procedural victory, but does satisfy it if the court can fairly call the outcome of the litigation some success on the merits without conducting a lengthy inquiry into the question whether a particular party’s success was ‘substantial’ or occurred on a central issue.”

In addition to the above criteria a district court may also consider the following five factors in deciding whether to award attorney fees:

  1. the degree of opposing parties’ culpability or bad faith;
  2. the ability of opposing parties to satisfy an award of attorney’s fees;
  3. whether an award of attorneys’ fees against the opposing parties would deter other persons acting under similar circumstances;
  4. whether the parties requesting attorney’s fees sought to benefit all participants and beneficiaries of an ERISA plan or to resolve a significant legal question regarding ERISA itself;
  5. the relative merits of the parties’ positions.

I think the court’s recent ruling will make it easier for disability claimant’s to receive an award of attorney fees, but there is obviously no guarantee that fees will be awarded. It will be interesting to see how the courts will rule on attorney fee awards following this opinion from the Supreme Court. The new “some degree of success” standard will generate all kinds of new case law! The court’s ruling is a rare ERISA victory for disability claimants. I hope this ruling will deter disability insurance companies from wrongfully denying disability claims.

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