Colby v. Assurant Employee Benefits, Civil Action No. 07-11488-RCL.

• Decision Date: 22 July 2009
• Docket Number: Civil Action No. 07-11488-RCL.
• Citation: 635 F.Supp.2d 88
• Parties: Dr. Julie COLBY, Plaintiff v. ASSURANT EMPLOYEE BENEFITS, Fortis Benefits Insurance Company, Management Company for Merrimack Anesthesia Associates Long Term Disability Plan, and Union Security Insurance Company, Defendants.
• Court: U.S. District Court — District of Massachusetts

Page 88

635 F.Supp.2d 88

Dr. Julie COLBY, Plaintiff v. ASSURANT EMPLOYEE BENEFITS, Fortis Benefits Insurance Company, Management Company for Merrimack Anesthesia Associates Long Term Disability Plan, and Union Security Insurance Company, Defendants.

Civil Action No. 07-11488-RCL.

United States District Court, D. Massachusetts.

July 22, 2009.

Mala M. Rafik, Alyssa A. Yenikomshian, Rosenfeld & Rafik, PC, Boston, MA, for Plaintiff.

Joshua Bachrach, Wilson Elser Moskowitz Edelman & Dicker, LLP, Philadelphia, PA, Edward S. Rooney, Jr., Eckert Seamans Cherin & Mellott, LLC, Boston, MA, Gary N. Stewart, Rawle & Henderson LLP, Harrisburg, PA, for Defendants.

MEMORANDUM AND ORDER

YOUNG, District Judge.

I. INTRODUCTION

The plaintiff, Dr. Julie Colby ("Dr. Colby") filed suit against the defendants, Assurant Employee Benefits, Fortis Benefits Insurance Company, Management Company for Merrimack Anesthesia Associates Long Term Disability Plan, and Union Security Insurance Company (collectively "USIC"), to recover long-term disability ("LTD") benefits she claims that USIC denied her in violation of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1132(a)(1)(B). On February 23, 2009, ruling on the parties' cross motions for judgment on the record, this Court held that USIC violated ERISA by arbitrarily and capriciously terminating Dr. Colby's benefits. Colby v. Assurant Employee Benefits, 603 F.Supp.2d 223, 245 (D.Mass.2009) ("Opinion"). This Court entered judgment in favor of Dr. Colby, remanded Dr. Colby's claim for benefits to USIC for "additional proceedings consistent with [its] opinion," and awarded Dr. Colby reasonable attorney's fees and costs "incurred from July 26, 2005, the date of USIC's termination of Dr. Colby's benefits, until the present." Id. at 247.

In accordance with the Court's Opinion, Dr. Colby submitted a motion for attorney's fees and costs. (Doc. No. 32.) USIC filed an opposition to Dr. Colby's motion and a motion for reconsideration of the Court's initial decision to award Dr. Colby attorney's fees and costs. (Doc. No. 36.)

For the reasons discussed below, the Court awards Dr. Colby attorney's fees and costs in the amount of $39,477.36. The Court also grants USIC's motion for reconsideration to modify the Court's Opinion to reflect the Court's conclusion that an ERISA plaintiff may not recover attorney's fees and costs expended while pursuing pre-litigation administrative appeals.¹ In all other respects, the Court denies USIC's motion for reconsideration.

II. ANALYSIS

In its February Opinion, the Court awarded attorney's fees and costs to Dr. Colby pursuant to ERISA § 502(g)(1), codified at 29 U.S.C. § 1132(g)(1), which provides that "[i]n any action under [ERISA § 1132] . . . 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." 29 U.S.C. § 1132(g)(1). The Court decided to exercise its discretion and award attorney's fees and costs sua sponte, without the benefit of briefing from either party. In its opposition to Dr. Colby's motion for attorney's fees and costs and in its own motion for reconsideration, USIC presents three primary arguments against awarding all or part of the fees and costs requested by Dr. Colby. First, USIC suggests that, because the only relief secured in this litigation by Dr. Colby was a court-ordered remand to USIC for reconsideration of her LTD benefits claim, Dr. Colby is not a "prevailing party," and thus is not entitled to fees or costs. Second, USIC claims that the Court improperly applied the First Circuit's five-factor test, for determining whether to award fees and costs under ERISA. Finally, USIC asserts that even if it was within the Court's discretion to award fees and costs to Dr. Colby, ERISA does not permit the recovery of fees and costs expended in pre-litigation administrative appeals.

A. In the First Circuit, Only a "Prevailing Party" Is Eligible to Recover Attorney's Fees and Costs Under ERISA § 1132(g)(1).

Before considering these arguments, the Court must first address a question not briefed by either of the parties: whether an ERISA plaintiff must be a "prevailing party" in order to be eligible for an award of attorney's fees and costs. Unlike other fee shifting statutes, ERISA does not contain any explicit requirement that a party prevail in order to be eligible to recover attorney's fees and costs. Compare 29 U.S.C. § 1132(g)(1) (permitting award of fees and costs to "either party"), with 42 U.S.C. § 1988(b) ("In any action or proceeding to enforce a provision of [various civil rights statutes], the court, in its discretion, may allow the prevailing party . . . a reasonable attorney's fee as part of the costs . . . .") (emphasis added), 28 U.S.C. § 2412(d)(1)(A) (Equal Access to Justice Act) ("Except as otherwise specifically provided by statute, a court shall award to a prevailing party other than the United States fees and other expenses . . . unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust.") (emphasis added), and 42 U.S.C. § 3613(c)(2) (Fair Housing Act) ("[T]he court, in its discretion, may allow the prevailing party, other than the United States, a reasonable attorney's fee and costs.") (emphasis added).

The First Circuit has not directly addressed whether only a prevailing ERISA party is eligible for an award of fees and costs. Nonetheless, the First Circuit has consistently read section 1132(g)(1) as limiting recovery of fees and costs to prevailing parties. See Doe v. Travelers Ins. Co., 167 F.3d 53, 61 (1st Cir.1999) ("Naturally, [awards under section 1132] are normally for the prevailing party, if at all, and are based on rather general considerations such as fault, ability to pay, deterrence, and the like.") (emphasis added); Cottrill v. Sparrow, Johnson & Ursillo, Inc., 100 F.3d 220, 225-26 (1st Cir.1996) (assuming that only a "prevailing plaintiffs and prevailing defendants" can recover fees and costs under ERISA); Gray v. New England Tel. & Tel. Co., 792 F.2d 251, 258 (1st Cir.1986) (holding that the five-factor balancing approach for determining whether a court should exercise its discretion to award fees and costs in an ERISA action "is the appropriate one to be applied regardless of which party prevails") (emphasis added).² Other courts within the First Circuit, reading the tea leaves, have concluded that the First Circuit has read a prevailing party requirement into section 1132(g)(1). See Rhode Island Carpenters Annuity Fund v. Trevi Icos Corp., 533 F.Supp.2d 246, 254 n. 7 (D.R.I.2008) (citing Cottrill, 100 F.3d at 225, and explaining that "[c]ourts have . . . tended to limit awards to prevailing parties"); Kerkhof v. MCI WorldCom, Inc., 204 F.Supp.2d 74, 75 (D.Me.2002) ("The ERISA attorney fee statute at issue here does not use the term `prevailing party,' but the First Circuit seems to have incorporated that requirement as a precondition to recovery. . . ."); Bertaux v. Dreyfus Trust Co., No. CIV.A. 99-10815-GAO, 2002 WL 389300, at *1 n. 1 (D.Mass. Mar. 12, 2002) (O'Toole, J.) (assuming that it was not within the court's discretion to award fees and costs to a non-prevailing ERISA defendant). Although this Court, along with many others throughout the nation,³ believes that Congress' failure to include any "prevailing party" language in section 1132(g)(1) evinces an intent to allow non-prevailing parties to recover fees and costs, this Court must, of course, abide by the law of this Circuit. Accordingly, it is only within this Court's discretion to award attorney's fees and costs to Dr. Colby if she is a prevailing party.

B. Dr. Colby Is a Prevailing Party.

USIC argues that, because the Court remanded Dr. Colby's LTD claim to USIC for reconsideration and did not hold that Dr. Colby was entitled to LTD benefits, Dr. Colby is not a prevailing party. Dr. Colby claims that she "prevailed in each claim submitted in her complaint." (Doc. No. 33, at 16-17.) As the Court will explain, the reality lies somewhere in the middle.

The term "prevailing party" is a "legal term of art." Buckhannon Board & Care Home, Inc. v. West Virginia Dep't of Health & Human Res., 532 U.S. 598, 603, 121 S.Ct. 1835, 149 L.Ed.2d 855 (2001). Within the First Circuit, in order to prevail, "a party must show . . . a `material alteration of the legal relationship of the parties'. . . ." Aronov v. Napolitano, 562 F.3d 84, 89 (1st Cir.2009) (quoting Buckhannon, 532 U.S. at 604, 121 S.Ct. 1835).⁴ A plaintiff satisfies this standard "[i]f [he or she] succeed[s] on any significant issue in litigation which achieves some of the benefit the parties sought in bringing suit." Hensley v. Eckerhart, 461 U.S. 424, 433, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983); see also Farrar v. Hobby, 506 U.S. 103, 111-12, 113 S.Ct. 566, 121 L.Ed.2d 494 (1992) (holding that a party prevails when "actual relief on the merits of his claim materially alters the legal relationship between the parties by modifying defendant's behavior in a way that directly benefits the plaintiff"); Hewitt v. Helms, 482 U.S. 755, 760, 107 S.Ct. 2672, 96 L.Ed.2d 654 (1987) (holding that a plaintiff must "receive at least some relief on the merits of his claim before he can be said to prevail").

Although the general contours of the prevailing party doctrine are well established, its application to this case is not simple. Neither the First Circuit nor any district court within the circuit has ever considered whether a plaintiff like Dr. Colby—who secured a remand to her plan administrator for reconsideration of her benefits claim after persuading the district court that the plan administrator violated ERISA—is a prevailing party.⁵ Courts in other circuits have split almost evenly on the issue.

On one side of the ledger, courts from the Second, Third, Sixth, Seventh, Eighth, Ninth, and Tenth...