Opinion
Civil Action Number 01-480, Section "L" (1)
October 31, 2002
ORDER REASONS
Before the Court is Plaintiff's motion to enforce judgment and statutory penalties under La. R.S. 22:658 and hearing on cost of living adjustment. For the following reasons, the Plaintiff's motion is DENIED.
I. BACKGROUND
This case arises out of a claim by the Plaintiff, Elizabeth Marziale, for long term disability benefits from Hartford Life and Accident Company ("Hartford"). Plaintiff was an employee of Leon Godchaux Clothing Company, Ltd. ("Godchaux") in 1985. Godchaux sponsored an employee welfare benefit plan, the Leon Godchaux Clothing Company Long Term Disability Employee Benefits Plan ("the Plan"), for its eligible employees. Long Term Disability ("LTD") benefits under the Plan were funded by a policy of group insurance issued by the Defendant, Hartford, to Godchaux. Hartford served as claims administrator for claims made under the Plan.
In 1986, Plaintiff submitted to Hartford a claim for long term disability benefits, claiming total disability, as of October 18, 1985, as a result of injuries sustained in a motor vehicle accident on September 15, 1983. On October 29, 1986, Hartford notified Plaintiff that her claim for Long Term Disability benefits was approved. Hartford began paying LTD benefits to Plaintiff, effective January 19, 1986.
On September 22, 2000, Hartford advised Plaintiff that long term disability benefits were no longer payable to her because she "no longer remain[ed] disabled, as defined by the contract." As of September 22, 2000, Plaintiff's claim was closed and no further benefits were paid. On October 5, 2000, Plaintiff, through counsel, appealed Hartford's determination without submitting additional evidence. On December 15, 2000, a Hartford Appeal Specialist notified Plaintiff that the "decision to terminate benefits was appropriate and is maintained." Hartford explained that "[w]e feel the weight of the information contained in Ms. Marziale's claim file establishes she has the capacity to perform sedentary work." Plaintiff filed suit in February of 2001.
After consideration of submitted trial briefs, on June 20, 2002, this Court issued its Order and Reasons finding that the Defendant's decision to terminate long term disability benefits was an abuse of discretion. This Court found that, in accordance with the plan terms, Plaintiff was entitled to benefits in the amount of $1609.92 per month dating from September 22, 2000. Additionally, this Court ordered the Defendant to pay prejudgment interest on the award at the rate set by the Louisiana Civil Code and found that an award of attorney's fees and costs was not warranted. This Court issued a judgment in this case on June 28, 2002, awarding Plaintiff "benefits in the amount of $1,609.92 per month dating from September 22, 2000 and continuing benefits in accordance with the terms of the plan," together with pre-judgment interest and post-judgment interest.
Before the Court is Plaintiff's motion to enforce the judgment and statutory penalties under La. R.S. 22:658 and Hearing on Cost of Living Adjustment. Plaintiff claims that thirty days have passed and that she has not received her monthly benefits in the amount of $1609.92. Therefore, Plaintiff argues that she is entitled to penalties, interest and attorney fees on the entire amount of the judgment under La. R.S. 22:658. In a reply memorandum requested by the Court, the Plaintiff asserts that La. R.S. 22:657 applies, rather than La. R.S. 22:658 as originally pled, and entitles the Plaintiff to recover double the amount of benefits due with attorney fees because of the late payment. Additionally, Plaintiff maintains that she is entitled to a cost of living adjustment under the terms of the policy.
In response to Plaintiff's motion, Hartford Insurance contends that it has complied with the judgment of this Court and that Plaintiff's motion should be dismissed. According to the Defendant, Hartford paid the Plaintiff $39,463.05, representing monthly benefits in the amount of $1609.92 from September 22, 2000 through June 30, 2002 with pre-judgment interest and July 2002 benefits. Defendant claims that as of the date the Plaintiff filed the present motion, on September 17, 2002, the only benefits due were long term disability monthly benefits of $1609.92 for the month of August 2002. Defendant asserts that these benefits were delayed due to an inadvertent administrative error and subsequently paid these benefits and post-judgment interest on September 30, 2002. Thus, it is Defendant's position that they have complied with the Court's judgment. Defendant argues that La. R.S. 22:657 does not allow the Plaintiff to recover penalties and attorney fees because it only addresses nonpayment of a claim, not a judgment. Defendant further argues that the plan is governed by ERISA, which preempts claims under La. R.S. 22:657 for penalties and attorney fees. In addition, Defendant contends that the Plaintiff cannot raise her claim for cost of living adjustment because it is procedurally improper and barred by res judicata.
The Plaintiff's motion presents the Court with the following two issues: (1) whether the Plaintiff is entitled to double the amount of monthly benefits due to her for August of 2002 as a penalty and attorney fees under La. R.S. 22:657, for delay in the payment of her monthly benefits which this Court ordered the Defendant to pay in a judgment on June 28, 2002; and (2) whether the Plaintiff can properly raise and this Court enforce her claim for a cost of living adjustment. The Court will address these issues in turn.
First, the Plaintiff argues that she is entitled to penalties and attorney's fees under La. R.S. 22:657 because the Defendant was late in paying her monthly benefits of $1609.92 for the month of August 2002. La. R.S. 22:657 provides in pertinent part:
All claims arising under the terms of health and accident contracts issued in this state . . . shall be paid not more than thirty days from the date upon which written notice and proof of claim, in the form required by the terms of the policy, are furnished to the insurer unless just and reasonable grounds, such as would put a reasonable businessman on his guard, exist. The insurer shall make payment at least every thirty days to the assured during that part of the period of his disability covered by the policy or contract of insurance during which the insured is entitled to such payments. Failure to comply with the provisions of this section shall subject the insurer to a penalty payable to the insured of double the amount of the health and accident benefits due under the terms of the policy or contract during the period of delay, together with attorney's fees to be determined by the court."
La. R.S. 22:657A (West Supp. 2002). This Court previously held that the Hartford plan at issue is governed by the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. § 1001, et seq. ("ERISA"). See Order Reasons, June 20, 2002, p. 7. According to the Plaintiff, ERISA does not preempt a claim for penalties and attorney fees under La. R.S. 22:657. Plaintiff cites no caselaw for this proposition, but rather refers the Court to several ERISA provisions including 29 U.S.C. § 1370(e)(1), 1401(a)(2), 1451z9e), and 2005(c)(3). However, these provisions of ERISA do not apply in this case because they involve plan termination, multi-employer plans, and employee polygraph protection, none of which are issues in this case.
After review of applicable law, this Court finds that it is well established that claims for penalties and attorney fees under La. R.S. 22:657 is preempted by ERISA. See Clancy v. Employers Health Ins. Co., 101 F. Supp.2d 463, 466-67 (E.D. La. 2000); Hicks v. CNA Ins. Co., 4 F. Supp.2d 576, 579 (E.D. La. 1998); Chatelain v. Southern Baptist Health Systems, 907 F. Supp. 206, 208-09 (E.D. La. 1995); West v. Connecticut Gen. Life Ins. Co., 591 So.2d 1296, 1298 (La.Ct.App. 3d Cir. 1991). Therefore, the Court need not consider the other arguments offered by counsel as to why Plaintiff is or is not entitled to penalties and attorney's fees under La. R.S. 22:657.
Next, this Court must decide whether Plaintiff is entitled to a cost of living adjustment which she has asserted in her motion to enforce the judgment. Plaintiff claims that an award of the cost of living adjustment will only be enforcing the judgment of this Court issued on June 28, 2002, which provided that Plaintiff was entitled to benefits in accordance with the terms of the plan. Plaintiff reasons that because the cost of living adjustment is provided for in the terms of the plan, an award of such adjustment is simply enforcing plan terms as ordered in the Court's judgment. However, Plaintiff fails to recognize that this Court specifically refused to rule on the cost of living adjustment in the very order and reasons for the judgment that Plaintiff is seeking to enforce. In the order and reasons issued by this Court on June 20, 2002, the Court noted the following in footnote 4:
Although not pleaded in her original petition, Plaintiff now argues that she is entitled to a "cost of living" increase in addition to restitution of monthly benefits . . . The Court is limited in this case to a review of the administrative record. As Defendant points out, "[t]here is nothing in the record to reflect that this claim was submitted to Hartford or that it was considered by the claims administrator." . . . Accordingly, the Court does not rule on this issue. (emphasis added).
Therefore, because the issue of a cost of living adjustment was specifically not ruled on in the judgment, this Court cannot grant such a claim in Plaintiff's motion to enforce the judgment. For the same reasons set forth in this Court's order and reasons quoted above, the Court cannot properly decide a claim for a cost of living adjustment. Accordingly, the Court must deny Plaintiff's motion for a cost of living adjustment.
III. CONCLUSION
For the foregoing reasons, the Plaintiff's motion to enforce judgment and statutory penalties under La. R.S. 22:658 and hearing on cost of living adjustment is DENIED.