Ninth Circuit Affirms Denial of ERISA Attorneys’ Fees to Claimant Where Insurer Reinstated Disability Benefits Shortly after Lawsuit was Filed

In Desharnais v. Unum Life Ins. Co. of Am., No. 22-15336, 2022 WL 17817954 (9th Cir. Dec. 20, 2022), a short unpublished memorandum, the Ninth Circuit found that the district court did not abuse its discretion in denying attorneys’ fees to Plaintiff Matthew Desharnais under ERISA Section 502(g)(1). Desharnais argued that the district court erred by concluding that he did not achieve “some success on the merits” under the “catalyst theory” and that the district abused its discretion in concluding that, in the alternative, the Hummell factors weighed against awarding fees. The Ninth Circuit memorandum did not discuss the background facts of this case, but based on the facts discussed at the oral argument, Desharnais filed suit against Unum when it did not decide his long-term disability benefit appeal on time as required by the ERISA regulations. Unum had requested that Desharnais undergo an independent medical evaluation before it was willing to engage in formal mediation. After some back and forth and disagreement over the scheduling (Desharnais wanted his counsel present at the exam), Unum did not arrange for the exam. Desharnais then underwent an independent medical evaluation that he arranged on his own. His counsel submitted the results of that exam to Unum, and Unum reinstated his LTD claim. The district court did not decide any issues on the merits prior to Unum reinstating the claim. Desharnais argued he was entitled to attorneys’ fees because his lawsuit was the catalyst for Unum reinstating his claim and he achieved the requisite success on the merits. Unum opposed Desharnais’s application for fees.

The Ninth Circuit did not decide whether Desharnais achieved some success on the merits based on the catalyst theory. The court assumed without deciding that Desharnais did achieve some success on the merits. But it affirmed the district court after finding that it did not abuse its discretion in denying fees after weighing the five Hummell factors. The court found that only one factor—Unum’s ability to pay—favored an award of fees. The other factors were either neutral or weighed against awarding fees. The court noted that the district court did not have the opportunity to consider the merits of Desharnais’s position, so it is not clear if the merits of his position were stronger than Unum’s. Because the court did not find clear error of judgment in the district court’s conclusion, it affirmed.