WASHINGTON (CN) – A Supreme Court debate on Monday over attorney’s fees hinged on whether a federal court’s order sending the case back to an insurer meant victory for a woman seeking disability benefits. Chief Justice John Roberts called the ruling a “very significant” win, to which the insurer’s attorney replied, “I’m not sure this should be characterized as a victory.”
The case stems from a claim made by Bridget Hardt, who argued that she was entitled to attorney’s fees because the district court had ordered underwriter Reliance Standard Life Insurance Co. to reconsider her claim for long-term disability benefits. Hardt had undergone surgery on both wrists for carpal tunnel syndrome while working for Dan River Inc.
Reliance reversed its decision after reconsideration, and the district court awarded Hardt nearly $40,000 in attorney’s fees.
Reliance’s attorney, Nicholas Rosenkranz, argued that Hardt wasn’t entitled to fees, because the remand order was “purely procedural” and wasn’t final.
But Hardt’s lawyer, John Ates, insisted that the order was couched in an underlying violation of law: Reliance had violated the Employee Retirement Income Security Act, or ERISA, by not properly considering the benefits claim.
Rosenkranz and Ates clashed over who “won” the remand order, and whether winning was even relevant.
“This is not a prevailing party case,” Ates stressed. He said Hardt just needs to show “some success on the merits.”
Pratik Shah, an assistant to the solicitor general, also argued on Hardt’s behalf, urging the justices to interpret the attorney’s fee provision of ERISA law broadly.
Justice Antonin Scalia seemed surprised by the unlikely ally.
“The position you are taking is unusual,” he told Shah. “The government is usually arguing against fees, because the fees are often assessed against the government.”
“Right,” Shah said.
“So long as you know that you are making your bed and you are going to have to lie in it,” Scalia replied, to laughter.
Justice Stephen Breyer, a frequent user of hypotheticals, presented Shah a scenario in which a plaintiff wins a new hearing but loses the case. He asked if the plaintiff would be eligible for attorney’s fees based on the Pyrrhic victory.
“Yes,” Shah answered. “But a district court applying –“
“All right,” Breyer interrupted. “You are just saying it won’t be a problem because the district court judges are all reasonable, and I know they think that.”
The friendly slight prompted laughter in the courtroom and smiles from the bench.
Breyer saved the tough questions for Reliance’s attorney, Rosenkranz, whose argument he called “technical.” He asked how the remand order could be viewed as anything “but a big victory for the other side.”
Chief Justice Roberts also raised the possibility that relying on a strict definition of victory would “severely limit” the circumstances under which plaintiffs are entitled to fees, in light of the court’s ruling last week in Conkright v. Frommert. That decision instructed district courts to remand most ERISA challenges. Roberts said future claimants might ask for a remand order instead of a straightforward ruling, so they could claim victory and reap fees.
But Rosenkranz insisted that a “properly framed” ERISA claim would seek benefits.
“Well, we’ve already told them they can’t get that,” Scalia said.
Hardt’s attorney asked the court to reverse the 4th Circuit’s denial of attorney’s fees to his client, saying a judgment should not be required for a fee award. His opponent claimed that a win for Hardt would mean a second round of litigation over attorney’s fees and “stingier” benefit plans.
A decision in Hardt v. Reliance Standard Life Insurance is expected in June.