Shultz v. Aetna Life Ins. Co., CIVIL ACTION NO. 1:16cv94-MHT (WO)

CourtUnited States District Courts. 11th Circuit. Middle District of Alabama
Citation398 F.Supp.3d 1188
Docket NumberCIVIL ACTION NO. 1:16cv94-MHT (WO)
Parties Richard P. SHULTZ, Plaintiff, v. AETNA LIFE INSURANCE COMPANY and L-3 Communications Welfare Plan, Defendants.
Decision Date13 August 2019

Lee P. Fernon, Jr., Thomas O'Neal Sinclair, Sinclair Law Firm, Birmingham, AL, for Plaintiff.

David Lynn Warren, Jr., Ogletree, Deakins, Nash, Smoak & Stewart, Birmingham, AL, Eric P. Mathisen, Ogletree Deakins Nash Smoak & Stewart PC, Valparaiso, IN, Ruth A. Cramer, Ogletree Deakins Nash Smoak & Stewart PC, Pittsburgh, PA, for Defendants.



This 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.


As 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.

At 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.

As 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 6.

Aetna 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.

Dr. 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.

Shultz 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).

Following 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.

Aetna 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.1 The court will address each of these arguments in turn.


The 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 recover.

A. Schultz has demonstrated that he is entitled to attorney's fees under ERISA.

Under § 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, 130 S.Ct. 2149, 176 L.Ed.2d 998 (2010) (quoting Ruckelshaus v. Sierra Club , 463 U.S. 680, 694, 103 S.Ct. 3274, 77 L.Ed.2d 938 (1983) ). Following his new benefit determination and award of long-term-disability benefits, there is no question that Shultz has satisfied this threshold requirement.

However, 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);2 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 fees.

1. Culpability or Bad Faith

The 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 F. App'x 53, 56 (11th Cir. 2012).


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