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Your ERISA Watch – Court Awards Plaintiff’s Attorney the Highest Rate Awarded in a Disability Case to Date

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I’m pleased to report that today’s notable decision is a good one for ERISA plaintiffs and their attorneys.  What am I talking about?  Attorneys’ fees.

In Dimry v. Bert Bell/Pete Rozelle NFL Player Ret. Plan, No. 3:16-CV-01413-JD, 2018 WL 6726963 (N.D. Cal. Dec. 22, 2018), the court previously overturned Defendants’ denial of total and permanent disability benefits to Dimry.  The court found that the claim file indicated that the Plan gave no consideration to Dimry’s evidence documenting a possible total disability, and “instead relied exclusively on a doctor who was regularly paid substantial sums by defendants and consequently had a financial incentive to give opinions favorable to them.”  (The court’s earlier decision is here:  Dimry v. Bert Bell/Pete Rozelle NFL Player Ret. Plan, 2018 WL 1258147 (N.D. Cal. Mar. 12, 2018)).

On the fee petition, the court found that hourly rates of $450 for the associate on the case and $900 for the partner to be reasonable and within the prevailing rates in the market of ERISA attorneys.

The court rejected Defendants’ argument that Dimry should not get full fees because a few claims were dismissed early in the case.  The court found that the claims arose from the same core of facts such that the work done on the dismissed claims was likely to have aided and overlapped with the successful abuse of discretion claim.  (The court previously dismissed Dimry’s equitable relief claim under Section 502(a)(3) because he failed to allege any facts showing the Plan followed a uniform practice of misconduct for all NFL disability claims.  You can view the Court’s orders here and here.)

The court concluded that an award of fees satisfies the five Hummell factors and awarded “(1) $279,370 in fees up to this motion; (2) $13,230 in fees for this motion; (3) $2,635.62 in costs; and (4) post-judgment interest at a rate and in an amount to be stipulated to by the parties as guided by statute.”

On the topic of attorney fees in disability cases, check out this survey published last year which surveys fee awards in ERISA disability benefit cases from approximately 2012 to 2017.  https://www.americanbar.org/content/dam/aba/publications/labor_employment_law_news/EBC%20Newsletter/a_survey_of_fee_awards.html.

Below is a summary of this past week’s notable ERISA decisions by subject matter and jurisdiction.

Attorneys’ Fees

Eighth Circuit

Johnson, et al., v. Charps Welding & Fabricating, Inc, et al., No. CV 14-2081 (PAM/LIB), 2018 WL 6819333 (D. Minn. Dec. 28, 2018) (Judge Paul A. Magnuson).  In this heavily litigated dispute to recover unpaid contributions to three multi-employer fringe benefit plans, the court determined that three of the five Westerhaus factors weigh in favor of granting an award of attorney’s fees to Defendants in this case.  Defendants requested $2,096,063.75 in attorney’s fees and $525,517.32 in costs based on hourly rates between $265 and $345 for partners, and between $175 to $250 for associates, and 8,779.35 billable hours.  Due to deficiencies in the billing records, the court reduced the cumulative hourly rate to $225 and the total number of hours billed by 50% for a total award of $987,676.88 in fees.  The court awarded costs of $149,220.96.

Ninth Circuit

Dimry v. Bert Bell/Pete Rozelle NFL Player Ret. Plan, No. 3:16-CV-01413-JD, 2018 WL 6726963 (N.D. Cal. Dec. 22, 2018) (Judge James Donato).  See Notable Decision summary above.

Disability Benefit Claims

Fourth Circuit

Price v. Unum Life Ins. Co. of Am., No. 18-1389, __F.App’x__, 2018 WL 6787452 (4th Cir. Dec. 26, 2018) (Before Thacker, Harris, and Richardson, Circuit Judges).  In a short per curiam opinion, the court affirmed the district court’s grant of summary judgment to Unum on Plaintiff’s claim for long-term disability benefits.

ERISA Preemption

Ninth Circuit

Narang v. Gerber Life Insurance Company, et al., No. 18-CV-04500-LHK, 2018 WL 6728004 (N.D. Cal. Dec. 21, 2018) (Judge Lucy H. Koh).  In this dispute over life insurance benefits offered by the decedent’s employer, eBay, and insured by Gerber Life Insurance Company, the court found Plaintiff’s breach of contract, bad faith claims handling, and unfair business practices claims preempted by ERISA.  Plaintiff’s exclusive remedy is a claim for benefits under ERISA Section 502(a)(1)(B).  In addition, Plaintiff did not oppose Gerber’s preemption argument, so it is a concession that such claims should be dismissed on that basis.  The court granted Gerber’s motion to dismiss without prejudice.  The court did not reach Gerber’s other bases to dismiss, including failure to exhaust and failure to sue within the contractual limitations period.

Eleventh Circuit

Doe v. Aetna Life Insurance Company, No. 618CV979ORL37GJK, 2018 WL 6829728 (M.D. Fla. Dec. 27, 2018) (Judge Roy B. Dalton, Jr.).  Plaintiff brought four state-law claims against Aetna for mailing a letter to him in which is HIV status was revealed through the envelope’s large window.  The court found that his breach of contract, negligence, and negligent infliction of emotional distress claims are not subject to ERISA preemption under Section 514 because they do not relate to an ERISA plan.  However, the court found that Plaintiff “has not pled an independent legal duty” to withstand Aetna’s Section 502 challenge; specifically that the claims could have been brought under ERISA.  The court found that invasion of privacy claim is not preempted by ERISA.

Medical Benefit Claims

Tenth Circuit

Melissa P. v. Aetna Life Insurance Company, No. 218CV00216RJSEJF, 2018 WL 6788521 (D. Utah Dec. 26, 2018) (Magistrate Judge Evelyn J. Furse).  The court granted Plaintiff’s motion for leave to file an amended complaint to state her claim under the Mental Health Parity and Addiction Equity Act more clearly.  “The Proposed Amended Complaint alleges sufficient facts to make plausible the claim that Aetna requires acute symptoms prior to approving subacute care in the mental health realm when it would not do so in the physical health realm. If Ms. P can prove her claim, such a disparity would appear to violate the Act. Discovery will allow Ms. P. to learn and compare the processes, strategies, evidentiary standards, and other factors Aetna used for sub-acute care in both realms.”

Eleventh Circuit

In re Walter Energy, Inc., No. 16-13483, __F.3d__, 2018 WL 6803736 (11th Cir. Dec. 27, 2018) (Before MARTIN, JILL PRYOR and ANDERSON, Circuit Judges).  This case involves a coal company’s statutory obligation to fund retiree health care benefits when the company files bankruptcy and pursues liquidation under Chapter 11.  On the question of whether the Retiree Benefits Bankruptcy Protection Act of 1988 (“RBBPA”) authorizes a bankruptcy court to terminate a debtor’s statutory obligation under the Coal Act to pay premiums to the Funds when the bankruptcy court finds that such termination is necessary for the coal company to sell its assets as a going concern and avoid a piecemeal liquidation, the Eleventh Circuit concluded that the bankruptcy court had the authority under 11 U.S.C. § 1114 to modify Walter Energy’s retiree benefits, which included the premiums that it owed to the Funds under the Coal Act.  It affirmed the bankruptcy court and district court.

Pleading Issues & Procedure

Eleventh Circuit

Biomatrix Specialty Pharmacy, LLC v. Horizon Healthcare Services, Inc., No. 18-61680-CIV, 2018 WL 6812842 (S.D. Fla. Dec. 27, 2018) (Magistrate Judge Barry S. Seltzer).  Horizon moved to disqualify DLA Piper as counsel for Plaintiffs in this matter.  The court granted the motion.  It found that “DLA Piper did not act with ‘undivided loyalty’ toward Horizon when it advanced BiologicTx’s efforts to collect a previously denied claim. The Court, therefore, concludes that DLA Piper did represent BiologicTx in December 2017 and that the representation was adverse to Horizon in violation of Rule 4-1.7(a), Rules Regulation the Florida Bar.”  Horizon has been harmed and disqualification is warranted.

Statute of Limitations

Sixth Circuit

Alexander Acosta v. Big G Express, Inc., et al., No. 4:17-CV-73-TAV-SKL, 2018 WL 6729643 (E.D. Tenn. Dec. 21, 2018) (Judge Thomas A. Varlan). “This ERISA case presents what appears to be a question of first impression in this circuit: whether the six-year statute of repose for claims of breach of fiduciary duty, contained in ERISA Section 413(1), 29 U.S.C. § 1113(1), is capable of being waived by express agreement of a defendant. The answer, based on the very clear weight of precedent, is yes, the statute of repose in § 1113(1) is subject to express waiver. Accordingly, defendants’ motions to dismiss arguing otherwise will be denied.” The court determined that the statute of repose is not jurisdictional and is not otherwise nonwaivable.

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