Faison v. Donalsonville Hospital Inc, No. 1:2011cv00010 - Document 58 (M.D. Ga. 2013)
Court Description: ORDER granting 51 Motion for Attorney Fees. The Hospital is Ordered to pay Lumley $55,170.00 and Howell $1,200.00. Ordered by Judge W. Louis Sands on 8/29/2013. (bcl)
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Faison v. Donalsonville Hospital Inc Doc. 58 IN TH E U N ITED S TATES D ISTRICT COU RT FOR TH E MID D LE D ISTRICT OF GEORGIA ALBAN Y D IVISION CORNELIUS B. FAISON, Plaintiff, v. DONALSONVILLE HOSPITAL, INC., Defendant. : : : : : : : : : : CASE NO.: 1:11-cv-10 (WLS) ORD ER Before the Court, without opposition, is Plaintiff Cornelius B. Faison’s Motion for Attorneys’ Fees. (Doc. 51.) For the reasons that follow, Faison’s m otion is GRAN TED . I. Pro ce d u ral Backgro u n d This action arose from Defendant Donalsonville Hospital’s denial of Plaintiff Cornelius Faison’s insurance ben efits under an Em ployee Ben efit Plan. After the denial, Faison filed suit under the Em ployee Retirem ent Incom e Security Act of 1974, 29 U.S.C. § 10 0 1 et seq. (ERISA), on the basis that the Hospital acted arbitrarily and capriciously in m aking its decision. On Septem ber 17, 20 12, the Court entered judgm ent in favor of Faison. In its Order, the Court m ade the following findings of fact: Faison was a plan participant of the Donalsonville Hospital Inc. Em ployee Benefit Plan. On J uly 26, 20 0 9, he sustained injuries after crashing his m otorcycle into a tree while eluding a Georgia State Patrol Trooper. He was charged, and later convicted of, five m isdem eanor violations related to his elusion from police. As a result of his injuries, Plaintiff am assed $ 481,783.48 in m edical bills. To pay them , Faison m ade a claim with the Hospital, which den ied the claim . The Hospital is a 1 Dockets.Justia.com sixty-five-bed gen eral hospital in Sem inole County, Georgia. It offers its em ployees “Em ployee and Depen dent” m edical insurance. The Hospital funds the plan with its own revenue and m odest em ployee contributions. Less than 5 percent of the insurance funds com e from em ployees. In 20 10 , the Hospital had around $ 2.3 m illion for insurance claim s. It has reinsurance for claim s exceeding $ 50 ,0 0 0 . The Hospital delegates initial claim s adm inistration to Paragon Benefits. Under the term s of the plan, participants m ay appeal adverse benefits determ inations to the claim s adm inistrator. As the plan docum ent instructs, Faison first subm itted his claim to Paragon. Paragon denied his request for coverage on the following exclusion, found in Faison’s plan: ( 19 ) Ille ga l Acts . Charges for services received as a result of Injury or Sickness occurring directly or indirectly, as a result of Serious Illegal Act, or a riot or public disturbance. For purposes of this exclusion, the term “Serious Illegal Act” shall m ean any act or series of acts that, if prosecuted as a crim in al offense, a sentence to a term of im prisonm ent in excess of one year could be im posed. It is not necessary that crim inal charges be filed, or, if filed, that a conviction result or that a sentence of im prisonm ent for a term in excess of one year be im posed for this exclusion to apply. In a letter dated August 10 , 20 10 , counsel for Faison appealed Paragon’s decision to the Plan Adm inistrator. A few days after receiving counsel’s letter, the Hospital’s Benefits Com m ittee m et to consider the claim . The Ben efits Com m ittee m akes fin al decisions on adverse ben efit determ inations. The com m ittee is com posed of Charles Orrick, the Hospital adm inistrator; J am es Moody, the chief financial officer; an d Herm an Brookins, who is the chairm an of the board of directors an d describes him self as the de facto chief executive officer. The m eeting occurred one m orning when CFO Moody approached Brookins and Orrick with Faison’s appeal letter. At the tim e of the m eeting, neither Brookins nor Or- 2 rick were fam iliar with Faison’s case beyond, at m ost, having heard about it. Besides the appeal letter and the plan docum ent, none of the Ben efits Com m ittee m em bers had seen any docum ents or evidence associated with the accident. Moody had spoken with an unknown Paragon em ployee som etim e after Paragon’s decision via a telephone call. Based on that call, Moody understood the reason for Paragon’s denial an d told the em ployee he agreed with his or her decision During their m eeting, the com m ittee reviewed the plan itself but they did not consider other docum ents. Com m ittee m em bers also discussed how Paragon had denied a claim for a plan participant who was injured during a legal m otocross racing accident. Brookins recalled that he had felt that it would be im portant to treat sim ilar claim s alike. At that m eeting, the Com m ittee decided to deny Plaintiff’s claim . The Com m ittee did not m eet again. CFO Moody then contacted attorney Charles Stewart to draft a response to Plaintiff’s appeal. Stewart was not involved in the hospital’s in itial decision. After the call, Stewart reviewed evidence and drafted a letter denying coverage, per Moody’s request. As evidenced by Stewart’s letter and com m ittee m em bers’ testim ony, the Hospital determ ined that Plaintiff was not entitled to benefits because his conduct fell under the plan’s “Illegal Acts” exclusion. Under these facts, the Court found the Hospital violated ERISA. The Court found the Hospital’s decision was “de novo wrong” because the plan exclusion applied only to illegals acts that “if prosecuted as a crim inal offense, a sentence to a term of im prisonm ent in excess of one year could be im posed.” Given the singular use of the word “offense,” the Court determ ined the Hospital could not sim ply add up Faison’s m isdem eanors to create a “serious illegal act.” After finding the Hospital’s interpretation 3 wrong, the Court proceeded in fin ding it unreasonable because the term was unam biguous. Additionally, the Hospital gave “surprisingly little consideration” to Faison’s appeal and operated under a conflict of interest. The Hospital appealed the Court’s judgm ent, and the Eleventh Circuit affirm ed. After this Court’s entry of judgm ent, Faison m oved for attorneys’ fees. He requests $ 55,170 on behalf of attorney J erry Lum ley for 18 3.9 hours worked at $ 30 0 an hour. He also requests $ 1,20 0 for co-counsel W. Kerry Howell for 4.8 hours at $ 250 . The Hospital did not respond to the m otion, and the tim e to do so has expired. II. D is cu s s io n A. W h e th e r Fais o n is e n title d to atto rn e ys ’ fe e s ERISA provides that “[i]n any action under this subchapter . . . by a participant, beneficiary, or fiduciary, the court in its discretion m ay allow a reasonable attorney's fee and costs of action to either party.” 29 U.S.C. § 1132(g)(1). A court has discretion to award attorneys’ fees when the claim ant has achieved “som e degree of success on the m erits.” Hardt v. Reliance Standard Ins. Co., 130 S. Ct. 2149, 2151 (20 10 ) (quoting Ruckelshaus v. Sierra Club, 463 U.S. 680 , 694 (1983)). The Eleventh Circuit instructs district courts to consider five factors when evaluating a m otion for attorney’s fees under § 1132(g)(1): (1) the degree of the opposing parties' culpability or bad faith; (2) the ability of the opposing parties to satisfy an award of attorney's fees; (3) whether an award of attorney's fees against the opposing parties would deter other persons acting under sim ilar circum stances; (4) whether the parties requesting attorney's fees sought to benefit all participants and ben eficiaries of an ERISA plan or to resolve a significant legal question regarding ERISA itself; (5) the relative m erits of the parties' positions. Freem an v. Cont’l Ins. Co., 996 F.2d 1116, 1119 (11th Cir. 1993) (citing McKnight v. S. Life & Health Ins. Co., 758 F.2d 1566, 1571– 72 (11th Cir. 1985)). These factors “operate 4 only as a [guideline] to assist [district courts] in exercising their discretion’ and as a ‘nuclei of concerns that a court should address in applying section [1132(g)].’” By ars v. Coca-Cola Co., 517 F.3d 1256, 1268 (11th Cir. 20 0 8) (quoting Iron W orkers Local 272 v. Bow en, 624 F.2d 1255, 1266 (5th Cir. 1980 )). The Court finds these factors weigh in favor of Faison. 1. Bad Faith The first factor, the degree of the hospital’s culpability or bad faith, supports an award of attorneys’ fees. In its Order on the Parties’ m otions for judgm ent, the Court found the Hospital abused its discretion by giving “surprisingly little consideration to [Faison’s] appeal” and acting under a conflict of interest. (Doc 48 at 12.) The evidence in the case showed that the Benefits Com m ittee denied Faison’s appeal without considering evidence. The record also “suggest[ed] that the Benefits Com m ittee had only a general understanding of the accident, based entirely on a conversation with a Paragon em ployee who had already decided to deny the claim .” (Id. at 13.) Two m em bers of the three-m em ber com m ittee appeared to rely alm ost entirely on the third to m ake the Com m ittee’s decision. Additionally, the Hospital, the plan adm inistrator, paid the benefits from its own assets, creating a conflict of interest. These facts suggest the Hospital was at the very least culpable in its conduct. 2 . Op p o s in g p arty’s ability to s atis fy an aw ard o f a tto rn e y’s fe e s . The second factor asks the Court to consider the Hospital’s ability to satisfy an award of attorneys’ fees. This factor also weighs in favor of awarding fees. Faison requests $ 56,370 for two attorneys. The Hospital had $ 2.3 m illion for insurance claim s in 20 10 . It has reinsurance for claim s exceedin g $ 50 ,0 0 0 . There is no eviden ce to suggest the Hospital would not be able to pay Faison’s fees. 5 3 . D e te rre n ce The Court next considers whether an award of attorneys’ fees will deter other plan adm inistrators from acting as found under sim ilar circum stances. The Court finds it would. The Eleventh Circuit has noted in another ERISA case that “the deterrent value of an award of attorneys’ fees . . . is high” because “[i]f [the defendant] did not have to pay . . . attorneys’ fees, it would only be liable for what it should have covered before this litigation com m enced. With nothing to lose but their own litigation costs, other ERISAplan sponsors m ight find it worthwhile to force underfin anced ben eficiaries to sue them to gain their ben efits or accept undervalued settlem ents.” N ational Cos. Health Benefit Plan v. St. Joseph's Hosp., Inc., 929 F.2d 1558, 1675 (11th Cir.1991), abrogated on other grounds, Geissal v. Moore Med. Corp., 524 U.S. 74 (1998). Likewise, in this case, an award of attorneys’ fees will discourage plan adm in istrators from giving cursory review to a plan participant’s appeal, at the risk of paying the benefits and a fee award. 4 . W h e th e r th e p artie s re qu e s tin g atto rn e y's fe e s s o u gh t to be n e fit a ll p articip an ts an d be n e ficiarie s o f a n ERISA p lan o r to re s o lve a s ign ifican t le gal qu e s tio n re gard in g ERISA its e lf Faison claim s that “[w]hile [he] brought this case to recover benefits that were wrongfully denied to him , this case will benefit all participants and beneficiaries of the Hospital’s Plan.” Although this case m ay have som e benefit to other plan participants, it neither involved other participants nor did it resolve a significant legal question. Instead, the case was strictly lim ited to Faison’s claim for benefits. The Court analyzed that question under the well-established six-part approach for reviewing a plan adm inistrator’s decision. Therefore, the Court finds that this factor does not weigh in favor of granting attorneys’ fees. 6 5 . Th e re lative m e rits o f th e Partie s ’ p o s itio n s . Finally, the fifth factor, the relative m erits of the Parties’ positions, weighs in favor of Faison. The Court determ ined that the Hospital’s decision was not only wrong, but also an abuse of discretion. The Court found unpersuasive the Hospital’s argum ents. Therefore, Faison’s positions had m ore m erit than the Hospital’s. Because the Court finds that four of the five factors weigh in favor of attorneys’ fees, the Court concludes that fees are warranted under 29 U.S.C. § 1132(g)(1). The Court now turns to whether the requested fees are reasonable. B. Re as o n able n e s s o f Fais o n ’s fe e re qu e s t In determ in ing the appropriate am ount of an award for attorneys’ fees, the Court m ultiplies the num ber of hours reasonably expended on a case by the reasonable or custom ary hourly rate. This am ount, the “lodestar,” m ay then be adjusted upward or downward in light of the factors identified in Johnson v. Ga. Highw ay Express, Inc., 48 8 F.2d 714, 717-19 (5th Cir. 1974), abrogated on other grounds by Blanchard v. Bergeron, 48 9 U.S. 87 (1989). 1 The Court in Blum v. Stenson, 465 U.S. 886 (1984), held that m ost of the Johnson factors 2 will ordin arily be reflected in the lodestar itself, for 1 The Eleventh Circuit has adopted as binding precedent all decisions issued by the former Fifth Circuit prior to October 1, 1981. Bonner v. City of Prichard, 661 F. 2d 1206, 1209 (11th Cir. 1981) (en banc). 2 Determination of a reasonable fee is based on consideration of the factors set forth in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974): 1. The time and labor expended; 2. The novelty and difficulty of the questions raised; 3. The skill required to properly perform the legal services rendered; 4. The customary fee for like work; 5. The attorney’s opportunity costs in pressing the instant litigation; 6. The fee is contingent or fixed; 7. The time limitations imposed by the client or circumstances; 8. The amount in controversy and the results obtained; 9. The experience, reputation, and ability of the attorney; 10. The undesirability of the case within the legal community in which the suit arose; 11. The nature and length of the professional relationship between attorney and client; and 12. The attorneys’ fees awards in similar cases. 7 exam ple, tim e and rate, rather than in an adjustm ent of the lodestar. Determ in ation of a reasonable fee necessarily requires that a counsel for the prevailing party exclude from a fee request “hours that are excessive, redundant, or otherwise unnecessary, just as a lawyer in private practice ethically is obligated to exclude such hours from his fee subm ission.” Hensley v. Eckerhart, 461 U.S. 424, 434 (1983). Faison requests $ 56,370 in fees for two attorneys, J erry Lum ley and K. Kerry Howell. Lum ley served as lead counsel for Faison, and Howell assisted on several occasions. According to Lum ley’s affidavit, $ 30 0 an hour is a reasonable fee for an attorney of his experience and ability and for the nature of the work perform ed. Likewise, Lum ely believes $ 250 is an appropriate fee for Howell. Lumley has practiced law in Macon, Georgia, since 1985. Howell was adm itted to the bar in 1991. Lum ley has taken a num ber of ERISA cases since that tim e. He has a good reputation among the professional com m unity for these types of cases, as evidenced by the fact that all of his ERISA cases cam e from referrals. Faison also provided an affidavit from Bradley G. Pyles, a partner with the law firm Westm oreland, Patterson, Moseley & Hinson LLP, in Macon, Georgia. Pyles’ practice focuses prim arily on em ployee benefit and insurance issues. Most of his recent work has involved ERISA claim s. He believes, based on the nature of the case and Lum ley’s and Howell’s experiences, that $ 30 0 and $ 250 are reasonable fees. In an invoice, Lum ley states that he worked 183.9 hours over the course of two years to litigate Faison’s case. His invoice includes tim e spent preparing briefs, attending depositions, com m unicating with opposing counsel and his client, am ong other things. Howell spent 4.8 hours reviewing and revising som e of Lum ley’s work. 8 After a careful review of the record and takin g account of the nature of the claim , the Court concludes that the am ount of fees requested are reasonable and appropriate for the attorneys’ extensive experience, the nature of the case, and the tim e spent obtaining a successful result. In particular, $ 300 and $ 250 are reasonable hourly rates for com plexity of this case and the attorneys’ respective abilities and experiences. Additionally, 18 3.9 hours is not unreasonable for a two-year case involving com plex law and facts. Therefore, Faison’s m otion is GRAN TED in the am ount of $ 56,370 . III. Co n clu s io n Faison’s Motion for Attorneys’ Fees (Doc. 51) is GRAN TED . The Hospital is ORD ERED to pay Lum ley $ 55,170 and Howell $ 1,20 0 . SO ORD ERED , this 29th_ day of August 20 13. _ / s/ W. Louis Sands _ _ _ _ _ _ _ _ TH E H ON ORABLE W . LOU IS SAN D S, U N ITED S TATES D ISTRICT COU RT 9
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