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Third Circuit Wrestles with Attorney Fees Under ERISA

October 23, 2014 | Posted in : Fee Award, Fee Award Factors, Fee Issues on Appeal, Fee Jurisprudence

A recent Legal Intelligencer story, “Third Circuit Wrestles with Attorney Fees under ERISA,” reports that after broaching the issue in an opinion issued last summer as not precedential, the U.S. Court of Appeals for the Third Circuit suggested during arguments Tuesday morning that it might soon answer definitively whether or not the catalyst theory for recovering attorney fees applies under ERISA.  The catalyst theory allows plaintiffs to collect fees when the pressure of legal action causes a defendant to voluntarily change its conduct.

“I’m trying to sort out the law here … on the catalyst theory,” Judge Thomas L. Ambro told Mark Oberstaedt on Tuesday.  Oberstaedt, of Archer & Greiner in Haddonfield, NJ argued on behalf of CareFirst, a member of the Blue Cross Blue Shield Association and a defendant in the case.

The case, Templin v. Independence Blue Cross, was initially filed as an Employee Retirement Income Security Act (ERISA) action in 2009 by people who have hemophilia seeking reimbursement for their medication.  The insurance companies agreed to pay $2.2 million in claims, according to court papers.  The plaintiffs then moved to collect the interest that had accrued on those claims, which settled in 2013.  They are now seeking to recover attorney fees for that part of the litigation.

In 2010, the U.S. Supreme Court ruled in Hardt v. Reliance Standard Life Insurance that the ERISA statute gives district courts broad discretion to award attorney fees to plaintiffs.  The high court ruled that the statute doesn’t limit attorney fee awards to only prevailing parties, but allows parties who show “some degree of success on the merits” to recover attorney fees.

U.S. District Judge Joel Slomsky of the Eastern District of Pennsylvania had rejected the plaintiffs’ bid to collect attorney fees in the hemophilia case because the interest they collected came from a settlement rather than a judgment and the amount of interest that they had won was small.

NALFA also reported on this issue in “Third Circuit OKs ERISA Attorney Fees Under Catalyst Theory”