ERISA Does Not Automatically Provide Awards for Attorney’s Fees

Philadelphia, PAWhen filing an ERISA lawsuit, it is important for plaintiffs to note that the Employee Retirement Income Security Act (ERISA) does not necessarily provide awards for attorney’s fees. This does not mean that lawsuits regarding ERISA plans should not be filed, but it is something for plaintiffs to be aware of, and it is something a Pennsylvania widow recently learned.

According to The Pennsylvania Record (7/2/13), the widow of a man who was killed in a motorcycle accident had filed a lawsuit after an insurance company denied accidental death and dismemberment benefits. Ultimately, a court awarded the woman the $400,000 in insurance coverage she sought. She then filed a motion to recover the $212,000 in attorney’s fees and costs that she incurred as a result of filing the lawsuit.

But the judge denied the request, saying that ERISA leaves attorney’s fees to the discretion of the judge. He found that the insurance company did not act in bad faith and therefore would not be liable for attorney’s fees and costs.

Under ERISA, plaintiffs can request attorney’s fees. But before they can request such fees, they must first file a lawsuit and have some degree of success in that lawsuit. Only then can they file a motion requesting attorney’s fees.

The “some degree of success on the merits” of a claim came from the U.S. Supreme Court in Hardt v. Reliance Standard Life Ins. Co (No. 09-448). That means that to obtain attorney’s fees, the plaintiff does not need to show she was the prevailing party in the lawsuit, just that she had success on the merits of the case.

In writing for the majority, Justice Thomas noted, “[ERISA] expressly grants district courts ‘discretion’ to award attorney’s fees ‘to either party.’”

Making the situation somewhat complicated for plaintiffs is that under ERISA, there are often administrative appeals that must be filed before a lawsuit can be filed. For example, before a person can file an ERISA lawsuit against an insurance company, the person must first file an appeal with the insurance company. Only once all administrative appeals have been exhausted can a lawsuit be filed. But attorney’s fees as given under ERISA do not include time spent on administrative appeals. ERISA only covers attorney’s fees during litigation.