Potter v. Blue Cross Blue Shield of Michigan
| Decision Date | 31 March 2014 |
| Docket Number | Case No. 10–cv–14981. |
| Citation | 10 F.Supp.3d 737 |
| Parties | Michael POTTER and Brett Boyer, on behalf of themselves and all others similarly situated, Plaintiffs, v. BLUE CROSS BLUE SHIELD OF MICHIGAN, Defendant. |
| Court | U.S. District Court — Eastern District of Michigan |
Brian M. Saxe, Mantese, Honigman, Rossman, Gerard V. Mantese, Mantese Assoc., David F. Hansma, Mantese and Rossman, Troy, MI, John J. Conway, III, Royal Oak, MI, for Plaintiffs.
Dennis J. Levasseur, Bodman, Jason R. Gourley, Bodman LLP, Nathan D. Dupes, Bodman PLC, Detroit, MI, G. Christopher Bernard, James J. Walsh, Bodman, Ann Arbor, MI, for Defendant.
ORDER OVERRULING OBJECTIONS, ADOPTING REPORT AND RECOMMENDATION(document no. 167), AND GRANTING IN PART PLAINTIFFS' MOTION FOR ATTORNEY'S FEES AND COSTS(document no. 128)
This is an ERISA denial-of-benefits class action, filed by named plaintiffs Michael Potter and Brett Boyer against Defendant Blue Cross Blue Shield of Michigan (“BCBS”). Plaintiffs sought benefits they were allegedly denied for Applied Behavior Analysis (“ABA”) therapy for autism
as well as declaratory and injunctive relief. The Court subsequently certified a class of individuals enrolled in or covered by a plan offered or administered by BCBS and governed by ERISA who were denied a claim for ABA therapy on the grounds that, pursuant to BCBS' 2010 Medical Policy, BCBS deemed the treatment to be “experimental.” On March 30, 2013, 2013 WL 4413310, the Court entered judgment against BCBS and in favor of Plaintiffs, declared that BCBS' characterization of ABA therapy as “experimental or investigative” as applied to the claims of the class members, was and is arbitrary and capricious, overturned all denials of benefits on that basis, ordered the class members' claims for coverage of ABA therapy to be remanded to BCBS for read ministration, and ordered BCBS to provide notice to the class at BCBS' sole expense.
On May 1, 2012, Plaintiffs filed the instant motion for attorney's fees and costs pursuant to § 502(g) of ERISA, Fed.R.Civ.P. 23(h) and 54(d)(2), L.R. 54.1 and 54.1.2, and 28 U.S.C. § 1920. The Court referred the motion to a United States Magistrate Judge. The magistrate judge conducted a hearing on October 23, 2013, and, in addition, to the original motion, response, and reply briefs, considered several subsequently filed “notices” of supplemental authority as well as response and reply briefs regarding those notices. On January 30, 2014, the magistrate judge issued a Report and Recommendation (“Report”), recommending that the motion be granted in part and reducing the amount of attorney's fees and costs requested by Plaintiffs.
BCBS has filed 11 timely objections challenging various aspects of the Report. Civil Rule 72 does not require the Court to hold a hearing when reviewing a magistrate judge's findings. Fed.R.Civ.P. 72 ; U.S. v. Raddatz, 447 U.S. 667, 674, 100 S.Ct. 2406, 65 L.Ed.2d 424 (1980) (); see also Estate of Wyatt v. WAMU/JP Morgan Chase Bank, No. 09–14919, 2012 WL 1622897 . After examining the record and considering BCBS' objections de novo, the Court concludes that its objections do not have merit. Accordingly, the Court will adopt the Report, and grant the motion for attorney's fees and costs to the extent recommended by the Report.
Civil Rule 72 provides that a party's specific written objections to a magistrate judge's Report filed within fourteen days of service are entitled to de novo review. See Fed.R.Civ.P. 72(b)(2) ; see also 28 U.S.C. § 636(b)(1) ().
Section 502(g)(1) of ERISA provides, “In any action under this title ... 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). Civil Rule 23(h) provides, “In a certified class action, the court may award reasonable attorney's fees and nontaxable costs that are authorized by law” upon plaintiffs' motion under Civil Rule 54(d)(2). 28 U.S.C. § 1920 provides that the Court may tax as costs various expenses.
The Supreme Court has held that a claimant need not be a “prevailing party” to be eligible for attorney's fee under ERISA's fee-shifting statute, but rather, the Court may award fees and costs under the statute if the party requesting the award shows that he obtained “some degree of success on the merits.” Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242, 254, 130 S.Ct. 2149, 176 L.Ed.2d 998 (2010). Nevertheless, “[e]ven under this more relaxed threshold for eligibility, [plaintiffs] must demonstrate [their] entitlement to attorney's fees.” Geiger v. Pfizer, Inc., 549 Fed.Appx. 335, 338 (6th Cir.2013). In exercising its discretion as to whether to award fees under § 1132(g), this Court is to consider the following five factors established by the Sixth Circuit in Sec'y of Dep't of Labor v. King, 775 F.2d 666 (6th Cir.1985) :
(1) the degree of the opposing party's culpability or bad faith; (2) the opposing party's ability to satisfy an award of attorney's fees; (3) the deterrent effect of an award on other persons under similar circumstances; (4) whether the party requesting the fees sought to confer a common benefit on all participants and beneficiaries of an ERISA plan or to resolve a significant legal question regarding ERISA; and (5) the relative merits of the parties' positions.
Id. at 669. “No single factor is determinative.” Moon v. Unum Provident Corp., 461 F.3d 639, 642–43 (6th Cir.2006).
The Report first concludes that there is no question that Plaintiffs have achieved some success on the merits. Report & Recommendation Plaintiffs' Mot. for Attorney Fees, (“Report”) 5, ECF No. 167. The Report notes that Plaintiffs were able to persuade the Court that the plan administrator's characterization of ABA therapy as “experimental or investigative” as applied to the claims of the class members is arbitrary and capricious and should not be upheld under ERISA. Id. at 5. The Report explained that the Court reversed the plan administrator's decision and ordered that the class members' claims for coverage of ABA therapy be remanded to BCBS for readministration consistent with the Opinion and Order. Id. The Report disagreed with BCBS' argument that an award of fees and costs is premature because the parties do not yet know the number of class members and how many are entitled to relief, explaining that courts within the Sixth Circuit have consistently held that a remand to the plan administrator constitutes a substantial success on the merits. Id. at 6.
The Report proceeds to analyze the King factors, noting that the parties did not dispute that the second and fourth factors were present. Id. at 6–7. The Report concludes that the Court's finding that BCBS' denial of benefits was arbitrary and capricious suggests that BCBS acted with culpability in denying benefits for ABA therapy. Id. at 7–10. The Report also finds that an imposition of attorney's fees and costs in the instant case will serve to deter other plan administrators from implementing internally inconsistent and ambiguous policies that are not properly supported by record evidence. Id. at 10. In addition, the Report determines that Plaintiffs' case has relatively more merit than BCBS' because Plaintiffs overcame the arbitrary and capricious standard of review. Id. at 11–12. Accordingly, the Report concludes that, based on the King factors, Plaintiffs are entitled to an award of attorney's fees and costs. Id. at 12.
Plaintiffs request fees in the amount of $829,561. Id. In determining reasonable hourly rates, the Report first notes that such a rate is calculated according to the prevailing market rates in the relevant community, which, in the case at bar, is the Eastern District of Michigan. Id. at 13–15. Mr. Mantese claims hourly rates of $500 and his partners claim rates of $400, which the Report points out are in the 95th percentile of prevailing market rates for attorneys with similar experience. Id. at 16. The Report also considers that the Michigan State Bar Survey shows that the 75th percentile hourly rate for a managing partner is $315, and is $350 for equity and non-equity partners. Id. at 17. The State Bar Survey shows that the 75th percentile hourly rate for attorneys with between 16 and 35 years of experience is $300 per hour and the 95th percentile rate is $425 to $450 per hour. Id. In addition, the Report notes that the 75th percentile hourly rate for attorneys practicing consumer law is $350 and is $300 for those practicing insurance law. Id. Considering those factors, the Report concludes that $425.00 is a reasonable attorney fee for hours submitted by Mr. Mantese and $350.00 per hour is a reasonable fee for his law partners. Id. at 16.
Mr. Conway, a sole practitioner, claims a rate of $400 per hour. Id. The Report considered that the 75th percentile hourly rate for sole practitioners is $250 and the 95th percentile rate is $350 according to the State Bar Survey, and that, for attorneys with his level of experience, 16 to 25 years, the 75th percentile hourly rate is $300 and the 95th percentile hourly rate is $450. Id. As a result, the Report finds that $350 per hour is a reasonable hourly rate for Mr. Conway.Id. at 17–18.
The associates claim a $310 hourly rate, regardless of experience level, which is at the 95th percentile. Id. at 18. The Report notes that Plaintiffs did not submit any information regarding their experience level or years in practice. Id. BCBS sought to reduce their rates to the average rate, which is $203 per hour, and the Report states that the 75th percentile rate is $228. Id. at 16. The Report suggests...
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