Long v. Houston Lighting & Power Co.

• Decision Date: 18 October 1995
• Docket Number: Civ. A. No. G-95-070.
• Citation: 902 F. Supp. 130
• Parties: Paul D. LONG v. HOUSTON LIGHTING & POWER COMPANY and Philadelphia American Life Insurance Company.
• Court: U.S. District Court — Southern District of Texas

902 F. Supp. 130

Paul D. LONG v. HOUSTON LIGHTING & POWER COMPANY and Philadelphia American Life Insurance Company.

Civ. A. No. G-95-070.

United States District Court, S.D. Texas, Galveston Division.

October 18, 1995.

William E. King, Kemah, TX, for plaintiff.

L. Chapman Smith, Baker & Botts, Houston, TX, and Yasmin Islam, Winstead Sechrest & Minick, P.C., Houston, TX, for defendants.

ORDER AWARDING ATTORNEYS' FEES

KENT, District Judge.

Pending before Court is the Plaintiff's Motion for Summary Judgment Regarding Attorneys Fees and Costs. For the reasons set forth below, the Plaintiff's Motion is GRANTED, and the Court AWARDS to the Plaintiff attorneys' fees and costs as set forth below.

This case involves the termination of disability benefits under a long-term disability plan (the Plan) governed by the Employee Retirement Income Security Act, 29 U.S.C. § 1001 et seq. (ERISA). The Plaintiff, an employee of Defendant Houston Lighting & Power (HL & P), was placed on long-term disability leave and awarded disability benefits under the Plan. The Plan is administered by a third-party administrator, Paul Revere Life Insurance Company (Revere). Revere makes the decisions on claims presented under the Plan, and submits information regarding its decision to HL & P's Health Services department, which in turn submits Revere's recommendation to HL & P's Benefits Committee for approval. The Plan provides that a participant can appeal a claim denial by sending a written request for reconsideration. If an appeal is filed, the Health Services department conducts an investigation and reviews the decision made by Revere; otherwise, the Health Services department does not review or overrule Revere's recommendations.

Under the terms of the Plan as amended, benefits terminate if the participant "ceases to be under the regular care of a health care provider appropriate to the disabling condition." On November 22, 1994, HL & P terminated the Plaintiff's benefits after the Plaintiff allegedly informed a representative of Revere over the telephone that he had not seen a doctor in approximately two years. The Plaintiff denies ever making this statement.

At the time the Plaintiff's benefits were terminated, Revere or HL & P had in its files medical reports showing that the Plaintiff had been treated by physicians in 1992 and 1993. Moreover, in 1993, HL & P requested the Plaintiff be examined by an independent physician, who submitted a report dated September 28, 1993 which stated that the Plaintiff was totally and permanently disabled. A printout from HL & P's computer system shows that HL & P knew that the Plaintiff had been seen by his regular doctor in September 1993.

Upon learning of the termination, the Plaintiff contacted an attorney. On December 29, 1994, the Plaintiff's attorney sent HL & P a letter giving notice of the Plaintiff's claim under various state statutes, and threatening to sue if the matter was not resolved. On January 17, 1995, the Plaintiff filed suit against the Defendants in state court. The Defendants thereafter removed the case to this Court. During the course of discovery, HL & P informed the Plaintiff it did not consider the December 29 letter to constitute an appeal of the benefits termination. On March 30, 1995, the Plaintiff sent another letter specifically appealing the decision to terminate the Plaintiff's benefits. On April 3, 1995, HL & P retroactively reinstated the Plaintiff's benefits. Thus, the question of attorneys' fees is the only issue remaining in this case.

ERISA allows a court in its discretion to award reasonable attorneys' fees and costs. 29 U.S.C. § 1132(g)(1). However, there is no presumption in favor of awarding fees and costs. Todd v. AIG Life Ins. Co., 47 F.3d 1448 (5th Cir.1995); Harms v. Cavenham Forest Indus., Inc., 984 F.2d 686 (5th Cir.), cert. denied, ___ U.S. ___, 114 S.Ct. 382, 126 L.Ed.2d 331 (1993). When determining whether to award fees, the court should consider (1) the degree of the opposing party's culpability or bad faith; (2) the ability of the opposing party to satisfy an award of attorneys' fees; (3) whether an award of attorneys' fees against the opposing party would deter other persons acting under similar circumstances; (4) whether the party requesting the award sought to benefit all participants and beneficiaries of an ERISA plan or to resolve a significant legal question involving ERISA itself; and (5) the relative merits of the parties' positions. Todd, 47 F.3d at 1458.

As a threshold matter, the Defendants contend an award of attorneys' fees is improper because the Plaintiff is not a "prevailing party." The Defendants contend the Plaintiff's benefits were reinstated as a result of the Plaintiff's belated appeal of the decision to terminate, not as a result of the lawsuit. Therefore, according to the Defendants, the Plaintiff cannot be considered a prevailing party because the lawsuit was not "the cause in fact of the resumption of the Plaintiff's benefits." (Response to Summary Judgment Motion at p. 3).

The Court disagrees. A party is a "prevailing party" if he succeeds on any significant issue in litigation which achieves some of the benefits sought by the party in the lawsuit. Farrar v. Hobby, 506 U.S. 103, ___, 113 S.Ct. 566, 572, 121 L.Ed.2d 494 (1992). A prevailing party must be able to point to a resolution of a dispute which changes the legal relationship between the parties. Whatever relief secured by the plaintiff must directly benefit the plaintiff at the time of the judgment or settlement. Id., 113 S.Ct. at 572-73.

Here, the Plaintiff succeeded on the merits of his ERISA claim through the reinstating of his benefits, which changed the legal relationship between the parties, and directly benefitted the Plaintiff. Clearly, the lawsuit contributed to the resolution of the Plaintiff's claims. Without the lawsuit, HL & P would not have been forced to reassess its decision to terminate the Plaintiff's disability benefits. Thus, the bringing of the lawsuit was a "but for" cause of the reinstating of the Plaintiff's benefits, and the Plaintiff, therefore, is a prevailing party.

The Defendants further contend the Plaintiff is not entitled to attorneys' fees because he failed to exhaust his administrative remedies. According to the Defendants, if the Plaintiff had appealed the termination of his benefits as provided for in the Plan, no litigation would have been necessary and no attorneys' fees would have been incurred.

ERISA itself contains no exhaustion requirement. However, to further the policies behind ERISA, courts have generally required a plaintiff to exhaust his administrative remedies under the plan before seeking judicial review. See, e.g., Denton v. First Nat'l Bank, 765 F.2d 1295 (5th Cir.1985). In this case, the Court concludes the Plaintiff's December 1994 letter satisfied the exhaustion requirement. While the letter did not specifically state it was an appeal of the termination decision, it brought the issue to the attention of the Defendants and informed the Defendants of the Plaintiff's dissatisfaction with the decision. The letter informed the Defendants that the Plaintiff remained disabled, and reminded them of the independent medical evaluation of the Plaintiff requested by HL & P in 1993. Thus, the...