You already know that under ERISA a court may, in its discretion, award reasonable attorney’s fees and costs to a claimant seeking benefits if there is a showing of “some degree of success on the merits.”

What does “some degree of success on the merits” mean?

You probably already know it does not require the claimant to be the “prevailing party.”

The United States Supreme Court explained this in Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242 (2010) (As a first step in determining whether a claimant is entitled to attorney fees, the party seeking attorney’s fees in an ERISA action need not demonstrate that it was a “prevailing party” in the lawsuit, but must show that it achieved “some degree of success on the merits” to be awarded fees. As a second step in the analysis, courts may apply a five-factor test.)

So what proof is needed to establish “some degree of success on the merits” after the Hardt decision?

Here is a mini-summary of a sampling of recent September 2013 cases:

  1. Binaley v. AT&T Umbrella Benefit Plan No. 1, __ F. Supp. 2d _, 2013 WL 5402236 (N.D. Cal. September 26, 2013) (Attorney fees denied: “The evidence shows that Plaintiff did not serve Defendants with the Complaint until after the decision had been made to reverse the previous denial and award of LTD benefits [and Defendants had no prior knowledge of the lawsuit].”)
  2. Scarangella v. Group Health, Inc., _ F.3d _, 2013 WL 4792466 (2nd Cir. September 10, 2013) ( Remanded to district court: “[A] party that obtains relief due to the voluntary conduct of another party after minimal litigation in the district court is unlikely to succeed in demonstrating that the impetus for the relief was some action by the court[.]”)
  3. Adair v. El Pueblo Boys & Girls Ranch, _ F. Supp. 2d _, 2013 WL 4775927 (D. Colo. September 5, 2013) (Attorney fees awarded because the district court had earlier remanded the benefit claim, and benefits were partially approved after remand).

KEY TAKE AWAYS:

  1. Consider settling early in the suit (minimal litigation) and before the court renders a decision on the merits;
  2. Know and apply the 5 factor test addressed in these cases;
  3. Make sure your ERISA settlement agreements address and resolve attorney fee claims, and consider adding a waiver for attorney fee claims.