Stark v. Reliance Standard Life Insurance Co.
Tenth Circuit Declines Equitable Surcharge for Pre-Litigation Attorney’s Fees under ERISA § 502(a)(3)

1. Introduction

Stark v. Reliance Standard Life Insurance Company, No. 24-6137 (10th Cir. July 8, 2025), addresses three recurring controversies in Employee Retirement Income Security Act (ERISA) litigation:

1. Whether § 502(a)(3) (29 U.S.C. § 1132(a)(3)) permits a plan participant to recover attorney’s fees incurred during the pre-suit, internal administrative appeal by labeling them an “equitable surcharge.”
2. Whether a long-term disability insurer may deduct Social Security Disability (SSD) benefits from the participant’s monthly benefit under plan language referring to “Other Income Benefits,” and what procedural hurdles (exhaustion and timeliness) govern challenges to that offset.
3. What constitutes a “concrete harm” when a fiduciary allegedly withholds documents during the administrative process.

Nancy Stark, guardian for the incapacitated insured Jill Finley, sued Reliance Standard after the company terminated—and later reinstated—Finley’s long-term disability benefits. Stark sought:

• A monetary surcharge equal to the attorney’s fees spent to overturn the termination internally;
• Repayment of SSD offsets taken since 2008; and
• Additional equitable and declaratory relief for alleged fiduciary breaches.

The district court dismissed all claims under Fed. R. Civ. P. 12(b)(6); the Tenth Circuit affirmed in full.

2. Summary of the Judgment

The Tenth Circuit held:

1. No Equitable Surcharge for Pre-Suit Fees. Section 502(a)(3) cannot be used to recover attorney’s fees incurred during mandatory administrative appeals. Such fees are available, if at all, only under ERISA’s fee-shifting provision, § 502(g)(1), which applies solely to fees incurred in “any action”—i.e., in court.
2. SSD Offset Claims Barred. Challenges to the SSD offset were (a) unexhausted because Stark never administratively appealed the 2010 offset determination within 180 days, and (b) waived because she failed to develop the argument below.
3. No Concrete Harm from Document-Handling Breach. Even assuming a fiduciary breach occurred, Stark pleaded no distinct, non-duplicative injury once benefits were reinstated; therefore, the derivative claim failed.

3. Analysis

3.1 Precedents Cited and Their Influence

• Varity Corp. v. Howe, 516 U.S. 489 (1996) – Described § 502(a)(3) as ERISA’s “catch-all” equitable remedy provision.
• CIGNA Corp. v. Amara, 563 U.S. 421 (2011) – Recognized “surcharge” as an historically equitable remedy but left scope unclear.
• Montanile v. Board of Trustees, 577 U.S. 136 (2016) – Limited equitable restitution to specifically identifiable funds.
• Cann v. Carpenters’ Pension Trust, 989 F.2d 313 (9th Cir. 1993) – Construed § 502(g) to exclude fees incurred in internal proceedings; relied upon by seven circuits.
• Castillo v. MetLife, 970 F.3d 1224 (9th Cir. 2020) – Held § 502(a)(3) cannot circumvent § 502(g) to obtain pre-litigation fees; expressly followed by the Tenth Circuit here.
• Tenth Circuit ERISA exhaustion cases, e.g., Whitehead v. OG&E, 187 F.3d 1184 (10th Cir. 1999), grounding the exhaustion dismissal.

3.2 Court’s Legal Reasoning

a. Statutory Text and Structure

The panel emphasized the “inter-section” of two ERISA provisions:

• § 502(a)(3) – authorizes “other appropriate equitable relief.”
• § 502(g)(1) – separately governs attorney’s fees, allowing them “in any action.”

Because Congress spoke directly to fees in § 502(g) but omitted pre-litigation language, the canon expressio unius est exclusio alterius indicates intentional exclusion. Allowing recovery under (a)(3) would render (g)(1) superfluous and undercut the American Rule’s presumption against fee shifting.

b. Historical Equity Principles

Even accepting Amara’s endorsement of “surcharge” as equitable, the court stressed that traditional surcharges compensated for losses to the trust, not for a beneficiary’s litigation expenses—particularly before suit was filed. Thus, Stark’s remedy was not the type historically available in equity.

c. Policy Considerations

Citing Cann, the panel explained that permitting fee recovery at the administrative stage would incentivize plans to pay questionable claims simply to avoid “double-or-nothing” exposure, undermining ERISA’s goal of plan stability and adequate funding.

d. Exhaustion and Waiver on SSD Offset

The letter of March 2010 triggered the 180-day administrative deadline. Stark never appealed. Under Tenth Circuit precedent, failure to exhaust is jurisdictional in effect for ERISA claims and bars judicial review. Furthermore, Stark did not substantively argue plan-language ambiguity or coercion in the district court, so those theories were waived.

e. Lack of Concrete Harm on Document Claim

After benefits were reinstated, the only alleged remaining injuries were the same pre-suit fees and SSD offsets already rejected. Without independent injury or ongoing deprivation, no Article III injury-in-fact existed to support separate equitable relief.

3.3 Likely Impact of the Decision

1. Clarifies fee recovery limits in the Tenth Circuit. Participants may not recoup attorney’s fees for navigating internal claims/appeals unless and until they file suit and satisfy § 502(g)’s requirements.
2. Aligns Tenth Circuit with majority view. Only the Fourth Circuit (post-Rose) openly permits broader surcharge theory; Stark deepens the circuit consensus that pre-litigation fees are unavailable.
3. Strategic repercussions. Claimants and counsel may:
   • File suit sooner to shift fees, rather than devote extensive resources to internal appeals, potentially straining judicial resources.
   • Seek alternative contract provisions (e.g., fee-reimbursement clauses) during plan drafting.
4. Plan administration stability. Insurers gain predictability over reserve requirements, knowing pre-litigation fees cannot be imposed retrospectively as “surcharge.”

4. Complex Concepts Simplified

• ERISA § 502 vs. § 503: § 502 provides enforcement mechanisms; § 503 outlines the internal claims procedure participants must exhaust before suing.
• Equitable Surcharge: Historically, a make-whole monetary remedy imposed on fiduciaries who breached duties causing loss to the trust—distinct from fee-shifting.
• Exhaustion Doctrine: Courts generally require participants to finish the plan’s internal review before filing suit, ensuring a complete administrative record and honoring plan primacy.
• SSD “Offset”: Many disability plans deduct government benefits (Social Security, Workers’ Compensation) from policy benefits to avoid double recovery.
• Expressio Unius: Interpretive canon meaning “the expression of one thing implies the exclusion of others.” Used to infer congressional intent where statutory language is partial.

5. Conclusion

The Tenth Circuit’s opinion in Stark v. Reliance Standard definitively rules that pre-litigation administrative attorney’s fees are not recoverable under ERISA’s equitable catch-all. By reading § 502(a)(3) in harmony with § 502(g), the court prevents participants from bypassing ERISA’s narrowly tailored fee-shifting mechanism. The judgment also underscores the importance of timely administrative exhaustion and the necessity of showing distinct, concrete harm when alleging fiduciary breaches unrelated to benefit denial. Together, these holdings reinforce textual fidelity to ERISA, ensure predictability for plan fiduciaries, and align the Tenth Circuit with the dominant national approach to fee recovery in ERISA disputes.