L. v. United Healthcare Services, Inc.

Background

Grant L. sued Oxford Health Plans, Inc., Oxford Health Insurance, Inc., and several John Does under the Employee Retirement Income Security Act of 1974 (ERISA). He sought mental-health benefits connected to residential treatment his son received at Daniels Academy under the United Healthcare Oxford Freedom Plan.

The parties gave different accounts of the benefits payments. Grant L. said the defendants initially denied the claim, requiring him to pay for the treatment, and that they later approved the claims and sent partial payments after he filed this lawsuit. The defendants said they had approved the claims before the lawsuit began and had sent the benefit checks to Daniels Academy because Grant L.’s electronic claim forms directed them to pay the Academy. The defendants maintained that the checks were payment in full and that the real issue was the identity of the proper payee.

While the defendants’ motion to dismiss was pending, the parties notified the court that defendants would reissue uncashed checks sent to Daniels Academy directly to Grant L. They disagreed about whether this was a settlement. Grant L. later confirmed that he had received the benefit check and was prepared to dismiss all claims with prejudice. The court dismissed those claims with prejudice on January 11, 2023, while allowing briefing on Grant L.’s request for attorneys’ fees, costs, and prejudgment interest.

Legal standard

Under ERISA section 1132(g)(1), a court may award reasonable attorneys’ fees and costs to either party in an ERISA action. Before awarding fees, the court must find that the fee claimant achieved “some degree of success on the merits.” A purely procedural victory or trivial success is not enough. Even when that threshold is met, the fee award remains discretionary.

The court explained that it could, but did not have to, consider the five factors associated with Chambless v. Masters, Mates & Pilots Pension Plan. Those factors concern the opposing party’s culpability or bad faith, ability to pay, deterrence, the relative merits of the parties’ positions, and whether the lawsuit produced a common benefit for plan participants.

Court’s analysis

The court found that the submitted documents supported the defendants’ account. The claim forms and explanations of benefits showed payments being made directly to Daniels Academy before Grant L. filed suit. Grant L. did not provide documentary evidence supporting his allegation that the defendants had outright denied the benefits. He also did not contradict the defendants’ statement that they paid the Academy because the claim forms instructed them to do so.

The court held that Grant L. had not shown that the litigation caused a change in the legal relationship between him and the defendants. The payments had already been approved before the lawsuit, and Grant L. had not shown that he asked the defendants to reissue the payments to him before filing suit or that they denied such a request. The first evidence of a request for reissuance was from August 2022, about six months after the case began. The court therefore found no sufficient connection between the lawsuit and the reissued payment.

The court added that it would decline to award fees even if Grant L. were eligible to seek them. It found no evidence that the defendants acted in bad faith, concluded that an award would not meaningfully deter similar conduct given the unusual facts, and noted that the individual case had not produced a common benefit for a group of plan participants.

Disposition

The court declined to award Grant L. attorneys’ fees under ERISA section 1132(g)(1). It directed the clerk to terminate all pending motions and stated that the case would remain closed. The opinion does not separately state a distinct disposition for costs or prejudgment interest beyond its ruling on the requested relief.