Hardt v. Reliance Standard Life Ins. Co.

• Citation: 130 S.Ct. 2149,176 L.Ed.2d 998,560 U.S. 242
• Decision Date: 24 May 2010
• Docket Number: No. 09–448.,09–448.
• Parties: Bridget HARDT, Petitioner, v. RELIANCE STANDARD LIFE INSURANCE CO.
• Court: United States Supreme Court

560 U.S. 242

130 S.Ct. 2149

176 L.Ed.2d 998

Bridget HARDT, Petitioner,

v.RELIANCE STANDARD LIFE INSURANCE CO.

No. 09–448.

Supreme Court of the United States

Argued April 26, 2010.

Decided May 24, 2010.

John R. Ates

, Alexandria, VA, for petitioner.

Pratik A. Shah

, for the United States as amicus curiae, by special leave of the Court, supporting the petitioner.

Nicholas Q. Rosenkranz, Washington, DC, for respondent.

Ann K. Sullivan

, Elaine Inman Hogan, Crenshaw, Ware & Martin, P.L.C., Norfolk, VA, John R. Ates, Counsel of Record, Ates Law Firm, P.C., Alexandria, VA, for petitioner.

Nicholas Quinn Rosenkranz, Washington, DC, Howard M. Radzely

, Richard W. Black, Danny E. Petrella, Morgan, Lewis & Bockius LLP, Washington, DC, R. Ted Cruz, Counsel of Record, Morgan, Lewis & Bockius LLP, Houston, TX, A. Lauren Carpenter, Morgan, Lewis & Bockius LLP, Philadelphia, PA, for respondent.Opinion

Justice THOMAS

delivered the opinion of the Court.

In most lawsuits seeking relief under the Employee Retirement Income Security Act of 1974 (ERISA), 88 Stat. 829, as amended, 29 U.S.C. § 1001 et seq.,

“a reasonable attorney's fee and costs” are available “to either party” at the court's “discretion.” § 1132(g)(1). The Court of Appeals for the Fourth Circuit has interpreted § 1132(g)(1) to require that a fee claimant be a “prevailing party” before he may seek a fees award. We reject this interpretation as contrary to § 1132(g)(1)

's plain text. We hold instead that a court “in its discretion” may award fees and costs “to either party,” ibid., as long as the fee claimant has achieved “some degree of success on the merits,” Ruckelshaus v. Sierra Club, 463 U.S. 680, 694, 103 S.Ct. 3274, 77 L.Ed.2d 938 (1983).

I

In 2000, while working as an executive assistant to the president of textile manufacturer Dan River, Inc., petitioner Bridget Hardt began experiencing neck and shoulder pain. Her doctors eventually diagnosed her with carpal tunnel syndrome

. Because surgeries on both her wrists failed to alleviate her pain, Hardt stopped working in January 2003.

In August 2003, Hardt sought long-term disability benefits from Dan River's Group Long–Term Disability Insurance Program Plan (Plan). Dan River administers the Plan, which is subject to ERISA, but respondent Reliance Standard Life Insurance Company decides whether a claimant qualifies for benefits under the Plan and underwrites any benefits awarded. Reliance provisionally approved Hardt's claim, telling her that final approval hinged on her performance in a functional capacities evaluation intended to assess the impact of her carpal tunnel syndrome

and neck pain on her ability to work.

Hardt completed the functional capacities evaluation in October 2003. The evaluator summarized Hardt's medical history, observed her resulting physical limitations, and ultimately found that Hardt could perform some amount of sedentary work. Based on this finding, Reliance concluded that Hardt was not totally disabled within the meaning of the Plan and denied her claim for disability benefits. Hardt filed an administrative appeal. Reliance reversed itself in part, finding that Hardt was totally disabled from her regular occupation, and was therefore entitled to temporary disability benefits for 24 months.

While her administrative appeal was pending, Hardt began experiencing new symptoms in her feet and calves, including tingling, pain, and numbness. One of her physicians diagnosed her with small-fiber neuropathy

, a condition that increased her pain and decreased her physical capabilities over the ensuing months.

Hardt eventually applied to the Social Security Administration for disability benefits under the Social Security Act. Her application included questionnaires completed by two of her treating physicians, which described Hardt's symptoms and stated the doctors' conclusion that Hardt could not return to full gainful employment because of her neuropathy

and other ailments. In February 2005, the Social Security Administration granted Hardt's application and awarded her disability benefits.

About two months later, Reliance told Hardt that her Plan benefits would expire at the end of the 24–month period. Reliance explained that under the Plan's terms, only individuals who are “totally disabled from all occupations” were eligible for benefits beyond that period, App. to Pet. for Cert. 36a, and adhered to its conclusion that, based on its review of Hardt's records, Hardt was not “totally disabled” as defined by the Plan. Reliance also demanded that Hardt pay Reliance $14,913.23 to offset the disability benefits she had received from the Social Security Administration. (The Plan contains a provision coordinating benefits with Social Security payments.) Hardt paid Reliance the offset.

Hardt then filed another administrative appeal. She gave Reliance all of her medical records, the questionnaires she had submitted to the Social Security Administration, and an updated questionnaire from one of her physicians. Reliance asked Hardt to supplement this material with another functional capacities evaluation. When Reliance referred Hardt for the updated evaluation, it did not ask the evaluator to review Hardt for neuropathic pain, even though it knew that Hardt had been diagnosed with neuropathy

after her first evaluation.

Hardt appeared for the updated evaluation in December 2005, and appeared for another evaluation in January 2006. The evaluators deemed both evaluations invalid because Hardt's efforts were “submaximal.” Id., at 37a. One evaluator recorded that Hardt “refused multiple tests ... for fear of nausea/illness/further pain complaints.” Ibid. (internal quotation marks omitted).

Lacking an updated functional capacities evaluation, Reliance hired a physician and a vocation rehabilitation counselor to help it resolve Hardt's administrative appeal. The physician did not examine Hardt; instead, he reviewed some, but not all, of Hardt's medical records. Based on that review, the physician produced a report in which he opined that Hardt's health was expected to improve. His report, however, did not mention Hardt's pain medications or the questionnaires that Hardt's attending physicians had completed as part of her application for Social Security benefits. The vocational rehabilitation counselor, in turn, performed a labor market study (based on Hardt's health in 2003) that identified eight employment opportunities suitable for Hardt. After reviewing the physician's report, the labor market study, and the results of the 2003 functional capacities evaluation, Reliance concluded that its decision to terminate Hardt's benefits was correct. It advised Hardt of this decision in March 2006.

After exhausting her administrative remedies, Hardt sued Reliance in the United States District Court for the Eastern District of Virginia. She alleged that Reliance violated ERISA by wrongfully denying her claim for long-term disability benefits. See § 1132(a)(1)(B)

. The parties filed cross-motions for summary judgment, both of which the District Court denied.

The court first rejected Reliance's request for summary judgment affirming the denial of benefits, finding that “Reliance's decision to deny benefits was based on incomplete information.” App. to Pet. for Cert. 42a. Most prominently, none of the functional capacities evaluations to which Hardt had submitted had “assessed the impact of neuropathy

and neuropathic pain on Ms. Hardt.” Ibid. In addition, the reviewing physician's report “was itself incomplete”; the basis for the physician's “medical conclusions [wa]s extremely vague and conclusory,” ibid., and the physician had “failed to cite any medical evidence to support his conclusions,” id., at 43a, or “to address the treating physicians' contradictory medical findings,” id., at 44a. The court also found that Reliance had “improperly rejected much of the evidence that Ms. Hardt submitted,” id., at 45a, and had “further ignored the substantial amount of pain medication Ms. Hardt's treating physicians had prescribed to her,” id., at 46a. Accordingly, the court thought it “clear that Reliance's decision to deny Ms. Hardt long-term disability benefits was not based on substantial evidence.” Id., at 47a.

The District Court then denied Hardt's motion for summary judgment, which contended that Reliance's decision to deny benefits was unreasonable as a matter of law. In so doing, however, the court found “compelling evidence” in the record that “Ms. Hardt [wa]s totally disabled due to her neuropathy

.” Id., at 48a. Although it was “inclined to rule in Ms. Hardt's favor,” the court concluded that “it would be unwise to take this step without first giving Reliance the chance to address the deficiencies in its approach.” Ibid. In the District Court's view, a remand to Reliance was warranted because “[t]his case presents one of those scenarios where the plan administrator has failed to comply with the ERISA guidelines,” meaning “Ms. Hardt did not get the kind of review to which she was entitled under applicable law.” Ibid. Accordingly, the court instructed “Reliance to act on Ms. Hardt's application by adequately considering all the evidence” within 30 days; “[o]therwise,” it warned, “judgment will be issued in favor of Ms. Hardt.” Id., at 49a.

Reliance did as instructed. After conducting that review, Reliance found Hardt eligible for long-term disability benefits and paid her $55,250 in accrued, past-due benefits.

Hardt then moved for attorney's fees and costs under § 1132(g)(1)

. The District Court assessed her motion under the three-step framework that governed fee requests in ERISA cases under Circuit precedent. At step one of that framework, a district court asks whether the fee claimant is a “ ‘prevailing party.’ ” Id., at 15a–16a (quoting Martin v. Blue Cross & Blue Shield of Virginia, Inc., 115 F.3d 1201, 1210 (C.A.4 1997), and citing Buckhannon Board & Care Home, Inc. v. West Virginia Dept. of Health and Human Resources, 532 U.S. 598, 603, 121...