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Hardt v. Reliance Standard Life Insurance Co.

Attorney's Fees Can Be Awarded to a Participant When a Court Orders the Plan Administrator to Rehear the Claim

AARP'S Brief

AARP's brief argued that the interaction between the Fourth Circuit's decision and existing judicial precedent, which frequently results in remands, would erect substantial barriers for a participant to have access to court. The brief pointed out that even before the Fourth Circuit's standard was set, participants had a difficult time finding knowledgeable attorney's to handle ERISA benefit claims. Because most participants are challenging denials of modest benefit amounts and have limited means, restricting attorney's  fees will essentially preclude many participants from bringing a benefit claims

A decision to affirm the Fourth Circuit's strict "prevailing party" standard would have “rendered illusory the availability of attorney's  fees for a majority of participants who successfully challenge benefit denials even if a participant secured significant legal relief” the brief argued. This would frustrate a critical and explicit element of the congressional enforcement mechanisms.

The Court's Ruling

The Court read the language of the statute closely. It noted that the relevant section of the law expressly granted courts the "discretion" to award attorneys fees to either party — and did not include the specific reference to "prevailing party" that other parts of ERISA required. The Court stated that as long as the participant achieved "some degree of success on the merits," he or she could recover attorney's  fees. Here, the Court found that the participant had clearly achieved some success on the merits because she obtained her benefits. Thus, the Court ruled the lower court's award of fees should stand.

Had the Supreme Court ruled the other way, participants' ability to obtain the benefits to which they are entitled would have been severely curtailed. The ability to recover legal fees is important because, unlike employers who have legal help in-house or on retainer and can justify this by the volume of legal work they provided, wronged employees will have difficulty retaining attorney's  to bring their individual benefit cases. Consequently, without the possibility of recovering legal fees, there would be little financial incentive for plans to comply with the law.  

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