You know already that, under ERISA, “the court in its discretion may allow reasonable attorney fee’s and costs so long as the party achieves ‘some success on the merits.’”

But don’t give up yet and just pay the claimant’s attorney fees. Courts apply additional criteria to decide whether to award fees…and these criteria help frame arguments to oppose Plaintiff’s request for fees… even when they achieve “some success on the merits.”

Here’s the case of Guest-Marcotte v. Life Insurance of North America, 2018 WL 3436782 (E.D. Michigan July 17, 2018)(Sixth Circuit reversed dismissal of plaintiff’s ERISA disability claim and concluded denial of benefits was “arbitrary and capricious.” On remand, trial court denied Plaintiff’s requests for attorney fees because Plaintiff failed to establish criteria used to determine whether to award fees in ERISA cases.)

FACTS: Guest-Marcotte brought a lawsuit claiming her ERISA governed disability benefits were improperly denied. The district court dismissed the claim, but the Sixth Circuit reversed and remanded. Plaintiff then brought a motion for attorney fees claiming she had “some success on the merits” as a result of the Sixth Circuit decision which concluded Life Insurance of North America’s (LINA) denial of benefits was arbitrary and capricious.

ISSUE: Whether Plaintiff should recover attorney fees after the Sixth Circuit reversed the trial court’s dismissal of her claim?

DISTRICT COURT HELD: CLAIMANT ATTORNEY FEES DENIED.

  1. Under ERISA, “the court in its discretion may allow reasonable attorney fee’s and costs[.] The party seeking fees need not be a ‘prevailing party’ to be eligible [but] they must simply achieve ‘some success on the merits.’” Op. at 6.
  2. When determining to award fees in the Sixth Circuit, the court applies the five-factor King test: (a) degree of opposing party’s culpability; (b) ability to satisfy the attorney fee award; (c) deterrent effect of attorney fee award; (d) whether claimant sought to confer a common benefit for all participants of the ERISA plan; and (e) relative merits of each parties’ positions. Op. at 7.
  3. “Arbitrary and capricious” findings “do[] not necessarily indicate culpability or bad faith[.]’” Op. at 6 (emphasis in original).
  4. LINA’s decision not to conduct an Independent Medical Exam “does not, by itself, suggest a high level of culpability… ‘t]here is nothing inherently objectionable about a file review by a qualified physician in the context of a benefits determination.’” Op. at 8.
  5. LINA “provided reasoned, if mistaken, explanations for its determinations [and its conduct] was not sufficiently culpable [to award attorney fees.]” Op. at 10
  6. “‘[E]rroneous interpretation of certain plan terms…does not constitute culpable conduct for purposes of determining whether to award attorney fees.’” Op. at 10.
  7. “Having considered the [five] factors set forth in King in light of the entire record, the Court finds that, on balance, a fee award is not warranted.” Op. at 13.

Note: The Sixth Circuit King factors, used to determine whether attorney fees should be imposed in ERISA cases, are similar to tests applied by a majority of the other circuits. See, e.g., Hummell v S.E. Rykoff & Co., 634 F.2d 446, 452-3 (9th Cir. 1980); Chambless v. Masters, Mates & Pilots Pension Plan, 815 F.2d 869, 872 (2nd Cir. 1987).