Thies v. Life Ins. Co. of N. Am.

839 F.Supp.2d 886

Elizabeth THIES and Matthew Thies, Plaintiffs

v.LIFE INSURANCE COMPANY OF NORTH AMERICA, Defendant.

Case No. 5:09–CV–00098–TBR.

United States District Court,

W.D. Kentucky,

Paducah Division.

Jan. 4, 2012.

Michael D. Grabhorn, Grabhorn Law Office, P.L.L.C., Louisville, KY, William K. Shannon, Paducah, KY, for Plaintiffs.

Mitzi Denise Wyrick, Walter M. Jones, Wyatt, Tarrant & Combs L.L.P., Louisville, KY, for Defendant.

MEMORANDUM OPINION AND ORDER

THOMAS B. RUSSELL, Senior District Judge.

This matter is before the Court upon the Plaintiffs' Motion for Attorneys' Fees and Costs. DN 83. The Defendant has responded. DN 86. The Plaintiffs have replied. DN 87. Fully briefed, this matter is now ripe for adjudication. For the following reasons, Plaintiffs' motion is GRANTED.

BACKGROUND

On May 28, 2006, Wade Thies was killed while operating a jet ski on Kentucky Lake. At the time of his death, Thies was a riverboat captain employed by Ingram Industries, Inc., a corporation that subscribed to a policy of accidental death and dismemberment insurance offered by Life Insurance Company of North America's (“LINA”). Following Thies's death, the Plaintiffs filed a claim for benefits under the policy on October 5, 2006. On November 10, 2006, a claims examiner for LINA denied the claim. After a series of appeals to the company and the submissions of additional evidence, LINA advised the Plaintiffs in a May 24, 2007 letter that their administrative remedies had been exhausted. The Plaintiffs then filed suit in this Court on June 3, 2009, pursuant to the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq. (“ERISA”). In an opinion of August 16, 2011, 804 F.Supp.2d 560 (W.D.Ky.2011), the Court found that the Defendant's benefits determination was arbitrary and capricious and remanded to the Defendant for a full and fair review in light of the Court's opinion and instructions.

In light of the Court's remand, the Plaintiffs filed the present motion for attorney's fees and costs pursuant to 29 U.S.C. § 1132(g)(1). Plaintiff's claim they are entitled to fees and costs because the Court's remand indicated that they had achieved “some degree of success on the merits” as contemplated by Hardt v. Reliance Standard Life Ins. Co., ––– U.S. ––––, 130 S.Ct. 2149, 176 L.Ed.2d 998 (2010), and McKay v. Reliance Standard Life Ins. Co., 428 Fed.Appx. 537 (6th Cir.2011).

DISCUSSION

I. Remand Constitutes “Some Degree of Success on the Merits.”

Under 29 U.S.C. § 1132(g)(1), a court may, in its discretion, allow reasonable attorney's fees and costs in an ERISA action.¹ In Hardt v. Reliance Standard, the U.S. Supreme Court “consider[ed] the circumstances under which a court may award attorney's fees pursuant to § 1132(g)(1).” Hardt, 130 S.Ct. at 2156. The Court held that “a fee claimant need not be a ‘prevailing party’ to be eligible for an attorney's fees award under § 1132(g)(1).” Id. Instead, fees and costs may be awarded “as long as the fee claimant has achieved ‘some degree of success on the merits.’ ” Id. at 2152 (quoting Ruckelshaus v. Sierra Club, 463 U.S. 680, 694, 103 S.Ct. 3274, 77 L.Ed.2d 938 (1983)).

In Hardt, Reliance Standard Life Insurance Company denied the plaintiff full benefits under her employer's disability insurance plan. Id. at 2152–53. After exhausting her administrative remedies, the plaintiff sued Reliance for violating ERISA. Id. at 2153–54. The district court eventually remanded the case to Reliance because the plaintiff “did not get the kind of review to which she was entitled under applicable law.” Id. at 2154. Upon further review, Reliance found that the plaintiff was disabled within the terms of the policy and awarded her full benefits. Id. The plaintiff then moved for and the district court awarded attorney's fees and costs under § 1132(g)(1). Id. at 2154–55. Reliance appealed the award. Id. at 2155. Based on the fact that the plaintiff received a remand in the lower court and was eventually awarded benefits under the plan, the Supreme Court found “that [the plaintiff] has achieved far more than ‘trivial success on the merits' or a ‘purely procedural victory.’ ... [S]he has achieved ‘some success on the merits,’ and the District Court properly exercised its discretion to award [the plaintiff] attorney's fees in this case.” Id. at 2159. Although finding for the plaintiff, the Court did “not decide ... whether a remand order, without more, constitutes ‘some success on the merits' sufficient to make a party eligible for attorney's fees under § 1132(g)(1).” Id. (emphasis added).

Although the Supreme Court did not decide if a remand order, without more, was sufficient to achieve ‘some degree of success on the merits,’ the Sixth Circuit recently took up the issue in McKay v. Reliance Standard Life Ins. Co., 428 Fed.Appx. 537 (6th Cir.2011). In McKay, the plaintiff sought payment of long term disability benefits offered through his employer. Id. at 538–40. One of the plan's benefit providers, Reliance, denied benefits, and, after exhausting administrative remedies, the plaintiff sued for violations of ERISA. Id. at 539. The district court remanded to the insurer for further determination because its first denial was “unreasonable and arbitrary.” Id. at 540. After the remand order was entered, the plaintiff moved for and the district court awarded attorney's fees under § 1132(g)(1). Id. On remand, Reliance again denied the plaintiff benefits under the policy, and the plaintiff once against sued to recover the same. Id. In the second suit, the district court upheld the insurance company's denial of benefits because the decision was “rational and supported by the record.” Id. The plaintiff appealed the denial of benefits decision to the Sixth Circuit, and Reliance cross-appealed the award of attorney's fees.

On appeal, the Sixth Circuit affirmed Reliance's denial of benefits. Id. at 545. More importantly for the present motion, the court upheld the plaintiff's award of attorney's fees because the first case was remanded to Reliance. Id. at 547. The Sixth Circuit affirmed the district court's findings that attorney's fees were available because “even if [the plaintiff] is ultimately ineligible for benefits, he has still seen some success on the merits because his case was remanded for further consideration.” Id. at 546. The court of appeals found that the plaintiff's position on attorney's fees was supported by the Supreme Court's decision in Hardt.Id. at 547. Thus, although Hardt did not decide whether remand, alone, was sufficient to make an award of attorney's fees available under § 1132(g)(1), McKay expressly holds that it is. Id. (“[The plaintiff] ‘achieved some degree of success' by achieving a remand.”). Even though the plaintiff was ultimately denied benefits under the policy at issue in McKay, the court held that attorney's fees and costs may be available under § 1132(g)(1) when a party's case is remanded. Id. In the Sixth Circuit, a remand, alone, constitutes “some success on the merits” that makes an award of attorney's fees and costs available under § 1132(g)(1). Other district courts in the circuit considering this question have come to the same conclusion. See Potter v. SABIC Innovative Plastics US, LLC, 2011 WL 4852334, *3, 2011 U.S. Dist. LEXIS 118604, *7 (S.D.Ohio 2011) (“[T]he Sixth Circuit ... held that a plaintiffachieves some degree of success on the merits by achieving a remand based on failure to comply with ERISA guidelines.”); Bio–Medical Applications of Ky., Inc. v. Coal Exclusive Co., LLC, 2011 WL 3568249, *2, 2011 U.S. Dist. LEXIS 91187, *7 (E.D.Ky.2011) (“The [McKay ] [C]ourt determined that the remand satisfied Hardt's standard for ‘success.’ ”); Bowers v. Hartford Life & Accident Ins. Co., 2010 WL 4117515, *2, 2010 U.S. Dist. LEXIS 114663, *6 (S.D.Ohio 2010) (“[R]emand does not preclude a finding of ‘some success on the merits.’ ”).

In the present case, the Court remanded to LINA because it found that LINA's benefits determination was arbitrary and capricious. Following Hardt and McKay, a remand to LINA represents “some degree of success on the merits” for the plaintiffs and makes an award of attorney's fees and costs available under § 1132(g)(1). Because an award of attorney's fees and costs is available, the Court must now determine whether it should be given.

II. The King Factors Favor an Award of Attorney's Fees and Costs.

Once a court determines that attorney's fees are available because a party has achieved “some degree of success on the merits,” whether those fees should be awarded is governed by the King factors.²See Sec'y of Dep't of Labor v. King, 775 F.2d 666, 669 (6th Cir.1985). When applying these factors, “[n]o single factor is determinative, and thus, the district court must consider each factor before exercising its discretion.” Moon v. Unum Provident Corp., 461 F.3d 639, 642–43 (6th Cir.2006) (citation omitted). Additionally, there is “no presumption as to whether attorney fees will be awarded” in the Sixth Circuit. Foltice v. Guardsman Prods. Inc., 98 F.3d 933, 936 (6th Cir.1996). In determining whether Thies will be awarded attorney's fees in this case, the Court will consider the following factors:

(1) the degree of the opposing party's culpability or bad faith; (2) the opposing party's ability to satisfy an award of attorney's fees; (3) the deterrent effect of an award on other persons under similar circumstances; (4) whether the party requesting fees sought to confer a common benefit on all participants and beneficiaries of an ERISA plan or resolve significant legal question regarding ERISA; and (5) the relative merits of the parties' positions.

King, 775 F.2d at 669 (citations omitted). The Court will address each of these factors in turn.

1. Factor One: Culpability or Bad Faith of the Opposing Party.

Under the first King factor, the Court must determine “the degree of the opposing party's bad faith or culpability.” Id. In...