Opinion
CASE NO. 8:98CV274
March 9, 2000.
ORDER
This matter is before the court on plaintiff's request for attorney's fees and costs (Filing No. 55) and defendant's motion for stay pending appeal and for an appeal bond (Filing No. 60). The case was tried to the court and a memorandum and order entered in favor of the plaintiff on December 30, 1999 (Filing No. 54). No final judgment was entered pending the outcome of the request for attorney's fees. Pursuant to 29 U.S.C. § 1132(g)(1), plaintiff has requested $12,677.75 in attorney's fees and $1,110.46 in total expenses. I shall grant plaintiff's request for attorney's fees, but I shall reduce the amount requested by $1,235.00, and grant an award of fees in the amount of $11,442.75. During the pendency of these motions, the Clerk of Court assessed costs (Filing No. 62) and no appeal was taken, and therefore, I will adopt the action taken by the Clerk of Court and assess $962.05 in costs. Further, although I do not believe there is a timely appeal pending, as hereinafter set forth, I shall grant the request for stay pending appeal and order bond in the amount of $35,000.00, if a timely appeal is filed or if the Eighth Circuit agrees to hear the case pursuant to the notice of appeal already filed. I make this decision in advance of the timely filing of a notice of appeal, because both parties have already briefed the issue.
ATTORNEY'S FEES AND COSTS
A. Attorney's Fees
This court has discretion to award attorney's fees to the prevailing party pursuant to 29 U.S.C. § 1132(g)(1) (ERISA); Lawrence v. Westerhaus, 749 F.2d 494, 496 (8th Cir. 1984); Lutheran Medical Center v. Contractors, 25 F.3d 616 (8th Cir. 1994). Awards of attorney fees, under ERISA, are discretionary. Short v. Central States, Southeast Southwest Areas Pension Fund, 729 F.2d 567, 576 (8th Cir. 1984). The Court must review and analyze the following factors to determine whether attorney fees should be awarded in this case: (1) the degree of culpability or bad faith on the part of Exclusive Healthcare, Inc.; (2) the ability of Exclusive Healthcare to pay; (3) the deterrent effect an award would have on others; (4) whether the attorney's fees are requested to benefit the other plan participants or to resolve legal issues; and (5) the relative merits of the parties' position. Jacobs v. Pickands Mather and Co., 933 F.2d 652, 659 (8th Cir. 1991) (citations omitted). The Eighth Circuit has stated that absent "special circumstances," the prevailing plan beneficiary should recover attorney's fees, unless the award would be inequitable . Landro v. Glendenning Motorways, Inc., 625 F.2d 1344, 1356 (8th Cir. 1980). "The burden of demonstrating the "special circumstances' necessary to overcome the presumption in favor of an award of fees to a prevailing ERISA beneficiary rests upon the losing party." Lutheran Medical Center v. Contractors, 814 F. Supp. 799, 802 (D.Neb. 1993); Landro at 1356 n. 19. I turn now to the five factors set forth in Jacobs.
With regard to the first factor, the degree of culpability or bad faith on the part of Exclusive Healthcare, I find in favor of the plaintiff. Exclusive Healthcare's culpability in this case is very significant. During trial there was substantial testimony regarding three breast reduction surgeries that had been paid by Exclusive Healthcare, while plaintiff's request, virtually identical in nature, had been denied. All three of the employees who had received payment for the benefit were home office employees. Plaintiff was not a home office employee. I was troubled by this inconsistency, and I found it to be unreasonable. I further found that Dr. de La Guardia did not go through the standard training offered by Exclusive Healthcare. Yet, he had the responsibility of determining "medical necessity" and "application of the plan language." I further found, after listening to the testimony and reviewing the relevant exhibits, that the use of "medical necessity" with regard to the plaintiff in this case was not consistent with the language set forth in exclusion "tt." I found that such use was internally inconsistent and ambiguous (Filing No. 54, pages 7-10). Further, the testimony of Dr. Pilley, Ms. Alt and Ms. Judith Milone showed that exclusion "tt" was really intended to be an inclusion for cosmetic surgery for patients who had surgery for breast cancer, so as to comply with state law requirements (Filing No. 54, pages 6, 7, and 12). In summary, I find that this factor weighs in favor of the plaintiff, as Exclusive Healthcare clearly had a degree of culpability on these issues.
Both parties agree that Exclusive Healthcare can afford to pay the requested attorney fees. I find, therefore, that this factor, factor number 2, weighs in favor of the plaintiff. I also note that this factor alone is not dispositive. See e.g., Harms v. Cavenham Forest Industr., Inc., 984 F.2d 686, 694 (5th Cir. 1993).
The third factor, the deterrent effect an award would have on others, is difficult to quantify. However, I do believe that if the above issues are remedied, it is arguable that those making judgments regarding application of the plan would be more consistent and fair. Thus, I believe that an award of fees in this particular case could have some deterrence value.
With regard to the fourth factor, although I do not believe that an award of fees in this case would directly benefit others or resolve legal issues, this award might very well indirectly benefit other plan participants. I am hopeful that Exclusive Healthcare will enhance training of those who make the decisions to grant or deny benefits. Further, if the ambiguities that occur in the analysis of "medical necessity" are clarified, this would result in more consistent application for the plan participants.
Fifth, this Court must look at the relative merits of the parties' positions. I will not say that Exclusive Healthcare's position was completely without merit. It relied on a line of cases that has upheld this type of exclusion. However, I found the degree of culpability based on the facts in this case to be greater than those expressed in the case law relied upon by Exclusive Healthcare. Like the first factor, the fifth factor weighs heavily in favor of the plaintiff. I don't find the relative merits to be close in this case. Plaintiff's contentions were well founded in fact and law.
In conclusion, with the exception of the fourth factor, I find that all other factors weigh heavily in favor of the plaintiff in this case. I further find that Exclusive Healthcare has not met its burden with regard to proving special circumstances that would support a denial of an award in this case. Accordingly, I shall award attorney fees to the plaintiff.
B. Amount of Fee
Plaintiff requests a total of $12,677.75, at a rate of $95.00 per hour, in attorney's fees. In addition, although Exclusive Healthcare does argue the merits of whether plaintiff should receive an award of attorney fees, it does not ever contend that the claimed amount is unreasonable, in error, or excessive. I have carefully reviewed the exhibits attached to plaintiff's motions for attorney fees, including a "Contract for Legal Services" signed by plaintiff and her counsel and a billing statement issued to the plaintiff which includes fees and costs incurred to date in this case. I shall apply the twelve-part test enunciated in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974), to determine the amount of the attorney fees that should be awarded. I turn to the Johnson factors.
Time and labor involved. Plaintiff's counsel claims that he spent 133.45 hours on this case. He cites no assistance from law clerks or paralegals. He requests an hourly rate of $95.00, a rate agreed upon by his client as evidenced by contract. First, I find the hourly rate to be reasonable in this community. I further find that the hours claimed, in general, are reasonable for this kind of case. Plaintiff underwent discovery for trial preparation, reviewed insurance documents, took depositions, was required to research and respond to both a motion to dismiss and a motion for summary judgment, and required to prepare for and try this case in federal court. Except as set forth below, the number of hours claimed are more than reasonable under the circumstances of this case. I find the time spent by counsel should be discounted as follows:
Plaintiff's counsel has listed over 20 hours of research time. The court has carefully reviewed such time entries and finds that the research time should be reduced by 8 hours. This was not a particularly difficult case from a legal perspective, and the legal issues were not complex.
2. It appears that counsel expended approximately fifteen hours of time responding to Exclusive Healthcare's motion for summary judgment. Again, I do not think that the issues were complex or particularly difficult. Therefore, I have reduced the time spent on the motion for summary judgment by five hours.
I find all other fees to be within reason.
Novelty and difficulty. I do not believe that this case presented any novel issues, nor do I think the case was particularly difficult. It was for the most part a fairly typical ERISA case.
Skill required. No extraordinary skilled was required in this case. It was sufficient to have an experienced trial attorney.
Preclusion of other employment. There is no allegation that this case precluded counsel from taking any other cases.
Customary fee. No affidavit was submitted to the court with regard to the customary fees and expenses in Omaha. However, if anything, the requested hourly rate is low for Omaha. See Lutheran Medical Center, 814 F. Supp. 799, 805 (noting that a 1989 Nebraska Bar Association survey indicated that almost 50% of the lawyers responding from Nebraska charge over $90.00 per hour for all kinds of work). The attorney representing the plaintiff in this case, like the lead counsel in Lutheran Medical Center, has approximately five years of trial experience. The court in Lutheran Medical Center allowed a similar hourly rate in 1993.
Fixed or contingent fee. The fee agreement in this case, attached as Exhibit 1 to the request for attorney fees, was based on a rate of $95.00 per hour. Again, this rate seems reasonable based on the type of case involved.
Time limitations. It does not appear that this case imposed any time limitations on plaintiff's counsel.
Amount involved and results obtained. Plaintiff's counsel defended a motion to dismiss, a motion for summary judgment, and following a bench trial, I issued an order in favor of the plaintiff. I ordered Exclusive Healthcare to pay for plaintiff's requested breast reduction surgery. The results of this representation, therefore, were quite beneficial to the plaintiff.
Undesirability of the case. This was not the type of case that one would say is undesirable.
Nature and length of relationship with clients. No information has been provided in regard to this factor.
Awards in similar cases. Although there are very few reported cases that ask for such a low amount of fees as are requested in this case, courts have affirmed the fee awards where plan participants have prevailed on the merits. See e.g., Felber v. Estate of Regan, 117 F.3d 1084, 1088 (8th Cir. 1997) ($146,750.00 fee upheld); Mansker v. TMG Life Insur. Co., 54 F.3d 1322, 1330 (8th Cir. 1995) ($55,000.00 fee upheld); Lutheran Medical Center v. Contractors, 25 F.3d 616, 623-24 ($49,299.69 fee upheld); O'Bryhim v. Reliance Standard Life Insur. Co., 997 F. Supp. 728, aff'd, 188 F.3d 502 (4th Cir. 1999) ($114,163.00 award of fees/costs affirmed).
C. Costs
Costs are assessed to the prevailing party pursuant to Fed.R.Civ.P. 54(d) and 28 U.S.C. § 1920 and 1923. During the pendency of these motions, the Clerk of Court examined the costs submitted by counsel and taxed those deemed to be appropriate in the amount of $962.05 (Filing No. 62). No request has been made pursuant to Fed.R.Civ.P. 54(d)(1) that this court review the action of the Clerk of Court. I shall, therefore, adopt the action taken by the Clerk of Court and assess $962.05 in costs.
STAY PENDING APPEAL AND APPEAL BOND
Defendant has requested a stay pending appeal pursuant to Fed.R.Civ.P. 62(d). The Court finds that the defendant has filed a notice of appeal in this matter; however, such filing appears to be untimely. This Court has not entered final judgment in this case, and I specifically stated in my Memorandum and Order dated December 30, 1999 (Filing No. 54), that final judgment would be entered after a decision regarding attorney fees was rendered. Because the parties have already briefed this issue, I will allow a stay and require a bond if a timely notice of appeal is filed, or if the Eighth Circuit chooses to accept the appeal that has already been filed. I further find that the amount of bond which would include the requested medical procedure, plaintiff's attorney fees and costs, and fees and costs for appeal should be an amount equal to $35,000.00. A separate order shall be entered if a timely notice of appeal is filed or if the Eighth Circuit chooses to allow the notice that has already been filed.
IT IS ORDERED, ADJUDGED, AND DECREED that:
1. Attorney's fees shall be awarded in this case in the amount of $11,442.75 (Filing No. 55). A separate judgment shall be issued simultaneously with this order.
2. Costs shall be awarded in this case in the amount of $962.05 (Fling No. 55). A separate judgment shall be issued simultaneously with this order.
3. A motion to stay will be granted and bond set at $35,000.00 if a timely notice of appeal is filed or if the Eighth Circuit allows the notice of appeal filed January 28, 2000 (Filing No. 58), to proceed. A separate order will be entered upon the occurrence of either of these events.
JUDGMENT
In accordance with Memorandum and Order entered on December 30, 1999 (Filing No. 54), judgment is entered in favor of the plaintiff and against the defendant.
ORDER ON ATTORNEY FEES AND COSTS
In accordance with my order filed today, attorney fees in the amount of $11,442.75, taxable court costs in the amount of $962.05, and post-judgment interest are awarded to the plaintiff.