O'Bryhim v. Reliance Standard Life Ins. Co.
| Decision Date | 23 February 1998 |
| Docket Number | No. Civ.A. 95-335-A.,Civ.A. 95-335-A. |
| Citation | 997 F.Supp. 728 |
| Parties | Ray A. O'BRYHIM, Plaintiff, v. RELIANCE STANDARD LIFE INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — Eastern District of Virginia |
William S. Sands, Jr., Alexandria, VA, for plaintiff.
William J. Virgulak, Jr., Fairfax, VA, for defendant.
This matter comes before the Court on Plaintiff's Motions to reopen case after remand; for additional benefits and relief; and for attorney's fees and costs. For the reasons set forth below, Plaintiff's Motion is GRANTED in part.
Plaintiff, Ray A. O'Bryhim ("O'Bryhim") filed a Complaint in this Court on March 17, 1995, pursuant to 29 U.S.C. 1132(a)(1)(B) and (a)(3), the ERISA statute, seeking to recover employee benefits due under the terms of a group long-term disability insurance policy covering employees of the Pohanka Automotive Group.
Prior to filing with this Court, O'Bryhim filed an administrative claim with Reliance Standard Life Insurance Company ("Reliance"), which was denied on October 28, 1993. O'Bryhim appealed this administrative decision three separate times, on December 16, 1993, April 8, 1994, and on June 22, 1994.
Following trial, in a Memorandum Opinion dated May 10, 1996 this Court found that the actions of Reliance were arbitrary and capricious in denying O'Bryhim's claim. The Court also made several findings of fact. The Court found that during his employment with Pohanka, O'Bryhim contracted chronic fatigue syndrome ("CFS"). The Court further found that O'Bryhim's disability occurred on September 1, 1992, based on the medical evidence submitted on O'Bryhim's behalf.
The Court then remanded the case back to the Plan Administrator so he could fully hear the evidence presented in Court to arrive at a decision on whether or not to award O'Bryhim benefits. The Court specifically directed the Plan Administrator, on remand, to consider O'Bryhim's additional telephone calls that were not fully recorded by Reliance's claims examiners regarding his condition, and also to consider certain information testified to by Dr. Levine.
On November 20, 1996, the Defendant issued its decision on remand awarding O'Bryhim long-term disability benefits, but limiting the time period for which it would pay such benefits. Specifically, the Defendant found that Plaintiff was not disabled until the date of January 1, 1993, four months later than September 1, 1992, the date on which this Court found Plaintiff had been disabled. The Defendant also found that Plaintiff was not suffering from CFS, contradictory to this Court's findings, but that Plaintiff was instead suffering from a mental or emotional disorder, for which Plaintiff was entitled to no more than two years of benefits.
Defendants argue that this Court did not retain jurisdiction over this matter and therefore has no ability to hear this motion. The Court, however, specifically retained jurisdiction over this matter by Order dated May 21, 1996.
Defendants also argue that O'Bryhim has failed to exhaust his administrative remedies since he did not appeal the decision upon remand through the Plan Administrator within sixty days. Section 1132(a)(1)(B) of ERISA specifically empowers employee benefit plan participants and beneficiaries to bring a federal civil action to recover benefits or enforce rights under the plan. "There is no explicit requirement that administrative remedies be exhausted before seeking federal court relief; however, it is within the district court's discretion to require that such administrative avenues be pursued before resort is had to any judicial remedy." Keel v. Group Hospitalization Med. Services, Inc., 695 F.Supp. 223, 227 (E.D.Va.1988).
The Court first notes that, following O'Bryhim's initial claims denial on October 28, 1993, O'Bryhim made three separate appeals to Reliance. Only after these three individual appeals were exhausted did O'Bryhim file a case in federal court. After trial, on remand, the decision regarding benefits due to O'Bryhim was made by the appeal section of Reliance. If O'Bryhim were to appeal the decision on remand, the same individuals would again determine O'Bryhim's claim. The Court thus finds that Plaintiff has made a "clear and positive" showing that any further administrative appeal would be futile. See Makar v. Health Care Corp. of Mid-Atlantic, 872 F.2d 80, 83 (4th Cir.1989).
Accordingly, the Court finds that it has jurisdiction to consider Plaintiff's claims for additional relief and for attorney's fees and costs.
O'Bryhim moves this Court for the following additional relief:
(1) Four Months of Additional Long
Term Disability Benefits Less
Other Income Offset $17,975.00
(2) Additional Pre-Judgment Interest
Due $19,763.00
(3) Sales Commissions Paid By Plaintiff
On Sale of Residence $16,320.00
(4) Additional Income Tax Liability Paid
by Plaintiff Due to Invasion of Retirement
Plan $ 8,666.00
A. Four Months Additional Benefits Plus Pre-Judgment Interest
In this Court's Memorandum Opinion dated may 5, 1996, the Court found as a matter of fact that O'Bryhim's disability occurred on September 1, 1992. On remand, Defendant determined that O'Bryhim was not disabled on September 1, 1992, but rather became disabled on January 1, 1993. Defendant also upset this Court's finding of fact that O'Bryhim was suffering from CFS, and found, rather, that O'Bryhim was suffering from a mental or emotional condition. Under the plan, a mental or emotional disability can be covered only up to a period of two years.
Plaintiff argues that to allow Defendant to adopt a wholly new view of this case on remand, ignoring the Court's specific findings of fact, would render the court's review of administrative decisions essentially a nullity, if the administrator can reverse the court.
The Court finds that Defendant substituted its own findings of fact for the Court's findings as set forth in its Memorandum Opinion dated May 5, 1996 and that such actions are arbitrary and capricious. Accordingly, the Court GRANTS in part Plaintiff's Motion for Additional Relief. Specifically, the Court finds that Defendant shall pay Plaintiff the sum of $17,975.00 for four months of additional long term disability benefits plus $11,225.00 additional pre-judgment interest1, for the total of $29,200.00.
B. Sales Commissions from Sale of House and Tax Resulting from Early 401(k) withdrawal
O'Bryhim claims that he was forced to withdraw funds from his retirement savings and was caused to pay income tax on these withdrawals. In addition, he claims that he was forced to sell his family's home because he was no longer able to afford to pay the mortgage.
The law is unclear as to whether allowances for these kinds of damages may be made under the portion of ERISA providing for "other equitable relief." While the Court is sympathetic to O'Bryhim's losses, the Court finds that Defendant's denial of this type of benefit was not arbitrary and capricious. Accordingly, Plaintiff's Motion for Additional Relief is DENIED in part. The Court will not award Plaintiff additional damages arising out of the use of his 401(k) retirement fund and for the sale of his house.
Plaintiff Ray O'Bryhim also moves this Court for an award of attorney's fees in the amount of $131,187.00 plus costs of $7,944.66 pursuant to 29 U.S.C. § 1132(g)(1) of ERISA.
29 U.S.C. § 1132(g)(1) of ERISA provides: "In any action under this subchapter ... by a participant, beneficiary, or fiduciary, the court in its discretion may allow a reasonable attorney's fee and costs of action to either party." The awarding of attorneys' fees in an ERISA claim continues to be determined under the five-factor test adopted by the Fourth Circuit in Reinking v. Philadelphia Am. Life Ins. Co., 910 F.2d 1210, 1217-18 (4th Cir.1990), even though the Fourth Circuit has since rejected the notion that a mandatory fee shifting rule exists in the ERISA context. See Quesinberry v. Life Ins. Co. of N. Am., 987 F.2d 1017, 1030 (4th Cir.1993).
The five-factor approach is not meant to be a rigid test but is designed to provide district courts with general guidelines for determining whether to grant a request for attorneys' fees. The five factors are:
(1) degree of opposing parties, culpability or bad faith;
(2) ability of 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 question regarding ERISA itself; and
(5) the relative merits of the parties' positions.
Quesinberry, 987 F.2d at 1028 (quoting Reinking, 910 F.2d at 1217-18). "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 ..." Id. at 1029. See also Snead v. UNUM Life Ins. Co. of Am., 824 F.Supp. 69 (E.D.Va.1993).
The Court will apply each of the five Reinking/ Quesinberry factors, in turn, to O'Bryhim's request for attorneys' fees. The Court first finds that the "bad faith factor" weighs in favor of awarding attorneys' fees to O'Bryhim. Examples of Reliance's "bad faith" in processing O'Bryhim's claim began as soon as O'Bryhim filed his claim. At trial, this Court found that Reliance wrote to O'Bryhim's treating physician requesting medical records, and, prior to receiving any records, requested a video-tape surveillance of O'Bryhim. The surveillance did not reveal anything negative to O'Bryhim's claim. As Joseph A. Randza, Reliance's Director of Technical Services...
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