House v. American United Life Insurance Company

Full title: WALTER RICHARD HOUSE, JR. VERSUS AMERICAN UNITED LIFE INSURANCE COMPANY

Court: United States District Court, E.D. Louisiana

Date published: Apr 19, 2004

CIVIL ACTION NO. 02-1342 SECTION "N" (E.D. La. Apr. 19, 2004)

Opinion

CIVIL ACTION NO. 02-1342 SECTION "N"

April 19, 2004

ORDER AND REASONS

KURT ENGELHARDT, District Judge

The Court's Order and Reasons entered on May 27, 2003 (Rec. Doc. No. 43) left open certain issues raised by the Motion for Partial Summary Judgment on the Issues of Benefits, Penalties, and Attorneys' Fees filed by the plaintiff, Walter Richard House, Jr. ("Plaintiff),' on December 20, 2002 (Rec. Doc. No. 26), and the Cross Motion for Partial Summary Judgment on Issue of Benefits filed by the defendant, American United Life Insurance Company ("AUL" or "Defendant"), on January 14, 2003 (Rec. Doc. No. 32). Those remaining issues are presently before the Court. Also to be determined are the parties' subsequently filed cross motions for summary judgment on the issue of partial disability (Rec. Doc. Nos. 44 and 57).

As stated herein, the Court declines to reconsider its May 27, 2003 ruling that Total Disability benefits payable to Plaintiff are subject to reduction by his earnings from other employment. The Court further concludes that Plaintiff is entitled to receive the greater of the Total Disability and the Partial Disability benefits payable under his insurance policy, but cannot receive both. Additionally, the Court finds that Plaintiffs claim for a penalty and attorney's fees under La R.S. 22:657 is not preempted by ERISA and has merit. Finally, the Court requires additional information from the parties for use in awarding a penalty, attorney's fees, interests, and costs. Accordingly, IT IS ORDERED that the parties' cross motions for summary judgment on the issues of benefits, penalties, and attorneys' fees (Rec. Doc. Nos. 26 and 32), are GRANTED IN PART and DENIED IN PART. IT IS FURTHER ORDERED that the parties' cross motions for summary judgment on the issue of partial disability (Rec. Doc. Nos. 44 and 57) are also GRANTED IN PART and DENIED IN PART

BACKGROUND

Plaintiff, a former partner in the law firm of House, Kingsmill, Riess, L.L.C., filed suit against Defendant on May 6, 2002, seeking payment of disability insurance benefits and a penalty and attorney's fees award under applicable law.¹ Defendant has not paid disability insurance benefits to Plaintiff since September 30, 2001. The parties submitted cross motions for summary judgment in October 2002 (Rec. Doc. Nos. 7 and 9). On December 3, 2002, this Court granted plaintiff's motion and denied Defendant's motion. In that Order and Reasons, the Court found that Plaintiff is Totally Disabled, as that term is defined by the disability insurance policy issued by Defendant to Plaintiff that became effective on May 1, 2000 (hereinafter, the "House Policy").² In evaluating Defendant's preemption argument, the Court further held that it could not determine, as a matter of law, that the House Firm, for purposes of the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq. ("ERISA"), had "established or maintained" an employee welfare benefit plan with the intent to provide disability benefits to Plaintiff, or that the policy issued to Plaintiff was a component of a comprehensive employee benefit plan.³

On December 20, 2002, and January 14, 2003, respectively, Plaintiff and Defendant filed the cross motions for summary judgment addressed in the Court's May 27, 2003 Order and Reasons. In his motion, Plaintiff sought an award of past and future disability benefits of $10,000 per month, interest, and costs, as well as a penalty and attorney's fees award under La. R.S. 22:657. In opposition to plaintiff's motion, and in support of its own motion, Defendant argued that the $10,000 maximum monthly benefit payable to Plaintiff under the House Policy must be reduced by other employment income that Plaintiff receives each month. Defendant further urged that plaintiff's claim for a penalty and attorney's fees award under La. R.S. 22:657 is preempted by ERISA.

Concluding that the cross motions should be granted in part and denied in part, the Court determined that the Total Disability monthly benefits payable to Plaintiff under the House Policy should be reduced by the amount of his monthly earnings from the Louisiana Department of Economic Development.⁴ The Court did not decide, at that time, however, whether Plaintiff is entitled to an award of a penalty and attorney's fees under La. R.S. 22:651 .⁵ Instead, the Court requested additional briefing from the parties regarding ERISA's application to plaintiff's claim.⁶

4 See May 27, 2003 Order and Reasons at 7-8.

5 Id. at 12-14.

6 Id.

Subsequent to filing their supplemental briefs regarding ERISA's application, the parties filed cross motions for summary judgment on the issue of partial disability (Rec. Doc. Nos. 44 and 57). These motions, as well as the questions left open by the Court's May 27, 2003 Order and Reasons, now require resolution.

LAW AND ARGUMENT

Under Rule 56 of the Federal Rules of Civil Procedure, summary judgment is properly granted only "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." See Fed.R.Civ.P. 56(c). "An issue is material if its resolution could affect the outcome of the action." Roberts v. Cardinal Servs., Inc., 266 F.3d 368, 373 (5th Cir. 2001), cert. denied, 535 U.S. 954? 122 S.Ct. 1357 (2002). A factual dispute precludes a grant of summary judgment if the evidence would permit a reasonable trier of fact to find for the nonmoving party. Smith v. Amedisys, 298 F.3d 434.440 (5th Cir. 2002). Any factual controversies must be resolved in favor of the non-moving party. Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (per curiam).

The role of summary judgment is to pierce the pleadings and to assess the proof to determine whether there is a genuine need for trial. When the parties present cross motions for summary judgment, as they have here, they essentially agree that there are no genuine issues as to any material fact, and that the matter is ripe for resolution on their motions. I. Reduction of Total Disability Benefits

In his July 15, 2003 opposition memorandum, Plaintiff asks the Court to reconsider its determination that the maximum monthly benefit payable for Total Disability is to be reduced by the monthly salary Plaintiff began receiving from the Louisiana Department of Economic Development in October 2001.⁷ For the reasons stated in its May 27, 2003 Order and Reasons in support of that ruling, the Court declines to do so. As stated therein, the Court does not find the policy language providing for the reduction to be ambiguous. Furthermore, it is not as if all disability benefits are lost if the insured earns any income from other employment. To the contrary, the benefits are only reduced by the amount of the other earnings. And, if an insured is earning 20% or less than his Covered Monthly Earnings in his regular or another occupation, Defendant will not reduce the Monthly Benefit by those earnings.⁸ Under these circumstances, the Court does not find the offset provision to be unlawful and therefore unenforceable.

7 See plaintiff's July 15, 2003 Memorandum in Opposition to Motion for Partial Summary Judgment on the Issue of Partial Disability (Rec. Doc. No. 58).

8 See House Policy, Section 8, p. 27, which is attached as Exhibit #2 to the September 22, 2002 Affidavit of Julian Good, Jr., offered in support of plaintiff's October 4, 2002 motion for partial summary judgment (Rec. Doc. No. 7). See also December 3, 2002 Order and Reasons at 3, n. 10, regarding identification of the House Policy.

II. Cross Motions on the Issue of Partial Disability

The House Policy provides the following definitions:

Disability and Disabled mean both Total Disability and Totally Disabled and Partial Disability and Partially Disabled.

* * *

Total Disability and Totally Disabled mean that because of Injury or Sickness the Person cannot perform the material and substantial duties of his regular occupation.

Partial Disability and Partially Disabled mean that because of Injury or Sickness the Person, while unable to perform every material and substantial duty of his regular occupation on a full-time basis, is:

1. performing at least one of the material and substantial duties of his regular occupation or another occupation on a part-time or full-time basis; and

2. is earning less than 80% of his Indexed Pre-Disability Earnings due to that same Injury or Sickness.⁹

9 See House Policy, Section 2, p. 11.

In the May 27, 2003 Order and Reasons, the Court noted that, as defined by the House Policy, an insured could be both Totally Disabled and Partially Disabled.¹⁰ Specifically, an insured could be unable to "perform the material and substantial duties of his regular occupation" on a full-time basis, but be able to earn "less than 80% of his Indexed Pre-Disability Earnings due to that same Injury or Sickness" by "performing at least one of the material and substantial duties of . . . another occupation on a part-time or full-time basis."

10 See May 27, 2003 Order and Reasons at 7.

Referencing the Court's observation, plaintiff's motion for summary judgment on the issue of partial disability argues that the House Policy authorizes an award of both Total Disability and Partial Disability benefits, as long as the total amount of benefits does not exceed a maximum monthly benefit of $10,000. Although recognizing that Partial Disability benefits can be more generous than Total Disability benefits, Defendant disagrees, for several reasons, that Plaintiff is entitled to receive both Total Disability and Partial Disability benefits.

First, Defendant contends that plaintiff's evidence is insufficient to establish that he is Totally Disabled or Partially Disabled and, in any event, has thus far been submitted only to support a finding of Total Disability. Second, Defendant maintains that Plaintiff cannot be Partially Disabled and Totally Disabled at the same time, and is not entitled to simultaneous awards for those conditions. Specifically, Defendant argues that Plaintiff cannot be unable to perform any of the material and substantial duties of a trial attorney while, at the same time, being capable of performing one, but not all, of the duties of a trial attorney. Defendant finally asserts that the doctrines of judicial admission and judicial estoppel preclude a Partial Disability claim because House and his physician have "consistentl[y] and frequentl[y]" asserted plaintiff's Total Disability throughout this case.

Notwithstanding Defendant's protests, the Court finds that Plaintiff has demonstrated that he is both Totally Disabled and Partially Disabled, as those statuses are defined in the House Policy. As the Court concluded in the December 3, 2002 Order and Reasons, plaintiff's evidence establishes that he cannot perform every material and substantial duty of his regular occupation, i. e., trial attorney, on a full-time basis. At the same time, however, he is performing at least one of the material and substantial duties of another occupation, that is, serving as Executive Counsel to the Louisiana Department of Economic Development,¹¹ but because of the same Injury or Sickness that prevents him from performing every material and substantial duty of his regular occupation, is earning less than 80% of his Indexed Pre-Disability Earnings.¹²

11 See December 17, 2001 Correspondence from Plaintiff to Andrew Eagan of AUL, AUL000012-15 ("I have not returned to the practice of trial law. I have . . . obtained other gainful employment. As you know, I have practiced business, international, and energy law since March, 2001 and became Executive Counsel of the Louisiana Department of Economic Development on October 15, 2001."); see also January 14, 2003 Brief in Support of Defendant's Cross Motion for Partial Summary Judgment on Benefits and Opposition to plaintiff's Motion for Summary Judgment on Issues of Benefits, Penalties, and Attorneys' Fees (hereinafter "Defendant's January 14, 2003 Brief) (Rec. Doc. No. 32) at 4, 21-22 (seeking reduction in benefits to Plaintiff equal to salary earned as Executive Counsel to the Louisiana Department of Economic Development and defending its denial of Plaintiff's claim based, in part, on that employment); October 29, 2002 Memorandum in Support of Defendant's Cross Motion for Summary Judgment and Opposition to plaintiff's Motion for Partial Summary Judgment (hereinafter "Defendant's October 29, 2002 Memorandum") (Rec. Doc. No. 9) at 18 (recognizing plaintiff's present employment as Executive Counsel to the Louisiana Department of Economic Development); September 20, 2002 Affidavit of Walter Richard House, Jr. at ¶ 21 (referencing Executive Counsel position), submitted with plaintiff's October 4, 2002 Memorandum in Support of Motion for Partial Summary Judgment on the Issue of Walter Richard House, Jr.'s Disability (hereinafter "Plaintiffs October 4, 2002 Memorandum) (Rec. Doc. No. 7).

12 See, e.g., February 23, 2001 Claim Summary by Linda Cross of AUL, AUL000312-317 (Plaintiff must earn less than $13,333.34 per month to meet definition of Partially Disabled); March 2, 2001 Correspondence from Linda Cross of AUL to Plaintiff, AUL 000159-63 (informing Plaintiff that he was considered Partially Disabled from November 16, 2000 until [he] ceased work activity in 2001"); March 26, 2001 Correspondence from Linda Cross of AUL to Plaintiff (asserting that plaintiff's earnings were less than 80% after January 1, 2001); October 12, 2001 Statement of Income, AUL000039-40 (showing plaintiff's income as an attorney for September 2001 to be $2164.05); December 17, 2001 Correspondence from Plaintiff to Andrew Eagan of AUL, AUL000012-15 (Plaintiffs monthly income is approximately 45% of Covered Monthly Income); April 2, 2002 Correspondence from Felix R. Weill to Kimberly Shaw of AUL, AUL000004-7 (Plaintiffs income now about 45% of his Indexed Pre-Disability Income); see also plaintiff's May 30, 2003 Memorandum in Support of Motion for Partial Summary Judgment on the Issue of Partial Disability (Rec. Doc. No. 44) at 2, n. 4 (calculations demonstrating earnings of less than 80%); May 30, 2003 Statement of Material Facts on the Issue of Partial Disability as to Which Walter Richard House, Jr. Contends There is No Genuine Issue for Trial (Rec. Doc. No. 44) at ¶ 3 (monthly average earnings for 1997-1999 were $21,970).

The Court further disagrees that its determination that Plaintiff is Totally Disabled means that Plaintiff cannot also be Partially Disabled. Cf. 12 LEE R. Russ THOMAS F. SEGALIA, COUCH ON INSURANCE § 182:8 at 182-14 ("In the absence of a provision to the contrary, the insured has the freedom of selecting the remedy alternative which is most favorable to him or her.") In arguing that Plaintiff cannot satisfy the definition of Totally Disabled, but still be able to perform at least one of the material and substantial duty of his regular occupation, Defendant ignores that the definition of Partially Disabled alternatively contemplates performance of at least one material and substantial duty of another occupation. As explained above, the latter situation is that which is present here.

Nevertheless, the Court does agree with Defendant that its policy does not contemplate an insured receiving Total Disability benefits and Partial Disability benefits. Regarding this issue, the Court notes that the House Policy states that when Defendant "receives proof that a Person is Disabled . . . [Defendant] will pay the Person a Monthly Benefit."¹³ As stated above, the term "Disabled" means both Total Disability and Partial Disability.¹⁴ The Monthly Benefit is the amount of benefit paid each month to the insured, and is defined as the Gross Monthly Benefit, reduced by Other Income Benefits.¹⁵ Gross Monthly Benefit is the amount of benefit payable on a monthly basis, prior to any reductions.¹⁶ Based on these policy provisions, the Court concludes that the House Policy contemplates the payment of only one Monthly Benefit regardless of whether Plaintiff is Totally or Partially Disabled or both, and regardless of any offsets. Accordingly, Plaintiff must choose whether he wishes to receive Partial Disability benefits or Total Disability benefits. He cannot receive benefits for both conditions.

13 See House Policy, Section 8, p. 22 (emphasis added).

14 Id., Section 2, p. 6.

15 Id., Section 2, pp. 3-8.

16 Id., Section 2, p. 7.

Lastly, the Court does not find that the doctrines of judicial admission and/or judicial estoppel preclude Plaintiff from seeking to recover Partial Disability benefits, if he so chooses, at this stage of the proceeding. Indeed, it does not find that either doctrine applies to this case.

Factual assertions in pleadings and pretrial orders are considered to be judicial admissions conclusively binding on the party making them. White v. ARCO/Polymers, Inc., 720 F.2d 1391 (5th Cir. 1983). Such statements, however, must be "deliberate, clear, and unequivocal." In re Corland Corp., 967 F.2d 1069, 1072 (5th Cir. 1992). Here, however, Plaintiff has never asserted that he is only Totally Disabled or disclaimed any suggestion that he satisfies the policy definition of Partially Disabled. In his complaint, Plaintiff asserted both Total Disability and Partial Disability, albeit in the alternative.¹⁷ Similarly, though Plaintiff previously did seek summary judgment only on the issue of his Total Disability, he has repeatedly emphasized Defendant's failure to pay either Total or Partial Disability benefits, since September 30, 2001, in his supporting memoranda,¹⁸ Further, there has been no pretrial order entered in this proceeding. Finally, even if plaintiff's assertions of Total Disability are deemed to be an admission that he can perform none of the material and substantial duties of a trial attorney, that admission does not mean that he cannot perform the material and substantial duties of an occupation other than his regular occupation.

17 See May 6, 2002 Complaint (Rec. Doc. No. 1) at ¶ 6 and Prayer.

18 See, e.g., Plaintiff's October 4, 2002 Memorandum at 13 (Defendant's November 20, 2001 denial letter made no mention of Partial Disability under the policy); plaintiff's November 5, 2002 Memorandum in Opposition to Defendant's Motion for Partial Summary Judgment and in Further Support of plaintiff's Motion (hereinafter "Plaintiffs November 5, 2002 Memorandum") (Rec. Doc. No. 12) at 19-20 ("AUL was arbitrary and capricious when it failed to consider whether . . .[Plaintiff] might be eligible [for benefits] under Partial Disability"); plaintiff's December 20, 2002 Memorandum in Support of Motion for Partial Summary Judgment on the Issues of Benefits, Penalties, and Attorneys' Fees (Rec. Doc. No. 26) at 4, n. 9 ("AUL completely ignored the issue" of Partial Disability); see also December 3, 2002 Order and Reasons at 12, n. 32 (noting that Defendant has not attempted to meet plaintiff's alternative argument that he is and was entitled to Partial Disability benefits during all phases of the benefit determination).

The doctrine of judicial estoppel "prevents a party from asserting a position in a legal proceeding that is contrary to a position previously taken [by that party] in the same or a prior proceeding." Hall v. GE Plastic Pacific PTE Ltd., 327 F.3d 391, 396 (5th Cir. 2003) (quoting Ergo Science, Inc. v. Martin, 73 F.3d 595, 598 (5th Cir. 1996)). The purpose of the doctrine is to protect the integrity of the judicial proceeding. Newfield Exploration Co. v. Applied Drilling Tech., Inc., 2003 WL 23253, *3 (E.D. La. 1/02/03) (Africk, J.) (quoting In re Coastal Plains, Inc., 179 F.3d 197, 205 (5th Cir. 1999) (internal citations omitted)). Thus, a party is not allowed to advance one argument and then "for convenience or gamesmanship after that argument has served its purposes, advance a different and inconsistent argument." Id. (quoting Hotard v. State Farm Fire Cas. Co., 286 F.3d 814, 818 (5th Cir. 2002)).

For a party to be judicially estopped from taking a particular position, the party's later position must be clearly inconsistent with the earlier position. In addition, that party must have convinced the court to accept its earlier position such that judicial acceptance of the later position would "create 'the perception that either the first or second court was misled."' Id. (quoting New Hampshire v. Maine, 532 U.S. 742, 750-51, 121 S.Ct. 1808, 1815 (2001) (internal citations omitted)). A court should also consider "whether 'the party seeking to assert an inconsistent position would derive an unfair advantage or impose an unfair detriment on the opposing party if not estopped.'" Id. (quoting New Hampshire v. Maine, 532 U.S. 742, 751, 121 S.Ct. 1808, 1815 (2001) (internal citations omitted)).

As previously explained, the definitions that Defendant chose to provide in the House Policy are what allow Plaintiff to satisfy both disability statuses. Thus, plaintiff's claims of Total Disability and Partial Disability are not truly inconsistent, even though the Court has determined that Plaintiff may not actually recover both Total Disability and Partial Disability benefits. Further, though the Court did "accept" plaintiff's Total Disability argument in granting his October 4, 2002 motion for partial summary judgment, that acceptance does not preclude the Court's consideration of plaintiff's Partial Disability claim, particularly since Plaintiff pled Partial Disability in his complaint, final judgment has not been entered, and the ordinary course of this proceeding has not been irrevocably altered because of the Court's December 3, 2002 or May 27, 2003 rulings. It is not as if, for example, the Court's earlier ruling dismissed a party or a claim that plaintiff's Partial Disability claim would require to be brought back into the case. Finally, and significantly, plaintiff's decision to press his claim for Partial Disability benefits at this juncture of the proceeding does not lead the Court to believe that it previously was misled, that Plaintiff is trying to "play fast and loose" with the legal process, or that Defendant has been prejudiced in any way. Defendant's assertions on this issue, moreover, do not justify a conclusion that Plaintiff will derive an unfair advantage or impose an unfair detriment on Defendant. Indeed, Defendant has not even contended that it will be prejudiced, much less explained how it will be prejudiced, if Plaintiff is allowed to pursue his Partial Disability claim. The Court certainly is not aware that Defendant has paid any Total Disability benefits as a result of the December 3, 2002 Order and Reasons or May 27, 2003 Order and Reasons.

III. Penalty and Attorney's Fees Under La. R.S. 22:657

La. R.S. 22:657 provides for an award of a penalty and attorney's fees if an insurer fails to pay benefits under a health or accident insurance contract within thirty days, "unless just and reasonable grounds, such as would put a reasonable and prudent businessman on his guard, exist." See La. R.S. 22:657; Cramer v. Association Life Ins. Co., 569 So.2d 533, 538 (La. 1990), cert. denied, 499 U.S. 938, 111 S.Ct. 1391 (1991). The statute applies to claims for disability insurance benefits. See, e.g., Kottle v. Provident Life and Accid. Ins. Co., 775 So.2d 64 (La.Ct.App. 2 Cir. 2000), writ denied, 790 So.2d 635 (La. 2001); Johnson v. Trustmark Ins. Co., 771 So.2d 307 (La.Ct.App. 2 Cir. 2000), writ denied, 786 So.2d 101 (La. 2001); Bowers v. Sun Life Assur. Co. of Canada, 768 So.2d 37 (La.Ct.App. 3 Cir. 1999), writ denied, 771 So.2d 82 (La. 2001). Plaintiff contends that Defendant's refusal to pay him any disability benefits after September 30, 2001, is arbitrary and capricious; thus, he is entitled a penalty and attorney's fee award under La. R.S. 22:657.

As the Court explained in the May 27, 2003 Order and Reasons, however, the Court must first determine whether ERISA applies to plaintiff's claim. If governed by ERISA, plaintiff's state law claims under La. R.S. 22:657 are preempted. See Hicks v. CNA Ins. Co., 4 F. Supp.2d 576, 579 (E.D. La. 1998); Coles v. Metropolitan Life Ins. Co., 837 F. Supp. 764, 768 (M.D. La. 1993); see also Cramer, 569 So.2d at 538. A. ERISA Preemption of La, R.S. 22:657

ERISA's application turns on whether Plaintiff has sought benefits under an "employee welfare benefit plan" as that term is defined by ERISA. See Meredith v. Time Ins. Co., 980 F.2d 352, 353(5th Cir. 1993) (summary calendar). This is a question of fact. Id. An employee welfare benefit plan is defined by ERISA as:

any plan, fund, or program which was . . . established or maintained by an employer . . . for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise, (A) medical, surgical, or hospital care or benefits in the event of sickness, accident, [or] disability. . . .

29 U.S.C. § 1002(1). Under the Fifth Circuit's jurisprudence, a particular insurance arrangement qualifies as an employee welfare benefit plan under ERISA if: (1) it is a "plan";¹⁹ (2) it does not fall within the safe-harbor provision established by the Department of Labor;²⁰ and (3) it was established or maintained by an employer with the intent to benefit employees. See Lain v. UNUM Life Ins. Co., 27 F. Supp.2d 926, 930 (S.D. Tex. 1998) (citing Meredith, 980 F.2d at 355), aff'd, 279 F.3d 337 (5th Cir. 2002)). If any of these three prongs is answered negatively, the insurance arrangement is not an ERISA plan. Meredith, 980 F.2d at 355.

19 A "plan" exists if "a reasonable person could ascertain the intended benefits, beneficiaries, source of financing, and procedures for receiving benefits." Meredith, 980 F.2d at 355.

20 If the relevant plan satisfies all of the requirements of the safe-harbor provision, it is exempt from ERISA's coverage. See Meredith, 980 F.2d at 355. The safe-harbor provision, 29 C.F.R. § 2510.3-l(j), applies to "a group or group-type insurance program offered by an insurer to employees . . ." that meets the following criteria:
(1) No contributions are made by an employer;

(2) Participation in the program is completely voluntary for employees;

(3) The sole functions of the employer with respect to the program are, without endorsing the program, to permit the insurer to publicize the program to employees, to collect premiums through payroll deduction, and to remit them to the insurer; and

(4) The employer receives no consideration in the form of cash or otherwise in connection with the program, other than reasonable compensation, excluding any profit, for administrative services actually rendered with payroll deductions.

Here, the parties do not agree on what the alleged "plan" is. Specifically, the parties dispute whether (1) the House Policy itself, (2) the policies made available to only partner attorneys of the House Firm, or (3) all of the disability insurance policies obtained by the House Firm for the benefit of the firm's employees, non-partner attorneys, and partners, is "the plan." Plaintiff argues that the relevant plan is either the House Policy itself or the disability policies made available only to partner attorneys of the House Firm. Defendant maintains that the package of disability insurance policies provided by it to the House Firm employees, nonpartner attorneys, and partner attorneys is the relevant plan, and that the House Policy is only one component of that plan.

Given the importance of this issue, and because of certain questions raised in the materials submitted by the parties, the May 27, 2003 Order and Reasons directed the parties to provide additional submissions regarding this issue. Having reviewed the parties' previous and supplemental submissions in the context of pertinent case law, the Court now concludes that the relevant plan is the House Policy itself, or the AUL disability policies made available to only the partner attorneys of the House Firm. Because those policies have never covered any House Firm employees, the policies were not "established or maintained by an employer with an intent to benefit employees," and, therefore, are not covered by ERISA. See Meredith, 980 F.2d at 356-58 (a plan without employees is not regulated by ERISA).

In reaching this conclusion, the Court is guided by the Fifth Circuit's decision in Robertson v. Alexander Grant Co., 798 F.2d 868 (5th Cir. 1986), cert. denied, 479U.S. 1089, 107 S.Ct. 1396 (1987), the Eleventh Circuit's decision in Slamen v. Paul Revere Life Ins. Co., 166 F.3d 1102, 1105-06 (11th Cir. 1999), and Judge Livaudais' decision in St. Martin v. Provident Life Accident, 1993 WL 262708 (E.D. La.). In Robertson, the Fifth Circuit held that two retirement plans, one covering the partner-owners of a business and the other covering employees, were two separate plans for purposes of ERISA. Id. at 871. Rejecting the argument that the two plans were really one plan because they were "nearly identical," the Court of Appeals explained:

Robertson's argument, however, misses the point. His argument ignores the fact that the plans, however similar, are two separate plans. The plan covering the partners does not pay benefits to principals, and the plan covering principals does not pay any benefits to partners. Since the plans are separate, the plan covering partners covers only partners, and the district court correctly ruled that the plan does not cover employees other than partners.

Id. at 871-72 (finding that the Grant plan covered only partners and affirming the district court's ruling holding ERISA inapplicable to plans covering only partners).

In Slamen, the Eleventh Circuit held that a disability insurance policy covering only a dentist was not an ERISA plan, even though the dentist also had in place a policy providing health and life insurance coverage to himself and his employees. 166 F.3d at 1105. Explaining its decision, the Court of Appeal emphasized that there was no evidence showing that the insurance polices were "related." Id. at 1105-06. Although the Court did not elaborate on what would make the policies "related," it pointed out that "the two policies were purchased at different times, from different insurers, and for different purposes." Id. at 1105.

Finally, in the St. Martin case, Guardian asserted that the St. Martin firm established and funded an ERISA plan through the purchase of several insurance policies, including an individual professional disability policy for Michael St. Martin that supplemented the coverage provided him by the firm's group policy. Id. at * 1. The Court first rejected the argument that ERISA governed St. Martin's claim for benefits under the individual policy simply because it supplemented the benefits he received under the group ERISA plan. Id. at 2. Additionally, citing Robertson, the court concluded that, because St. Martin's individual disability policy provided benefits only to St. Martin, who was not an employee, the policy was not governed by ERISA. Id. Finally, the court rejected Guardian's contention that the individual disability policy was a component of the firm's ERISA plan because St. Martin had indicated on his application for the disability policy that the firm would pay 100% of the policy premiums. Id. at 3. The court noted that the evidence showed the contrary, i.e., that the premiums were taxed as income to St. Martin in 1990 and 1991. Id.

Here, it is true that the disability insurance coverage obtained for Plaintiff and the other partner attorneys, as well as the non-partner attorneys and other employees of the House Firm, was secured by the House Firm at the same time, from the same insurer, for the same purpose, and through the use of single application, i.e., the Subscription Agreement.²¹ In addition, some degree of "administration" was provided by the House Finn with respect to all of the policies.²² Based on these facts, the Court agrees that these facts technically create a relationship between the various policies.

21 See Group Life Application and Long Term Disability/Short Term Disability Subscription Agreement for 10+ Lives (hereinafter, the "Subscription Agreement"), AUL000373-382, KR0527-537. Documents bearing "AUL" Bates numbers are documents from Defendant's claim file that were produced by Defendant. Plaintiff submitted the "AUL" documents with Plaintiffs October 4, 2002 Memorandum. Documents bearing "KR" Bates numbers were produced by the Kingsmill, Riess firm (the successor to the House Firm) in response to a subpoena issued by Defendant. Plaintiff submitted the "KR" documents with his January 28, 2003 Memorandum in Opposition to AUL's Motion for Partial Summary Judgment on the Issue of Benefits (hereinafter "Plaintiffs January 28, 2003 Memorandum") (Rec. Doc. No. 35).

22 The parties disagree on the exact nature and extent of the House Firm's administration of the House Policy and the other disability insurance policies.

At the same time, the Court does not agree that this relationship, when considered in light of other evidence, is sufficient to establish that the House Plan is, or is a part of, an ERIS A plan. To the contrary, the Court finds that, as in Robinson, the disability insurance plans obtained for partner attorneys of the House Firm were separate from the group coverage provided by the firm to nonpartner attorneys and employees, and thus are not covered by ERISA. Similarly, the Court finds that the coverage provided to Plaintiff is analogous to that which the individual policy provided to the plaintiff in the St. Martin case. In other words, facts demonstrating the separate nature of the disability policies issued to partners of the House Firm overcome any suggestion, at least in this case, that a relationship between the policies, created by the circumstances of the insurance placement and/or any post-issuance administration by the House Firm and/or Defendant, causes ERISA to apply to those policies.

The Court reaches this conclusion for a number of reasons. First, the Court is heavily persuaded by the fact that the House Policy pays benefits only to Plaintiff, who was a partner of the House Firm. Neither it nor the policies issued to the other partners provide benefits to the nonpartner attorneys or the other employees of the firm.²³ Indeed, Plaintiff is the only insured listed on the policy issued to him.²⁴ Likewise, the benefits payable under the policies issued to the House Firm employees are not available to partners.²⁵

23 The Subscription Agreement submitted by the House Firm identified three classes of insureds and the benefits payable to each. See Subscription Agreement, AUL000373-383, KR0527-37. Ultimately, Defendant provided separate policies for the three classes of insureds, which policies were effective on May 1, 2000. See September 22, 2002 Affidavit of Julian Good, Jr., ¶ 2.4, submitted with plaintiff's October 4, 2002 Memorandum, and Exhibits #2-4 to that affidavit (copy of policies effective on May 1, 2000). One policy covers partner attorneys. See AUL000384-422, KR0383-420 (Class 1). Another covers nonpartner attorneys. See AUL000423-61, KR0421-58 (Class 2). The third covers other House Firm employees. See AUL000462-500, KR0459-96 (Class 3).

24 See House Policy, pp. 00-1. The Certificate of Insurance for the policy issued to House states: "Change Effective Date, Member: 5/1/00 Group: Does Not Apply." See House Policy, p. 1.

25 See Note 23.

Second, Plaintiff, not the House Firm, personally paid 100% of the premiums for his policy.²⁶ Significantly, however, it is undisputed that the House Firm paid 100% of the premiums for the policies covering the non-partner attorneys and the other firm employees.²⁷ Third, plaintiff's and the other partners' participation in the disability coverage provided by Defendant was purely voluntary.²⁸ Eligible employees, including the non-partner attorneys, however, were automatically covered because the House Firm paid 100% of their premiums.²⁹ Fourth, certain of the policy provisions differed for partners. For instance, Basic Monthly Earnings for partners is defined as the monthly average of the amount shown as net earnings from the Schedule K-l's, a schedule for partners for the three (3) most recent years.³⁰ Basic Monthly Earnings for employees, including non-partner attorneys, is defined as the person's current monthly pay before taxes based on a maximum of a 40-hour week.³¹ In addition, the definition of Total Disability for the partner and nonpartner attorneys differs from that applicable to other employees. For attorneys, that term means" because of Injury or Sickness the Person cannot perform the material and substantial duties of his regular occupation."³² For the other employees, one is Totally Disabled, after benefits have been paid for 36 months, only if he or she "cannot perform the material and substantial duties of any gainful occupation for which the Person is reasonably fitted by training, education, or experience.³³

26 See Subscription Agreement, AUL000373-383, KR0527-37; see also June 16, 2003 Defendant's Brief on the Application of ERISA in Response to May 27, 2003 Order and Reasons (Rec. Doc. No. 49) at 5, 8; January 27, 2003 plaintiff's Answers to the Statement of Material Facts as to Which Defendant Contends There is No Genuine Issue Requiring Trial (Rec. Doc. No. 35) ¶ 31; January 25, 2003 Third Affidavit of Walter Richard House, Jr. (Rec. Doc. No. 35) ¶ 5. Defendant makes much of the fact that the Subscription Agreement obligated the House Firm to remit all premiums, including those for the partners' policies. That the House Firm agreed to collect and transmit the premiums to Defendant, however, is of little significance. It is undisputed that the premiums were charged against each partner's firm drawing account.

27 See Note 26; see also November 15, 2002 Defendant's Post-Hearing Brief (Rec. Doc. No. 16) at 4-5 (House Firm agreed to pay 100% of the premiums for Classes 2 and 3).

28 See Subscription Agreement, AUL000379, 383, KR0533, 36; plaintiff's December 20, 2002 Statement of Material Facts on the Issues of Benefits, Penalties, and Attorneys' Fees as to Which Walter Richard House, Jr. Contends There is No Genuine Issue (Rec. Doc. No. 26) at ¶ 10 (Plaintiff had the choice of whether or not purchase the House Policy) (citing Second Affidavit of Walter Richard House, Jr., dated December 18, 2002, ¶ 3)); Defendant's Long Term Disability Proposal, Schedule of Benefits and Rates, AUL001591 (indicating Class 1 coverage to be contributory with 90-100% participation), which was submitted with plaintiff's January 28, 2003 Memorandum.

29 See Subscription Agreement, AUL000379, 383, KR0533, 536; Defendant's Long Term Disability Proposal, Schedule of Benefits and Rates, AUL001591 (indicating Class 2 3 coverage to be noncontributory and with 100% participation).

30 See Subscription Agreement, AUL000379, 383, KR0533, 36; see also House Policy, Section 2, p. 5; Class 1 Policy, KR 0388, AUL000389.

31 See Class 2 Policy, KR0426, AUL000428; Class 3 Policy, KR0464, AUL000467.

32 See House Policy, Section 2, p. 11; Class 1 Policy, KR0394, AUL000395; Class 2 Policy, KR0432, AUL000434.

33 See Class 3 Policy, KR 0470, AUL000473.

Considering the specific facts and circumstances of this case and the relevant jurisprudence, the Court determines that the House Policy does not constitute and is not part of an ERISA plan. Accordingly, ERISA does not preempt the application of La. R.S. 22:657 to this matter. Cf. Page v. UNUM Life Ins. Co., 2000 WL 748154, *2(N.D. Tex.) (concluding preemption determination turned on whether single policy or group of policies should be evaluated together or separately).

B. Application of La. R.S. 22:657

As previously stated, La. R.S. 22:657 provides for an award of a penalty and attorney's fees if an insurer fails to pay benefits under a health or accident insurance contract within thirty days, "unless just and reasonable grounds, such as would put a reasonable and prudent businessman on his guard, exist." See La. R.S. 22:657. The statute "was enacted to effect a speedy collection of just claims without diminution and without unnecessary delay and expense." Crawford v. Blue Cross Blue Shield of Louisiana, 770 So.2d 507, 517 (La.Ct.App. 1 Cir. 2000) (citing Lopez v. Blue Cross of Louisiana, 397 So.2d 1343, 1345 (La. 1981)), writ denied, 786 So.2d 98 (La. 2001).

The absence of "just and reasonable grounds for failing to pay" has been equated with a finding of "arbitrary and capricious" conduct. Crawford, 770 So.2d at 515; see also Houston v. Blue Cross and Blue Shield of Louisiana, 843 So.2d 542, 548 (La.Ct.App. 2 Cir.) (La. R.S. 22:657 penalty should not be assessed unless refusal to pay is clearly arbitrary and capricious), writ denied, 853 So.2d 641 (La. 2003). "An insurer's actions are 'arbitrary and capricious' when its willful refusal of a claim is not based on a good faith defense . . . or is unreasonable or without probable cause[.]" Wallace v. State Farm Mutual Auto. Ins. Co., 821 So.2d 704, 710 (La.Ct.App. 2d Cir. 2002). This determination is a question of fact to be decided on the facts and circumstances of each case. Houston, 843 So.2d at 548; Crawford, 770 So.2d at 515.

An insurer receiving notice that a claim has been made under its policy has a duty to investigate the claim. Houston, 843 So.2d at 548. An insurer resisting its contractual obligation based on a supposed defense, which a reasonable investigation would have disproved, "'acts at its peril and renders itself liable for statutory penalties and attorney's fees.'" Crawford, 770 So.2d at 518 (quoting Savarino v. Blue Cross and Blue Shield of Louisiana, Inc., 730 So.2d 1083, 1090 (La.Ct.App. 1 Cir. 1999)). Furthermore, "[i]f correspondence is insufficient for submission of a claim, it is incumbent on the insurer to respond with proper instructions on proper submission of the claim." Houston, 843 So.2d at 550. 1. Total Disability Benefits

In the section of the December 3, 2002 Order and Reasons granting plaintiff's motion for partial summary judgment on the issue of Total Disability, the Court stated: "[regardless of whether a de novo or arbitrary and capricious standard is used, a record this strong, including the uncontroverted opinion of House's treating cardiologist that he is presently disabled from his regular occupation (trial attorney), mandates a ruling in favor of the plaintiff."³⁴ The Court's conclusion on that issue has not changed. For that reason, the Court refers the parties to the factual statements and analysis in the December 3, 2002 Order and Reasons, as that explanation sufficiently demonstrates why a penalty and an award attorney's fees should be imposed against Defendant. Notwithstanding this reference, the Court writes here for additional emphasis.

34 See December 3, 2002 Order and Reasons (Rec. Doc. No. 21) at 24.

In asserting that its refusal to pay any disability benefits to Plaintiff after September 30, 2001, was reasonable, Defendant argues Dr. Cook's opinion that Plaintiff is totally disabled from litigation, but not other areas of law, is not supported by objective medical evidence.³⁵ It further objects to plaintiff's characterization of his regular occupation (at the time he became disabled in October 2000) as being a "trial attorney," rather than simply '"an attorney."³⁶ Maintaining that Plaintiff makes an unsupported and artificial distinction between his current employment and his occupation while at that House Firm, Defendant contends: "House's attempts to create sub-specialties of the legal profession and complain of his inability to practice within one of them should be unavailing."³⁷ Defendant finally contends that, even if plaintiff's former occupation was a "trial attorney," Plaintiff has not demonstrated that the "material and substantial duties" of his present occupation are any less stressful that those of a trial attorney.³⁸ a. Dr. Cook's Opinion

35 See Defendant's October 29, 2002 Memorandum at 8-9, 15, and 18; Defendant's January 14, 2003 Brief at 21.

36 See Defendant's October 29, 2002 Memorandum at 16.

37 Id.

38 Id. at 17-19; see also Defendant's January 14, 2003 Brief at 21 ("Mr. House reported that he was working in an apparently responsible position; there was no basis for AUL to conclude Mr. House was less 'stressed' in that position than in trial work").

Considering plaintiff's post-bypass health condition, medical history (including the myocardial infarction he suffered in October 1999), age, and his own understanding of the stress inherent with plaintiff's litigation practice, Dr. Cook, a board certified cardiologist and, since the 1980's, plaintiff's treating physician, concluded that Plaintiff is totally disabled from his occupation as a trial attorney. He informed Defendant of this determination in the Attending Physician's Statement provided with plaintiff's initial application for benefits, explaining that Plaintiff "is able to engage in only limited stress situations and engage in only limited interpersonal relations," and is totally disabled from his job, but not from other work.³⁹ He reaffirmed this opinion on numerous occasions throughout 2001, emphasizing that Plaintiff was restricted from a litigation practice.⁴⁰ Plaintiff further reiterated Dr. Cook's assessment to Defendant on numerous occasions, explaining that Dr. Cook had advised that his litigation practice was a substantial factor in his heart disease.⁴¹ In fact, in one of its briefs, Defendant acknowledges that "House actively pursued his claim with AUL both through frequent phone calls and no less than twenty letters, all the while claiming total disability."⁴²

39 See November 2000 Attending Physician Statement, AUL000181.

40 See January 24, 2001 Correspondence from Dr. Cook to Defendant, AUL00015 8 (Mr. House . . . has been totally and permanently disabled."); February 7, 2001 Office Visit Note, AUL000729 ("Cannot practice litigation; Total and Permanent Disability as set forth in letter of 1-24-01."); March 1, 2001 Attending Physician's Statement, AUL000790 ("cannot practice litigation, totally permanently disabled"); April 5, 2001 File Memo by AUL Medical Consultant Leslie Walls, RN, AUL000288 (Dr. Cook called . . . advises that [Plaintiff] can still be a lawyer, but he cannot perform litigation); July 31, 2001 Physician's Supplemental Statement, AUL000250 (patient disabled from his job but not other work; incapable of performing litigation practice); November 1, 2001 Attending Physician Statement, AUL000026 ("no litigation practice" for patient). Dr. Cook's evaluation of plaintiff's condition had not changed as of September 19, 2002. At that time, he explained:

3.6 It is my opinion that the level of stress Mr. House encountered in his practice as a trial attorney . . . significantly contributed to his acute myocardial infarction in October 1999 and to his coronary artery disease that required the quadruple bypass surgery in October, 2000. Indeed, I am familiar with the stressors which are inherent in the work of trial lawyers as my father also practiced in this area. For these reasons, I have deemed Walter Richard House, Jr. to be totally and permanently disabled from practicing law as a trial attorney, and he continues to be disabled from doing his work.

* * *

3.9 I believe that withdrawing from the practice of trial law has been the major element in his continued recovery, and I would not recommend that he return to trial practice. His returning to the stress of trial work, against my instructions, could cause severe medical repercussions, including death.

See September 19, 2002 Affidavit of John R. Cook, M.D., which Plaintiff submitted with his October 4, 2002 motion for partial summary judgment (Rec. Doc. No. 7).

41 See, e.g., November 30, 2000 Correspondence from Plaintiff to Defendant and Group Disability Application, AUL000172-74, 179-84 (because of physical condition cardiologist has recommended change in legal practice from trial law); March 25, 2001 Training Education and Experience Form submitted by Plaintiff, AUL000148-49 (Plaintiff left House Firm because he "could not practice law as before heart disease"); April 9, 2001 Correspondence from Plaintiff to Linda Cross of AUL, AULOOO1 2 ("Dr. Cook has advised AUL that in his opinion as a board certified cardiologist and internist, the practice of trial law is a substantial factor in my heart disease and I am therefore disabled from pursuing to substantial and material duties of my occupation of over 25 years"); May 2, 2001 Correspondence from Plaintiff to Linda Cross of AUL. AUL000110 (same); May 10, 2001 Correspondence from Plaintiff to Linda Cross to AUL, AUL000107-09 (same); December 17, 2001 Correspondence from Plaintiff to Andrew Eagan of AUL, AUL000012-15 (cardiologist has reported that considering history and quadruple bypass he recommends that Plaintiff discontinue practice of trial law). Dr. Cook confirmed plaintiff's statements in his September 19, 2002 affidavit. See Note 40.

42 See July 8, 2003 Memorandum in Support of Defendant's Cross Motion for Partial Summary Judgment (Rec. Doc. No. 57) at 5.

Although Defendant has refused to accept Dr. Cook's assessment of plaintiff's medical condition, it has never — not before and not since Plaintiff filed suit and sought summary judgment — provided a countervailing medical opinion or produced other contradictory medical evidence.⁴³ This fact is fatal to Defendant's argument that its denial of plaintiff's claim was reasonable. Particularly significant is Defendant's failure, contrary to the repeated advice of its own internal medical consultants, to obtain an ME. The AUL administrative record reveals that, on March 21, 2001, AUL adjuster Linda Cross referred plaintiff's November 2000 application for benefits to a "RN medical consultant" for review with respect to "impairment beyond March 31, 3001.'⁴⁴ A determination that additional, current medical information was necessary followed, along with a recommendation that an ME, with a current echocardiogram, stress test and EKG, if needed, be obtained.⁴⁵ Consistent with this recommendation, Defendant informed Plaintiff, on or around April 27, 2001, that his medical records were inconclusive with regard to his "current impairment"; therefore, an ME with a board-certified cardiologist would be necessary."⁴⁶

43 In Defendant's October 29, 2002 Memorandum, Defendant references the statement in the records of Dr. Bethea, the cardiothoracic surgeon who performed plaintiff's bypass surgery, that Plaintiff could return to "full activity and return to see me [as needed]." See November 21, 2000 Office Notes, AUL000563. The Court does not find Defendant to have shown this statement to have the significance that Defendant tries to attribute to it. The statement does not specifically address plaintiff's occupation. Additionally, Dr. Bethea's records indicate that Plaintiff was to receive follow-up care from Dr. Cook. See October 24, 2000 Discharge Summary, AUL000859. As indicated, Dr. Cook believes plaintiff's follow-up care to require a career change. Furthermore, as stated herein, Defendant never asked Dr. Bethea to explain his notes or to provide an opinion regarding plaintiff's condition and possible return to his litigation practice.

44 See March 21, 2001 Referral Form to RN Medical Consultant, AUL000289.

45 On March 22, 2001, Defendant's medical consultant, Nurse Leslie Walls, after reviewing plaintiff's benefits application and medical records, and talking with Assistant Medical Director Dr. Nina Smith about Plaintiff, stated that she was "unsure if objective medical evidence supports impairment at this time." See March 22, 2001 RN Medical Consultant Referral Response, AUL000290-93. She further indicated that Dr. Smith "agrees that we need current medical information to make a determination." Id. Specifically, "[w]e need to know what his left ventricular function/ejection fraction is before we can determine the extent of his impairment." Id. Nurse Walls stated that a post-bypass stress test and echocardiogram would provide the relevant information, and suggested that efforts be made to obtain plaintiff's cardiac rehab medical records and records from Dr. Bethea. Id. On April 18, 2001, Nurse Walls again consulted with Dr. Smith, and reported that Dr. Smith "suggests an ME with a current echocardiogram, stress test and EKG, if needed," to confirm whether Plaintiff could perform his job. See RN Medical Consultant Referral Response, AUL000283-84. On September 7, 2001, Nurse Walls reported: "still unsure if objective medical evidence supports impairment at this time due to the fact that we have never received post-bypass echocardiogram results that reveal [patient's] ejection fraction and ventricular function." See September 7, 2001 RN Medical Consultant Referral Response, AUL000252-253.

46 See April 27, 2001 Correspondence from Linda Cross of AUL to Plaintiff, AUL000113-14.

That Defendant had determined that an IME was necessary is further evidenced in its May and June 2001 internal records, correspondence with the outside vendor, GENEX Services, Inc., retained to set up the IME, and correspondence to Plaintiff.⁴⁷ Defendant's records reflect that it specified that the IME was to be conducted by a board certified cardiologist and include a current echocardiogram, stress test, and EKG.⁴⁸ A cardiac functional capacity assessment form also was to be completed.⁴⁹ Indeed, Defendant went so far as to inform GENEX that it "would like the IME consultant to be experienced with considering occupational stress," explaining that"[w]e are looking for his physical functional level along with his ability to handle the stress of his regular occupation."⁵⁰ On or around July 11, 2001, however, while GENEX was waiting for a response from the third physician it had contacted about conducting the IME, Defendant abruptly informed GENEX that an IME would not be necessary."⁵¹

47 See May 1, 2001 Email from Linda Cross to KCampbell, AUL000274 ("I have requested GENEX to set up an IME with a board-certified cardiologist"); May 1, 2001 Notes of Linda R. Cross of AUL, AUL000275 ("need ME with board certified cardiologist"); May 15, 2001 Correspondence from Andrew Eagan of AUL to Plaintiff, AUL000104 ("[T]he information from Dr. Cook's office was inconclusive regarding your current impairment. Therefore, we believe it is not unreasonable to request current information via the Independent Medical Examination."); May 30, 2001 Correspondence from Andrew Eagan of AUL to Plaintiff, AUL000271 ("an Independent Medical Examination has been requested in order to determine the extent of your current restrictions and limitations"); June 29, 2001 Correspondence from Andrew Eagan of AUL to Plaintiff, AUL000103 (same); see also May 7, 2001 Correspondence from GENEX to Linda Cross of AUL, AUL000266 (confirming receipt of referral for coordination of ME); July 6, 2001 Initial Report of GENEX, AUL000254 (retained to establish a second cardiology evaluation for the Insured and to secure background information toward factors of stress related to return to work and occupational limitations).

48 May 1, 2001 Notes of Linda R. Cross of AUL, AUL000275.

49 Id.

50 See June 6, 2001 AUL Phone Report of Contact, AUL000262.

51 See July 11, 2001 Correspondence from Donald Crais of GENEX to Andrew Eagan of AUL, AUL000260. Interestingly, the record indicates that the third physician contacted by GENEX, Dr. David Elizardi, bears the same name as the physician who performed plaintiff's pre-bypass angiography on October 2, 2000. See July 5, 2001 Correspondence from GENEX to Dr. David J. Elizardi, AUL 000258-59; Operative Report of Dr. David Elizardi, AUL000879-80. It is not clear from the record, however, whether the two physicians actually are the same person or simply have the same first and last names.

Defendant's reasons for deciding not to do an IME are unclear from the record, and have never been adequately explained in Defendant's submissions to the Court. In subsequent internal email, Steve Torrence of AUL states: "We decided not to do an IME. We contacted two cards and both refused to do the examination, (reasons unknown) and by that time the medical indicated he was ok from a cardiac so we didn't think it would be of value.'⁵² Mr. Torrence's explanation, however, is not adequately supported by the record. The Court has not found, and Defendant has not identified any documentation in the record reflecting Defendant's receipt of new medical records or a new physician opinion between July 5, 2001 and July 11, 2001. At most, the Court notes that Plaintiff submitted an "Insured's Group Disability Supplemental Statement," at Defendant's request, on or around July 10, 2001, indicating that he still was unable to practice litigation, but had begun practicing business, energy, and international law, and was doing some investing.⁵³

52 See April 12, 2002 Email from Steve Torrence to Kimberly Campbell, AUL 000228.

53 See Insured's Group Disability Supplementary Statement, AUL000251.

Furthermore, rather than abandoning its quest for additional post-bypass test results for Plaintiff, which were to be conducted as part of the IME, Defendant thereafter continued its pursuit of a post-bypass echocardiogram and a supplemental physician statement from Dr. Cook.⁵⁴ In fact, Andrew Eagan of AUL continued to request post-bypass echocardiogram results even after AUL medical consultant Nurse Leslie Walls had determined, on or around September 7, 2001, that neither Dr. Cook, Dr. Bethea, nor the hospital had that record, and surmised that the test had not been performed.⁵⁵

54 See July 13, 2001 AUL Group Disability File Memo by Nurse Walls, AUL00257 (evidencing efforts to obtain post-bypass echocardiogram from Dr. Cook's office, the hospital, and/or Dr. Bethea); July 16, 2001 Correspondence from Andrew Eagan of AUL to Dr. Bethea, AUL000214 (requesting medical records from October 2000 to the present); July 30, 2001 Correspondence from Andrew Eagan of AUL to Plaintiff, AUL000099 (additional benefits conditioned on receipt of previously requested Supplemental Attending Physician Form); July 31, 2001 Second Request for Medical Records to Memorial Medical Center, AUL000215; September 7, 2001 RN Medical Consultant Referral Response, AUL000252-53 ("still unsure if objective medical evidence supports impairment at this time due to the fact that we never received post-bypass echocardiogram results that reveal [patient's] ejection fraction and ventricular function"); October 22, 2001 Correspondence from Andrew Eagan of AUL to Plaintiff, AUL 000038 (suspending good faith payments pending receipt of post-bypass cardiogram and verification of continued regular medical treatment).

55 See Note 54.

On October 26, 2001, Plaintiff explained to Defendant that it had not received a post-bypass echocardiogram because one had not been performed.⁵⁶ This is significant because Defendant's medical consultant had advised, on or around March 22, 2001, that "[w]e need to know what [Plaintiffs] left ventricular function/ejection fraction is before we can determine the extent of his impairment," and that that information could be obtained from a post-bypass stress test and echocardiogram.⁵⁷ As of November 9, 2001, however, Defendant did not have the required echocardiogram; it had only up-to-date treadmill stress tests results.⁵⁸ With just that additional information, Nurse Walls' November 9, 2001 review offered only that "[i]t appears there may be a lack of objective evidence to support an impairment at this time."⁵⁹

56 See October 26, 2001 Correspondence from Plaintiff to Andrew Eagan of AUL, AUL 00032-33. Plaintiff provided this information in response to Defendant's October 22, 2001 notice that it was suspending payments pending receipt of a post-bypass echocardiogram. See Note 54.

57 See Note 54 (emphasis added).

58 See October 31, 2000-November 8, 2001 AUL Group Disability File Memo, AUL000245 (reflecting Nurse Walls' receipt of October 8, 2001 treadmill stress test on November 8, 2001).

59 See November 9, 2001 RN Medical Consultant Referral Response, AUL000244 (emphasis added).

Despite becoming aware that medical evidence that its own medical consultant had said was necessary, and that it had actively pursued for months, simply did not exist, Defendant did not renew its request for an IME and/or echocardiogram. Instead, it issued its November 20, 2001 denial, apparently deciding to go with management's recommendation regarding the claim, rather than pursuing an echocardiogram and/or an independent opinion from another cardiologist.⁶⁰

60 See November 15, 2001 AUL Internal Memo, AUL000248 ("Management was consulted and the recommendation is to deny the claim."). The November 20, 2001 letter denying plaintiff's application for disability benefits references Dr. Cook's October 8, 2001 examination report and the results of Plaintiff's treadmill stress test (exercise to 12.5 METS on Bruce Protocol and achieving 85% of target heart rate). See November 20, 2001 Correspondence from Andrew Eagan of AUL to Plaintiff, AUL000016-19. Even considering that progress, however, it was Dr. Cook's professional opinion, as of November 1, 2001, that Plaintiff still should refrain from a litigation practice and that his Current GAP was Class 3, indicating that he was "able to engage in only limited stress situations and engage in only limited interpersonal relationships." See November 1, 2001 Attending Physician's Statement, AUL00026; see also December 17, 2001 Correspondence from Plaintiff to Andrew Eagan of AUL, AULOOOO12-15 (Dr. Cook's November 1, 2001 report took into consideration all diagnostic testing including the October 2001 stress test). In addition, the Court notes that Plaintiff has explained in his submissions that the A CC/AHA 2002 Guideline Update for Exercise Testing (2002), published by the American Heart Association, states:

Exercise testing in an asymptomatic patient who has undergone successful coronary bypass grafting is not predictive of subsequent events when the test is performed within the first few years after the revascularization procedure.

See plaintiff's November 5, 2002 Memorandum at 6.

Attempting to defend its rejection of plaintiff's total disability status without the support of a contrary ME, Defendant remarks: "Interestingly, it is House's longtime personal physician, Dr. Cook, who has pronounced House disabled due to his heart condition, and not Dr. Bethea, the physician performing surgery on House, or Dr. Elizardi, the physician performing angiography on House."⁶¹ Even more interesting, however, is Defendant's own failure to seek an opinion regarding plaintiff's status from Dr. Bethea or Dr. Elizardi, given its disagreement with Dr. Cook's opinion, its decision to not obtain an IME, and the absence of a post-bypass echocardiogram.

61 See Defendant's October 29, 2002 Memorandum at 18.

Indeed, although objecting to Dr. Cook's assessment of Plaintiff s medical condition, the record does not reflect, and Defendant has not identified, a single instance where it sought to have Dr. Cook further explain his continued opinion that, although plaintiff's post-bypass stress test results showed apparent improvement in plaintiff's physical condition, Plaintiff remained unable to practice litigation. What is more, Defendant completely fails to even entertain the possibility that plaintiff's recovery — in terms of improved stress tests and lack of symptoms — can be attributed, at least in part, to plaintiff's decision to accept Dr. Cook's recommendation that he not return to a litigation practice.

Other arguments advanced by Defendant in support of its conduct are similarly objectionable. For instance, Defendant contends that "Dr. Cook made no differentiation [between] the effect of Mr. House's heart based on running 5 miles several times a week and occupation stress."⁶² Once again, if Defendant questioned why Dr. Cook apparently had no objection to Plaintiff running 5 miles several times a week, but said that Plaintiff could not be a trial lawyer, Defendant should have asked him that, or should have sought an IME from another cardiologist. It did not.⁶³ Instead, it has decided to rely on its own speculation and generalizations. For instance, it argues that "it is very well known that persons with a history of cardiac bypass surgery engage in very stressful occupations. There was no evidence offered as to why Mr. House should be disabled based on that status, when others are able to continue to function in such occupation."⁶⁴ When measured against the expert opinion of a board certified cardiologist who is also plaintiff's long-time treating physician, such speculation and generalizations alone simply were not reasonable bases on which to deny plaintiff's claim. b. "Trial Attorney" v. "An Attorney"

62 See Defendant's January 14, 2003 Brief at 21.

63 See September 19, 2002 Affidavit of John R. Cook, M.D., ¶ 3.7 ("At no time did AUL ever question me regarding the opinion of any other doctor, and, except for the above listed requests for information, at no time did AUL seek information from me as to the care or continued treatment of Mr. House."), submitted with plaintiff's October 4, 2002 motion for partial summary judgment.

64 See Defendant's January 14, 2003 Brief at 21.

As stated above, Defendant also argues that Plaintiff makes an unsupported and artificial distinction between his current employment and his occupation while at the House Firm. It contends: "House's attempts to create sub-specialties of the legal profession and complain of his inability to practice within one of them should be unavailing.⁶⁵ Consistent with this argument, Defendant asserted, in its November 20, 2001 denial of plaintiff's application for benefits, that plaintiff's "regular occupation at the onset of [his] disability was an Attorney."⁶⁶ It additionally stated, [FNM][t]he determination of your claim is that you are capable of performing the duties of your regular occupation full time. You appear to be capable of performing the sedentary occupation of an Attorney as it is normally performed in the national economy."⁶⁷ Defendant does not explain what it views to be the material and substantial duties of "the sedentary occupation of an Attorney as it is normally performed in the national economy." Indeed, the Court finds such a statement rather enigmatic.

65 See Defendant's October 29, 2002 Memorandum at 16.

66 See November 20, 2001 Correspondence from Andrew Eagan of AUL to Plaintiff, AUL000016-19.

67 Id. (emphasis in original).

In any event, there is no basis in this case for concluding that plaintiff's "regular occupation," for purposes of the House policy, should be defined as anything other than a "trial attorney." The House policy does not define the phrase "regular occupation." Further, to the extent that the phrase reasonably can be construed to mean a specific type of law or specialty within the practice of law, as well as the practice of law generally, the policy provision is ambiguous. Defendant is well aware that policy ambiguities are construed in favor of the insured. Finally, until management's decision to deny plaintiff's claim was communicated to him on November 20, 2001, Defendant never suggested to Plaintiff that it viewed his regular occupation as anything other than a trial attorney. In fact, on March 2, 2001, Defendant sent a letter to Plaintiff specifically identifying his regular occupation to be that of a trial attorney.⁶⁸

68 See March 2, 2001 Correspondence from Linda Cross of AUL to Plaintiff, AUL 000159-63 (referring to plaintiff's "regular occupation" and "own occupation" as "trial attorney").

Defendant's internal documents likewise are replete with references to plaintiff's regular occupation as a trial attorney.⁶⁹ In fact, Defendant's records show that it was recommended to Defendant's claims adjuster that he send a questionnaire to Plaintiff to determine "if [Plaintiff] was in fact functioning as a trial attorney before we decide the next steps."⁷⁰ Similarly, Defendant's representative reviewing the denial of plaintiff's appeal specifically inquired whether it had been confirmed that Plaintiff was, in fact, a trial attorney.⁷¹ She explained that, contrary to the assertion made in Defendant's November 20, 2001 denial letter, "[a] trial attorney is not a sedentary occupation and cannot standardly be done in a 40 [hour] work week."⁷² The same representative further emphasized that" [i]t's quite one thing to have 'billable' hours in the support of a trial but quite another to be the lead trial attorney in court."⁷³

69 See, e.g., March 21, 2001 Referral Form to RN Medical Consultant, AUL000289 (identifying occupation as "trial attorney"); March 22, 2001 RN Medical Consultant Referral Response, AUL000290-93 (same); April 27, 2001 AUL Claim Summary by Linda Cross, AUL000278 (stating that Plaintiff worked as a trial attorney); April 12, 2002 Email from Steve Torrence to Kimberly Campbell, AUL000228 (confirming that there was documentation in the file from Plaintiff and the House Firm that Plaintiff was a trial attorney).

70 See May 16, 2001 Facsimile to Andrew Eagan, AUL000263-65.

71 See April 16, 2002 Email from Kimberly Campbell to Steve Torrence, AUL00231.

72 Id.

73 Id.

Defendant's failure for months to assert that plaintiff's regular occupation was as "an attorney" generally, rather than a "trial attorney," is telling. Neither Plaintiff nor Dr. Cook have ever contended, not even in plaintiff's November 20, 2000 application for benefits, that Plaintiff is entirely disabled from practicing any and all types of law.⁷⁴ Indeed, Plaintiff informed Defendant from the very beginning of his intention and efforts to establish a different type of legal practice.⁷⁵ If Defendant had viewed plaintiff's regular occupation to be simply an attorney generally rather than a trial attorney, there would have been no need to expend resources in confirming plaintiff's prior and current job descriptions in connection with a claim for Total Disability benefits.⁷⁶ To the contrary, Defendant would have had a strong argument for denying plaintiff's request for Total Disability benefits as soon as it became aware that Plaintiff could practice a different type of law.

74 See November 30, 2000 Group Disability Application, AUL000179-83; July 10, 2001 Insured's Group Disability Supplementary Statement, AUL000251.

75 See November 30, 2000 Correspondence from Plaintiff to Defendant and Group Disability Application, AULOOO172-74, 179-84 (indicating intent to continue legal practice but in area other than trial law); February 13, 2001 File Phone Memo by Linda Cross of AUL, AUL0003 30 (Plaintiff stated that he was looking into University teaching position and planned to do "something else"); February 22, 2001 File Phone Memo by Linda Cross of AUL, AUL000328 (Plaintiff informed Defendant that he was considering a teaching position as well as positions at other law firms that would not involve litigation and that would be less stressful).

76 See, e.g., December 20, 2000 Correspondence from Susan Fields of AUL to Randy Path, AUL000169 (requesting for description of Plaintiff's legal practice prior to and after November 20, 2000); January 2, 2001 Note of AUL Examiner Susan Fields, AUL000334 ("I asked about the change in the definition from [Plaintiffs] previous type of law he was practicing, and what he is currently practicing.").

The evidence likewise leaves no doubt that Plaintiff adequately informed Defendant that he was a trial attorney prior to becoming disabled in October 2000, but not thereafter. In the application form that he provided to Defendant on November 20, 2000, Plaintiff identified his regular occupation (prior to his disability) as "attorney — trial practice including pretrial discovery, depos, motions and trials in federal and state court, arbitration."⁷⁷ Plaintiff also stated in his application materials that "[o]ver the 25 years that [he had] practiced law, [his] primary concentration ha[d] been trial work," and that "over 95% of [his] billable hours [were] related to trial work."⁷⁸ In a statement accompanying his November 30, 2000 application for benefits, Plaintiff additionally explained that:

77 See November 30, 2000 Group Disability Application, AUL000179-83.

78 See Attachment to November 30, 2000 Group Disability Claim Application, AUL000184.

No longer being able to have a trial practice means that I will not be able to participate in pre-trial practice (such as discovery, depositions, motions and other matters before the Court) as well as the trial of cases before Federal and State Courts of Louisiana, Texas and other jurisdictions in which I have practiced, as well as arbitration proceedings, locally, nationally, and internationally where I have practiced over the last 25 years.⁷⁹

79 See November 30, 2000 Group Disability Claim Application, AUL000184.

Steve Torrence of AUL similarly represented that Plaintiff had informed Defendant:

In the one year period prior to [his] quadruple bypass surgery, [he] billed 2170 hours, tried three lengthy complicated cases, argued three appeals in four different courts of appeal, including the Louisiana Supreme Court and took or participated in depositions, argued numerous trial court motions, and engaged in court supervised settlement conferences resulting in the settlement of more than 20 active cases].⁸⁰

80 See April 12, 2002 Email from Steve Torrence of AUL to Kimberly Campbell, AUL000224; March 16, 2001 Correspondence from Plaintiff to Linda Cross of AUL, AUL000154-156.

According to Plaintiff, he spent an average of 185 billable hours per month performing trial and appellate work in the year preceding his open heart surgery.⁸¹ Martindale-Hubbell's Online Lawyer Locator additionally showed plaintiff's pre-bypass occupation to have been litigation.⁸²

81 See March 16, 2001 Correspondence from Plaintiff to Linda Cross of AUL, AUL000154-156. Plaintiff provided Defendant with his time records for October 1999 through September 2000. See July 10, 2001 Insured's Group Disability Supplementary Statement, AUL000251 (reflecting that time records had been furnished).

82 See April 26, 2001 Martindale-Hubbell Lawyer Locator, AUL 000118-119.

The description of Plaintiff's work provided by Randy Fath, Manager of the House Firm, confirms that plaintiff's work prior to November 16, 2000, was "complex litigation" and thereafter involved transactional matters and counseling clients and other attorneys in the preparation of pleadings.⁸³ Other submissions by Plaintiff to Defendant likewise confirmed that after submitting his application for benefits he did only non-litigation work, and that the material and substantial duties of his work therefore changed.⁸⁴ With respect to plaintiff's current employment as Executive Counsel of the Louisiana Department of Economic Development, he explained:

83 See January 1, 2001 Correspondence from Randy Fath of the House Firm to Ms. Susan Fields, AUL000157 (explaining change in nature of Plaintiff's legal practice since November 16, 2000).

84 In February 2001, Plaintiff informed Defendant that he was considering a teaching position as well as positions at other law firms that would not involve litigation and that would be less stressful. See February 22, 2001 File Phone Memo by Linda Cross of AUL, AUL000328. Plaintiff later reported that he had commenced a new type of legal practice. See July 10, 2001 Insured's Group Disability Supplementary Statement, AUL000251 ("Since March 1, 2001, [I] have engaged in the practice of business, energy, and international law. . . . [I] cannot practice trial law. . . .); December 17, 2001 Correspondence from Plaintiff to Andrew Eagan of AUL, AUL000012-15 ("I have not returned to the practice of trial law. I have . . . obtained other gainful employment. As you know, I have practiced business, international, and energy law since March, 2001 and became Executive Counsel of the Louisiana Department of Economic Development on October 15, 2001.").

I advise the Secretary of the Department on all matters relating to economic development goals and policies, including legislative and administrative incentives for retaining, expanding and obtaining businesses and good jobs for the people of Louisiana. The position does not and will not include litigation duties. Though I have returned to work, I have not, because of medical restrictions, resumed my trial practice.⁸⁵

c. Work Stress — Litigation v. Non-Litigation

85 See December 17, 2001 Correspondence from Plaintiff to Andrew Eagan of AUL, AUL000012-15.

As previously explained, Defendant further defends its actions based on the argument that, even if Plaintiff's former occupation was as a "trial attorney," rather than "an attorney" generally, Plaintiff has not demonstrated that the "material and substantial duties" of his present occupation, Executive Counsel to the Louisiana Department of Economic Development, are any less stressful that those of a trial attorney. The Court finds this position to be unreasonable.

From the time that Plaintiff sought benefits on November 30, 2000, he and Dr. Cook, aboard-certified cardiologist and plaintiff's long-time physician, repeatedly informed Defendant of Dr. Cook's belief that Plaintiff was no longer capable of practicing trial law, but could tolerate a different type of law practice.⁸⁶ Likely significant to this conclusion was the fact that Plaintiff worked, and had worked for twenty-five years, as a trial attorney when he suffered a heart attack in 1999. Then, just one year later, during which time Plaintiff billed more than 2000 hours in trial, pretrial, and appellate work, he required emergency quadruple bypass surgery. Also important is Dr. Cook's determination that Plaintiff was "able to engage in only limited stress situations and engage in only limited interpersonal relations."⁸⁷ Contrary to this limitation, the form submitted by Plaintiff to Defendant, on March 25, 2001, identifies the "unusual mental and/or physical requirements" of his job at a trial attorney as "intense and stressful involvement of trial work with clients, courts and opposition."⁸⁸ Indeed, noting his absence of typical risk factors for heart disease, Plaintiff attributes the stress of having a trial practice is an important factor in the causation of his heart disease.⁸⁹

86 See Notes 40 and 41.

87 See November 30, 2000 Group Disability Claim Application, AUL000181.

88 See March 25, 2001 Training Education and Experience form, AUL000148-49.

89 Dr. Cook concurs. See Note 40. In the attachment to his application for disability benefits, Plaintiff explained:

Over the 25 years that I have practiced law, my primary area of concentration has been trial work. During that time, over 95% of my billable hours have been related to trial work. . . . Given the various factors that cause heart disease[,] as well as the fact that none of the primary indicators for heart disease (such as smoking, heredity, overweight or high cholesterol) have been present in my case at the time of my disability, it [is] highly likely that the stress of having a trial practice is an important factor in the causation of my heart disease.

See November 30, 2000 Group Disability Claim Application, AUL000184; see also December 17, 2001 Correspondence from Plaintiff to Andrew Eagan of AUL, AUL000012-15 ("my discontinuance of a trial practice has undoubtedly been the significant factor in my recovery since I have a long history of exercise, no family history of heart disease or personal history of smoking, or any of the other risk factors for heart disease, except for the high stress of my trial practice").

Significantly, as plaintiff's December 17, 2001 letter emphasized to Defendant, his present job as Executive Counsel to the Louisiana Department of Economic Development does not, and will not require, him to partake in adversary litigation activities. Accordingly, he has not and will not be exposed to the stress presented by interaction with and opposition from clients, the courts, and opposing counsel in the course of litigation, including discovery, motion practice, trial, and appeal.⁹⁰

90 Other employment undertaken by Plaintiff between the time he left the House Firm and when he accepted the Executive Counsel position likewise did not involve litigation. See Notes 11 and 84.

Statements by Defendant's representatives likely demonstrate, at least in part, why Dr. Cook believed a litigation practice to be more harmful to Plaintiff than other legal work. As previously indicated, AUL representative Kimberly Campbell explained that being a "trial attorney is not a sedentary occupation and cannot standardly be done in a 40 [hour] work week."⁹¹ Similarly, when Plaintiff informed Adjuster Linda Cross, on February 22, 2001, that he was considering a teaching position, as well as positions at other firms that would not involve litigation and would be less stressful, she commented that his time records showed that he worked 12-14 hour days each time that he went to trial.⁹² Plaintiff responded that he was "doing that back when he had his heart attack in 10/99."⁹³

91 See April 16, 2002 Email from Kimberly Campbell to Steve Torrence, AUL00231.

92 See February 22, 2001 File Phone Memo by Linda Cross of AUL, AUL000328. Ms. Cross's memo does not indicate that she, at that time, questioned whether a teaching or nonlitigation position would be less stressful than a litigation practice.

93 Id.

Also significant, once again, is Defendant's failure, when presented with Dr. Cook's professional opinion that Plaintiff still could work as lawyer, but not a litigator, to ask him to elaborate on this distinction, or to require Plaintiff to obtain that information. Nor did Defendant seek an opinion on the matter from an independent cardiologist, or other medical or vocational expert. To the contrary, Defendant simply chose to deny plaintiff's claim and then to resort to generalizations and speculation when called to defend that conduct.⁹⁴ The Court finds that, in acting in this manner, Defendant was arbitrary and capricious in its handling of Plaintiff's claim.⁹⁵ 2. Partial Disability Benefits

94 See Defendant's October 29, 2002 Memorandum at 18-19 (emphasis added) (Plaintiffs position as Executive Counsel to the Louisiana Department of Economic Development "is presumably rife with much responsibility and demands . . . and presumably all the more stressful when performed at a level that merits recognition as 'State Executive of the Year' by the New Orleans Chamber of Commerce); Defendant's January 14, 2003 Brief at 21 (emphasis added) ("Mr. House reported that he was working in an apparently responsible position; there was no basis for AUL to conclude Mr. House was less 'stressed' in that position than in trial work") and ("it is very well known that persons with a history of cardiac bypass surgery engage in very stressful occupations. There was no evidence offered as to why Mr. House should be disabled based on that status, when others are able to continue to function in such occupation.").

95 The Court finds Brown v. Washington National Insurance Company, 942 F. Supp. 1078 (E.D. La. 1996), and Cooper v. Paul Revere Life Insurance Company, 1997 WL 375884 (E.D. La.), distinguishable from the instant case for the reasons stated in the December 3, 2002 Order and Reasons at 23-24.

The Court likewise finds that Defendant has acted arbitrarily and capriciously in failing to pay Partial Disability benefits to Plaintiff. Importantly, Defendant informed Plaintiff on March 2, 2001, that he "[was] considered Partially Disabled from November 16, 2000 until [he] ceased work activity in 2001.⁹⁶ After denying plaintiff's request for Total Disability Benefits in November 2001, however, Defendant did not commence payment of Partial Disability benefits. In fact, it never even bothered to respond to plaintiff's counsel's query as to why he should not at least receive Partial Disability Benefits.⁹⁷

96 See March 2, 2001 Correspondence from Linda Cross of AUL to Plaintiff, AUL000159-163.

97 See April 2, 2000 Correspondence from Felix Weill to Kimberly Shaw of AUL, AUL000004-7; May 7, 2002 Correspondence from Steve Torrence to Felix Weill, AUL 000001 (communicating disagreement with plaintiff's disabled status and failing to address query regarding Partial Disability benefits)

In any event, for much the same reasons that Defendant was arbitrary and capricious when it denied plaintiff's entitlement to Total Disability benefits, Defendant's failure to pay Partial Disability benefits to Plaintiff after he returned to work was similarly egregious. As explained above, Defendant acted unreasonably in concluding that Plaintiff could perform the material and substantial duties of his regular occupation as a trial attorney. There likewise could be no question that Plaintiff was performing "at least one of the material and substantial duties of . . . another occupation on a part-time or full-time basis" when he began practicing business, energy, and international law, or when he assumed his Executive Counsel position.⁹⁸ Finally, at least as of January 2001, it was undisputed that Plaintiff earned less than 80% of his Indexed Pre-Disability Earnings because of his heart condition.⁹⁹ IV. Calculation of Benefits, Penalty, Attorney's Fees. Judicial Interest and Costs

98 See Notes 11 and 84.

99 See Note 12.

The Court has determined that Plaintiff presently is entitled to receive Total Disability benefits or Partial Disability benefits, subject to applicable offsets for income from other employment. Because plaintiff's election will affect other relief sought by Plaintiff, the Court will not determine the dollar amount of benefits, penalty, attorney's fees, and/or judicial interest and costs at this time. Instead, IT IS ORDERED that Plaintiff shall inform the Court on or before April 30, 2004, whether it presently seeks to recover Total Disability or Partial Disability benefits. Then, on or before May 20, 2004, the parties are to file submissions with the Court regarding the appropriate dollar amount of benefits, penalty, attorney's fees, interest and costs. The parties are urged to enter into stipulations, where possible, regarding any or all of these amounts. IT IS FURTHER ORDERED that the parties schedule a settlement conference with Magistrate Judge Knowles to be held on or before May 28, 2004, if Magistrate Knowles has time available on or before that date for a conference with the parties.

CONCLUSION

By seeking summary judgment regarding his entitlement to Total Disability benefits under the House Policy, Plaintiff did not abandon or waive his right to alternatively seek payment of Partial Disability benefits. Defendant is correct, however, that Plaintiff cannot actually recover Total Disability Benefits and Partial Disability Benefits. Thus, Plaintiff must choose which benefits he would like to recover.

The Court does not find that the House Policy is part of the same "plan," for purposes of ERISA, as the disability insurance coverage provided by the House Firm to its employees. Accordingly, plaintiff's claim for a penalty and attorneys fee award under La. R.S. 22:657 is not preempted.

The Court concludes that Defendant abandoned its efforts to reasonably investigate plaintiff's claims for disability benefits. Rather than obtaining the additional objective medical evidence and an independent medical examination that it originally asserted was necessary to a proper evaluation of claim, Defendant's decision instead rested on assumptions it made about plaintiff's undertaking of a non-litigation legal practice, his ability to tolerate strenuous exercise, and his improving results on treadmill stress tests. In addition, despite initially informing Plaintiff that he was Partially Disabled, Defendant did not pay Plaintiff any disability benefits after September 30, 2001, and simply ignored plaintiff's subsequent query regarding his entitlement to Partial Disability benefits. Under these circumstances, the Court finds that Defendant's denial of Plaintiff's claim for benefits was not based on just and reasonable grounds. Accordingly, the Court shall impose a penalty and attorneys fee award against Defendant under La. R.S. 22:657 upon submission the additional information sought herein. New Orleans, Louisiana, this day of April