Bain v. Oxford Health Insurance, Inc.

Background

David and Dayna Bain and their daughter Alaina sued Oxford Health Insurance, Inc. and its affiliate United Behavioral Health, which the opinion collectively calls “UBH,” after UBH denied a claim for services provided to Alaina. UBH determined that the services were not medically necessary.

In an earlier order addressing cross-motions for judgment, the court granted in part and denied in part the Bains’ motion and denied UBH’s motion. The court found that UBH abused its discretion in denying the benefits claim, but it did not award benefits outright. Instead, it remanded the claim to the plan administrator for further proceedings. Final judgment was entered on February 14, 2020.

The Bains were represented by the Phillips law firm and the Creitz law firm. They requested $173,943.75 in attorneys’ fees and nontaxable expenses, including fees for just under 300 attorney and paralegal hours.

Legal Standard

Under 29 U.S.C. § 1132(g)(1) of the Employee Retirement Income Security Act (ERISA), a court may award reasonable attorneys’ fees and costs to either party. Under the Supreme Court’s decision in Hardt v. Reliance Standard Life Insurance Co., a party does not have to be the overall winner to seek fees, but must achieve “some degree of success on the merits.” A result is not enough if it is only a trivial success or a purely procedural victory.

The Ninth Circuit also requires courts to consider five factors, known as the Hummell factors: the opposing party’s culpability or bad faith; its ability to pay; whether an award would deter similar conduct; whether the fee claimant sought to benefit other plan participants or resolve an important ERISA question; and the relative strength of the parties’ positions.

Analysis

The court rejected UBH’s argument that the Bains achieved only a procedural victory because they received a remand rather than an immediate benefits award. The court concluded that the Bains achieved more than trivial success because the remand followed the court’s finding that UBH abused its discretion. The court also rejected UBH’s argument that the Bains’ result was merely duplicative of relief available through a related class action, explaining that the relevant relief had not yet been established in that action when the Bains litigated their case.

The court found that the Hummell factors supported awarding fees. Although UBH might not have acted in bad faith, the court found UBH culpable, particularly because it applied guidelines developed using financial rather than medical considerations. UBH acknowledged that it could pay the award. The court also found that a fee award could deter similar conduct involving those guidelines. The Bains conceded that they did not seek to benefit all plan participants, and the court considered the parties’ relative merits in connection with its earlier success analysis.

Amount of the Award

UBH argued that the request should be reduced substantially because the Bains obtained limited relief, used too many attorneys, and billed excessive time for a motion to stay, discovery, and the cross-motions for judgment. The court rejected an 80 percent reduction but found that some criticisms had merit. It concluded that the case appeared overstaffed and that approximately 50 hours spent on the motion to stay was excessive.

The Bains requested $172,624.75 in fees, excluding costs. The court imposed a 10 percent reduction and awarded $155,362.28 in attorneys’ fees. UBH did not contest the requested costs, and the court also awarded an additional $347.86 for subpoena service and $20 in docket fees. The total nontaxable costs awarded were $1,319.

Disposition

The court granted the Bains’ motion for attorneys’ fees and nontaxable expenses. It awarded $155,362.28 in attorneys’ fees and $1,319 in nontaxable costs, and stated that the order disposed of Docket No. 116.