Tenth Circuit Denies Equitable Relief and Reinforces Limits on ERISA Remedies

In Stark v. Reliance Standard Life Ins. Co., No. 24-6137, —F.4th—-, 2025 WL 1872420 (10th Cir. July 8, 2025), the Tenth Circuit affirmed the dismissal of all claims brought under ERISA by a long-term disability claimant, reinforcing the limited scope of equitable relief and underscoring the importance of exhausting administrative remedies. The case involves a totally disabled beneficiary whose legal guardian sought additional financial remedies from Reliance Standard Insurance Company after the company reinstated long-term disability benefits following a successful pre-litigation appeal. Despite the claimant’s sympathetic circumstances, the court concluded that ERISA did not provide the remedies sought—particularly equitable relief in the form of attorney’s fees and reimbursement for offset deductions.

In 2007, Jill Finley, then 31 years old, suffered a cardiac arrest resulting in a hypoxic brain injury that rendered her totally disabled. At the time, she was employed by Provident Funding Associates, which provided long-term disability (LTD) insurance through Reliance Standard. Reliance Standard approved Finley’s claim. Over time, Reliance Standard began deducting estimated Social Security Disability Insurance (SSDI) benefits from Finley’s monthly LTD payments. Initially, the company waived the offset due to financial hardship, but after Finley was approved for SSDI in 2009, Reliance demanded repayment of over $27,000 in overpaid LTD benefits and reduced her ongoing monthly benefit accordingly.

In April 2022, Reliance terminated Finley’s LTD benefits based on updated testing, claiming she was no longer totally disabled. Finley’s legal guardian, Nancy Stark, hired counsel and appealed the decision, submitting medical documentation and legal argument. The insurer reinstated benefits in January 2023 but declined to cover attorney’s fees or reimburse prior SSDI offsets.

Stark subsequently filed suit, alleging: (1) Reliance owed equitable relief under ERISA § 502(a)(3) (29 U.S.C. § 1132(a)(3)) for the costs incurred in appealing the benefit denial; (2) the SSDI offset violated the plan terms and internal claims procedures; and (3) Reliance Standard breached fiduciary duties by failing to provide requested records during the appeal. The district court granted Reliance’s motion to dismiss under Rule 12(b)(6), and the Tenth Circuit affirmed in full.

No Equitable Relief for Pre-Litigation Attorney’s Fees

The centerpiece of Stark’s argument was a claim for an equitable surcharge under § 1132(a)(3) to cover attorney’s fees incurred in the successful administrative appeal. Citing CIGNA Corp. v. Amara, Stark argued that surcharge relief could make her whole. However, the Tenth Circuit rejected this theory.

The court agreed with the majority of circuits holding that ERISA § 1132(g)(1), which governs fee-shifting, does not authorize recovery of attorney’s fees incurred during administrative proceedings. Referring to decisions from the Second, Third, Fourth, Sixth, Eighth, Ninth, and Eleventh Circuits, the court emphasized that Congress used the term “action,” meaning a formal lawsuit, in the fee provision. Thus, attorney’s fees incurred before litigation are outside the statute’s reach.

The court also rejected the argument that § 1132(a)(3) could serve as a “backdoor” to recover fees not permitted under § 1132(g). Echoing the Ninth Circuit’s reasoning in Castillo v. Metropolitan Life Insurance Co., the court held that reading § 1132(a)(3) to authorize such relief would circumvent congressional intent and violate the American Rule’s presumption against fee-shifting.

SSDI Offset Claim Waived for Failure to Exhaust and Preserve

Plaintiff also challenged the long-standing SSDI offset, arguing that Reliance improperly reduced her monthly benefits and failed to follow its internal policies. The Tenth Circuit declined to consider the merits of this claim on two procedural grounds:

Failure to Exhaust: Finley’s guardian did not appeal the SSDI offset determination when it was issued in 2010, despite being informed of her right to do so. The court emphasized that ERISA requires exhaustion of administrative remedies, and Stark’s failure to challenge the offset at the time barred her from seeking judicial review years later.

Waiver: Even if the claim was timely, the court found it was waived. Stark failed to meaningfully develop arguments about the offset’s illegality or ambiguity in district court, relegating such claims to a cursory factual statement. As a result, those issues were not preserved for appeal.

No Independent Harm from Fiduciary Breach

Lastly, Stark alleged that Reliance breached its fiduciary duty by failing to provide internal documents during the appeal. However, the court determined that any harm from this alleged breach overlapped entirely with the already-dismissed claims. Because Finley’s benefits were reinstated and Stark failed to show distinct or concrete harm from the document request issue, this claim also failed.

Conclusion

Stark v. Reliance Standard serves as a cautionary tale for ERISA claimants: successful reinstatement of benefits may not open the door to broader monetary remedies, particularly when a claimant did not fully pursue administrative remedies. The Tenth Circuit’s decision limits the scope of equitable relief under § 1132(a)(3) and reinforces the importance of ERISA’s exhaustion requirement.