United States District Court, M.D. Alabama, Southern Division
RICHARD P. SHULTZ, Plaintiff,
AETNA LIFE INSURANCE COMPANY and L-3 COMMUNICATIONS WELFARE PLAN, Defendants.
OPINION AND ORDER
H. THOMPSON UNITED STATES DISTRICT JUDGE.
case has been brought pursuant to the Employee Retirement
Income Security Act of 1974 (“ERISA”), as
amended, 29 U.S.C. § 1001, et seq. After being awarded
long-term-disability benefits because he can no longer work,
plaintiff Richard P. Shultz now seeks, under ERISA's
fee-shifting provision, 28 U.S.C. § 1132(g)(1),
attorney's fees and costs from defendants Aetna Life
Insurance Company and L-3 Communications Welfare Plan. For
the reasons below, the court holds that Shultz's petition
for attorney's fees and costs is due to be granted,
though not for the full amount requested.
described in the magistrate judge's first recommendation,
Shultz began working as an engineer for a company in 2003.
Rep. & Rec. (doc. no. 158) at 2. After being diagnosed
with bladder cancer in July 2013, he could no longer work;
his last day on the job was July 23, 2013. One of his
treating physicians stated that Shultz had, “No ability
to work ... due to inoperable hernia & pulmonary
emboli.” Id. at 3. The physician later
indicated that Shultz's “Estimated return to work
date” was “Never.” Id. Based at
least in part on that physician's findings, Aetna Life
approved Shultz's short-term disability benefits
beginning in September 2013 and later approved his claim for
24 months of long-term-disability benefits beginning on
October 22, 2013. Aetna Life informed Shultz that, should he
still be disabled after 24 months, he would need to meet a
more stringent definition of “disabled” to
continue receiving benefits; specifically, he would need to
show that he was “unable to work at any reasonable
occupation solely because of an illness, injury, or disabling
pregnancy-related condition.” Id. at 4.
Aetna Life's prompting, Shultz applied for, and received,
Social Security Disability Income. Aetna Life sought
reimbursement for those payments to recoup part of the
payments it had made to Shultz. Id. at 5. However,
the magistrate judge noted that the standard for Social
Security disability benefits--which Shultz satisfied--is much
higher than Aetna Life's “reasonable
occupation” standard. Id. at 11.
Shultz continued the treatment for his cancer and as the end
of the 24-month period approached, Aetna Life investigated
whether Shultz was able to work in “any reasonable
occupation.” An Aetna Life nurse reviewed Shultz's
file and noted that he was “inclined to conclude, based
on the current medical records in the file, that Richard
Shultz would have ful[l] time functional capacity.”
Claim File Pt. 2 (doc. no. 115-33); see Rep. &
Rec. (doc. no. 158) at 5. Aetna Life provided the nurse's
assessment to Shultz's treating physicians for their
approval, and both signed it. However, each physician later
wrote with concerns about Shultz's ability to work; in
fact, one physician wrote that “th[e] letter noting
[his] signature ... was in error on the pre-printed form
submitted by Aetna.” Rep. & Rec. (doc. no. 158) at
Life eventually terminated Shultz's long-term-disability
benefits based on a “Transferable Skill Analysis”
that found that he could work as a “boat dispatcher,
” “purser, ” or “test desk
supervisor, ” a job very similar to the one that he was
previously deemed incapable of working. Id. at 6-7
(referring to Shultz's prior job as a “Help Desk
Supervisor”). When Shultz appealed Aetna Life's
determination to a higher level, Aetna Life requested that an
independent physician, Dr. Elena Antonelli, complete an
assessment. See Id. at 7.
Antonelli said she attempted to reach Shultz's treating
physicians, but that they failed to return her calls; at
least one of the physicians disputed that account. Dr.
Antonelli never physically examined Shultz but, based on a
telephone conversation and a review of his medical records,
she determined that he could return to work. She later read
letters, submitted by Shultz's treating physicians, which
stated that they did not agree that Shultz was able to return
to work, but the letters did not affect her decision. See
Id. at 8. Dr. Antonelli noted that neurocognitive
testing might be helpful to better understand Shultz's
condition, but the record contains no indication that such
testing occurred. Based on Dr. Antonelli's review, Aetna
Life denied Shultz's appeal. See id.
then filed suit in this federal court, claiming that Aetna
Life and the Welfare Plan improperly withheld
long-term-disability and other related benefits from him. The
magistrate judge, to whom the case had been referred,
recommended that the matter be remanded to Aetna Life's
administrator so the parties could “complete the record
and obtain a new decision.” Id. at 13. In a
later recommendation noting again that the court was without
the benefit of a complete record, the magistrate judge
declined the Welfare Plan's request to rule as to the
claim against it for non-long-term-disability benefits.
See Supp. Rep. & Rec. (doc. no. 164). Over
objections, the court adopted both of the magistrate
judge's recommendations and remanded the case to the
Welfare Plan for a new determination on a complete record.
See Judgment (doc. no. 172).
the remand order, Shultz timely filed the pending petition
for attorney's fees and costs. After he filed the
petition, Aetna Life notified him that it was reinstating his
long-term-disability benefits. See Pl.'s Supp.
to Mot. for Attorneys' Fees (doc. no. 184-1) at 1. He
supplemented his petition to reflect that he had prevailed in
getting his long-term-disability benefits. See Id.
But he also asked the court to keep the case pending because
the parties still had to address “ancillary benefits
and a few secondary issues.” Id. Shultz has
now represented to the court that the parties “recently
resolved all remaining administrative issues not presently
before the [c]ourt.” Pl.'s Statement Regarding
Conclusion of Admin. Process (doc. no. 187) at 1.
Life and the Welfare Plan oppose Shultz's petition for
fees and costs. They argue that (1) he did not achieve the
required “success on the merits” to warrant
attorney's fees; (2) the court should exercise its
discretion to deny attorney's fees; and (3), in the
alternative, the court should dramatically reduce his
requested fees and eliminate his requested
expenses.The court will address each of these
arguments in turn.
court's analysis proceeds in two parts. First, the court
considers whether Schultz is entitled to an award of
attorney's fees and expenses from Aetna Life and the
Welfare Plan under 29 U.S.C. § 1132(g)(1). Second, the
court considers the amount of attorney's fees Schultz may
Schultz has demonstrated that he is entitled to
attorney's fees under ERISA.
§ 1132(g)(1), “the court in its discretion may
allow a reasonable attorney's fee and costs of action to
either party” provided that “the fee claimant has
achieved ‘some degree of success on the
merits.'” Hardt v. Reliance Standard Life
Insurance Co., 560 U.S. 242, 245 (2010) (quoting
Ruckelshaus v. Sierra Club, 463 U.S. 680, 694
(1983)). Following his new benefit determination and award of
long-term-disability benefits, there is no question that
Shultz has satisfied this threshold requirement.
even when a party has achieved some degree of success on the
merits, there is “no presumption in favor of granting
attorney's fees to a prevailing claimant in an ERISA
action.” Freeman v. Cont'l Ins. Co., 996
F.2d 1116, 1119 (11th Cir. 1993). Instead, the court is
required to consider the following five factors: “(1)
the degree of the opposing parties' culpability or bad
faith; (2) the ability of the opposing parties to satisfy an
award of attorneys' fees; (3) whether an award of
attorneys' fees against the opposing parties would deter
other persons acting under similar circumstances; (4) whether
the parties requesting attorneys' fees sought to benefit
all participants and beneficiaries of an ERISA plan or to
resolve a significant legal question regarding ERISA itself;
and (5) the relative merits of the parties'
positions.” Iron Workers Local No. 272 v.
Bowen, 624 F.2d 1255, 1266 (5th Cir. 1980) (footnote
omitted); see also McKeown v. Blue Cross Blue
Shield of Alabama, 497 F.Supp.2d 1328, 1332 (M.D. Ala.
2007) (Thompson, J.). “No one of these factors is
necessarily decisive, and some may not be apropos in a given
case, but together they are the nuclei of concerns that a
court should address.” Iron Workers Local, 624
F.2d at 1266. Applying these factors to the case, the court
finds that Schultz is entitled to an award of attorney's
Culpability or Bad Faith
culpability-or-bad-faith factor weighs in Shultz's favor.
Bad faith is a high bar. It is the “conscious doing of
a wrong, ” United States v. Gilbert, 198 F.3d
1293, 1299 (11th Cir. 1999); “knowingly or recklessly
pursu[ing] a frivolous claim or engag[ing] in litigation
tactics that needlessly obstruct the litigation of
non-frivolous claims, ” Schwartz v. Millon Air,
Inc., 341 F.3d 1220, 1225-26 (11th Cir. 2003); or
“deliberate deception, gross negligence or
recklessness, ” Am. Bankers Ins. Co. of Fla. v.
Northwestern Nat'l Ins. Co., 198 F.3d 1332, 1336
(11th Cir. 1999); see also Cross v. Quality Mgmt. Grp.,
LLC, 491 Fed.Appx. 53, 56 (11th Cir. 2012).
culpability is a lower standard than bad faith. See
Wright v. Hanna Steel Corp., 270 F.3d 1336, 1345 (11th
Cir. 2001). Courts have found that an administrator's
failure to consider all the appropriate medical evidence in
the case indicates, at minimum, culpability. See Hines v.
Unum Life Ins. Co. of Am., 110 F.Supp.2d 458, 469 (W.D.
Va. 2000) (Williams, J.) (finding bad faith in part because
administrator failed to consider relevant medical evidence);
Lijoi v. Cont'l Cas. Co., 414 F.Supp.2d 228, 249
(E.D.N.Y. 2006) (Glasser, J.) (finding culpability, but not
bad faith, on the part of administrator who failed to
consider new evidence of disability); Powers v.
Thermadyne Holdings Corp., No. 99-1427-WEB, 2001 WL
487902, at *11 (D. Kan. Feb. 6, 2001) (Brown, J.) (declining
to find bad faith but finding that defendant's failure to
consider appropriate evidence weighed in favor of awarding
court finds that Aetna Life and the Welfare Plan acted with
culpability because they failed to consider all relevant
information before making a benefits determination. They
argue that they had no obligation to seek out “evidence
which is in the possession of others.” Def.'s Resp.
to Mot. for Summary Judgment (doc. no. 134-15) at 31. But it
later came to light--after a protracted discovery dispute the
court had to resolve--that Aetna Life already had access to
Shultz's medical records. See Sealed Document
(doc. no. 145). Moreover, in making its benefits decision,
Aetna Life did not consider any evidence produced in
Shultz's Social Security benefits application, which
Aetna Life ...