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Prevailing Party?s Request for Attorney?s Fees Denied ? E.D. Mi.

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  • Prevailing Party?s Request for Attorney?s Fees Denied ? E.D. Mi.

    Prevailing Party?s Request for Attorney?s Fees Denied ? E.D. Mi.

    Attached is a case out of the Eastern District of Michigan, Guest-Marcotte v. Life Insurance Company of North America, et. al. The case is before the court on plaintiff?s motion for attorney?s fees and costs. Plaintiff was successful on an appeal to the Sixth Circuit reversing the district court?s dismissal of her claim. Thereafter, plaintiff filed a motion for attorney?s fees and costs. The court ultimately denies plaintiff?s request, based mainly on the factor regarding the culpability or bad faith of the opposing party.

    With respect to the first King factor, Plaintiff does not allege or attempt to prove that Defendants acted in bad faith. Indeed, she cites a Sixth Circuit case that distinguishes between bad faith and culpability, ostensibly for the purpose of conceding that Defendants did not act in ba faith but are nonetheless culpable. Mot. at 8, ECF No. 85 (citing Hoover v. Provident Life and Acc. Ins. Co., 290 F.3d 801, 809-10 (6th Cir. 2002)). Plaintiff notes that ?while ?an arbitrary and capricious denial of benefits does not necessarily indicate culpability or bad faith,? Sixth Circuit Court of Appeals precedent ?by no means precludes a finding of culpability or bad faith based only on the evidence that supported a district court?s arbitrary-and-capricious determination.?? Mot. At 9, ECF No. 85 (quoting Gaeth v. Hartford Life Ins. Co., 538 F.3d 524, 530 (6th Cir. 2008) (internal citations omitted) (emphasis in original)). In other words, a court may find that evidence that led to an arbitrary-and-capricious determination also leads to a finding that the actor is culpable. The inquiries, however, are separate. Indeed, to hold that a finding of arbitrary and capricious conduct creates a presumption of culpability would frustrate the purpose of the inquiry:

    To conclude that the degree-of-culpability factor always favors an award of
    attorney fees when a case is remanded to address an inadequate review of the record
    would essentially equate the first King factor with a litigant?s degree of success on
    the merits. The law of this circuit makes clear that these are separate inquiries.

    Geiger v. Pfizer, Inc., 549 F. App?x 335, 339 (6th Cir. 2013) (internal citations omitted). Thus, the first King factor requires a deeper and more detailed inquiry beyond merely whether a Plaintiff achieved remand under the arbitrary and capricious standard of review.

    An ?arbitrary and capricious? ruling suggests some level of culpability on the part of the plan administrator. However, the first King factor does not ask merely whether a party is culpable; rather, the inquiry concerns the degree of culpability: ?[T]he first factor asks district courts to consider the ?degree? of culpability or bad faith, not merely whether the opposing party is culpable in any sense of the word.? Id. Indeed, the Hoover court explicitly found the defendant?s culpability to be high. Hoover, 290 F.3d at 809?10.

    Here, the fact that LINA did not exercise its right to order a physical examination of Plaintiff does not, by itself, suggest a high level of culpability.3 The Sixth Circuit has held that ?there is ?nothing inherently objectionable about a file review by a qualified physician in the context of a benefits determination,?? though that court has cautioned plan administrators to avoid relying too heavily on file reviews alone when the option to conduct physical examinations exists. Smith v. Cont?l Cas. Co., 450 F.3d 253, 263 (6th Cir. 2006). Indeed, the Sixth Circuit?s criticism of LINA?s decision making process ? that it rejected Plaintiff?s reports of pain without physically examining Plaintiff ? was limited to ?the facts of this case.? Op. at 16, ECF No. 81.

    Here, the Sixth Circuit did not credit LINA?s decision to deny Plaintiff disability benefits because her treating professionals did not identify any ?ongoing physical functional impairment which would preclude her from performing her own occupational duties.? Op. at 12. On the contrary, it viewed LINA?s decision to be based on its rejection of Plaintiff?s reports of pain. The Sixth Circuit explained:

    LINA?s decision to deny STD benefits was arbitrary and capricious because LINA
    had the option to conduct a physical examination, yet declined to do so . . . . It was
    not reasonable for LINA to brush aside [Plaintiff?s] claims of debilitating pain
    without first performing a physical examination . . . . It was arbitrary and capricious
    for LINA to deny [Plaintiff?s] disability without exercising its right to conduct a
    physical examination.

    Op. at 15, 16, 19, ECF No. 81. The Sixth Circuit also focused on LINA?s interpretation of the plan terms. Specifically, the Sixth Circuit took issue with the fact that LINA conflated ?satisfactory proof? of disability (which was required by the plan?s terms) and ?objective proof? of disability (which LINA actually required). The Sixth Circuit found that satisfactory proof is less demanding than objective proof. Id. at 17.4

    But for the different interpretation of the plan?s terms, LINA?s decision-making process appeared to be thorough and complete. In Moon, the court found that the improper basis of the administrator?s determination was not the fact that they opted for a file review rather than a physical examination, but that ?they did not provide a reasoned explanation that supported their outcome? and that the file review was selective. Moon, 461 F.3d at 643. Here, by contrast, LINA responded to the medical evidence provided by Plaintiff and provided reasoned explanations for its determinations. While the Sixth Circuit found that LINA?s failure to perform a physical examination of the Plaintiff was unreasonable, it did not appear to find fault with the thoroughness of LINA?s file review. The file reviews undertaken by LINA for Plaintiff?s initial application for STD benefits and for each successive appeal were each undertaken with the involvement of different physicians, each of whom provided a reasoned explanation for their conclusions. Each review, however, was premised on LINA?s interpretation that the plan required objective medical proof Plaintiff?s functional impairment. Id. at 4?6, 8?9, 12. When Plaintiff?s treating professionals did not produce such evidence, the plan administrators determined that it was reasonable to deny her benefits.

    Thus, the Sixth Circuit?s arbitrary-and-capricious determination was at least in part based on LINA?s interpretation of the plan?s terms. A mistaken interpretation of plan terms, however, is not sufficient to find a plan administrator highly culpable for the purposes of the King test. See Shelby Cty. Health Care Corp., 581 F.3d at 377 (6th Cir. 2009) (holding that an ?erroneous interpretation of certain terms in [defendant?s] plan documents does not constitute culpable conduct for purposes of determining whether to award attorney fees.?). Although LINA erred in failing to exercise its right to conduct a physical examination, it did provide reasoned, if mistaken, explanations for its determinations. Furthermore, LINA appears to have engaged in a full, rather than selective, file review. Defendants? conduct may have been culpable, but it was not sufficiently culpable for this factor to weigh in favor of a fee award.

  • #2
    Unfortunate, poorly reasoned decision. Hopefully, Plaintiff has already made the decision to go back to the 6th, at least on this issue alone, once all the port-remand dust settles.

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