Resolving a question of first impression, the Eleventh Circuit has held that ERISA's attorney's fee provision does not permit a district court to award fees against a party's counsel (ERISA § 502(g)(1) (29 U.S.C. § 1132(g)(1)); Peer v. Liberty Life Assurance Co. of Bos., (11th Cir. Apr. 6, 2021); see Practice Note, ERISA Litigation: Attorney's Fees and ERISA Litigation Toolkit).

The plaintiff-claimant in this case was covered under an ERISA-governed insurance policy under which totally insured individuals were eligible for a waiver of premiums during their disability. However, the policy's insurer denied the claimant's premium waiver request—concluding that she was not totally disabled. The claimant hired a lawyer and administratively appealed the insurer's decision, but the insurer upheld its decision. The claimant then sued the insurer in federal district court seeking a waiver of premium and clarification of her rights to future benefits. Five months later, the insurer relented and reinstated the claimant's coverage and waiver of premium retroactive to the original termination date.

The district court determined that the insurer's reversal rendered the case moot, but gave the claimant leave to amend her complaint. Through counsel, the claimant filed an amended complaint that repeated her original complaint and rephrased the claims for relief that had previously been declared moot. After the court dismissed the amended complaint, the claimant filed a second amended complaint that again asserted the mooted claims (by block-quoting and repeating the claims verbatim). After additional attempts by the claimant's counsel to prolong the litigation, the district court dismissed the claims as moot or not ripe, and the Eleventh Circuit affirmed.

On remand, both parties moved for attorney's fees under ERISA, and the district court awarded fees to:

The court directed the claimant's attorney, rather than the claimant herself, to pay the fees to the insurer, because the attorney was responsible for prolonging the litigation of moot arguments despite having 30 years of ERISA experience. The court noted that the attorney had created a "systemic state of confusion" and caused the insurer to expend considerable resources in defending the litigation. The claimant's attorney appealed and the insurer, arguing that fees should have been awarded against both the attorney and the claimant, cross-appealed.

The Eleventh Circuit held that ERISA's attorney's fees provision does not permit district courts to award fees against a party's lawyer (see Practice Note, ERISA Litigation: Attorney's Fees: Eligibility for Attorney's Fees Under ERISA). The Eleventh Circuit reasoned that this holding:

In addition, the Eleventh Circuit reasoned that interpreting ERISA's attorney's fee provision to allow an award of fees against a lawyer would circumvent existing procedures for sanctioning attorney misconduct. ERISA's attorney's fee provision, the court observed, is an "ill-fitting" way to address attorney misconduct.

Therefore, the Eleventh Circuit reversed and vacated the fee award against the claimant's attorney, and remanded the case to the district court to consider whether the claimant's attorney should be sanctioned and whether the claimant should pay the insurer's attorney's fees.

In the Eleventh Circuit's view, its holding supports ERISA's overall purposes in that the opposite outcome could make it more difficult for participants to hire qualified counsel (who might reject ERISA cases because of the heightened personal risk involved). That said, ERISA's purposes could arguably be served by awarding fees in a case like this if doing so deters needless litigation—thereby preventing the expense of defending such litigation.