The Third Circuit held that the catalyst theory of recovery applies to ERISA cases when determining whether to award attorneys' fees. In this case, Plaintiffs (two individuals and two pharmacies) filed suit against Defendant insurance companies for denial of benefits under ERISA. After their motion to dismiss was denied, Defendants paid the claims in full. Both parties then sought attorneys' fees and costs, which the district court denied. The Third Circuit affirmed the district court’s decision to deny fees, but remanded on the issue of whether Plaintiffs were entitled to interest on the delayed payment of benefits. Ultimately, the Defendants agreed to pay $68,000 in interest to Plaintiffs and the case settled.
Plaintiffs then filed a motion for attorneys' fees and costs. The district court denied the motion. In so ruling, the court explained that under the catalyst theory of recovery, which applies when the lawsuit brings about a voluntary change in the defendants' conduct, judicial action must serve as the catalyst for change. The Third Circuit agreed that the catalyst theory applied, but it disagreed with the district court's ruling and held that all that was necessary was that litigation activity pressed Defendants to settle or give Plaintiffs the requested relief. It explained that the victory must be voluntary, non-trivial, and more than a procedural victory that is apparent to the court without the need to conduct a lengthy inquiry into whether that success was substantial or occurred on a central issue. The Court held that Plaintiffs were eligible for an award under this standard and remanded to the district court to determine whether to award attorneys' fees. The case is Templin v. Independence Blue Cross, No. 13-4493, 2015 WL 2151778 (3d Cir. May 8, 2015).
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