Legal Summary: Frassrand v. Metropolitan Life Insurance Company

No. 1:07-CV-222, 2010 WL 1252817, (E.D. Tenn. Mar. 24, 2010)
No. 1:07-CV-222, 2009 WL 6313560 (E.D. Tenn. June 1, 2009)
No. 1:07-cv-222, 2009 WL 10709920 (E.D. Tenn. Mar. 31, 2009)

Our client became disabled and unable to work as a result of two health conditions, so she requested LTD benefits through her work policy with MetLife. Frassrand v. Metro. Life Ins. Co., No. 1:07-cv-222, 2009 WL 10709920, at *1 (E.D. Tenn. Mar. 31, 2009). MetLife denied her claim, concluding that neither of her health conditions qualified her for coverage under the policy. Id. We sued MetLife on our client’s behalf, and the court held that MetLife acted arbitrarily and capriciously with regard to its decision to deny coverage for one of her two conditions. Id.

A magistrate judge reviewed our client’s claim and recommended that MetLife be ordered to reconsider its denial decision regarding one of our client’s conditions. Id. Then, a court had to decide whether to adopt the magistrate’s recommendation in our client’s favor. Id. After reviewing the evidence, the court agreed with us and the magistrate that MetLife needed to review our client’s claim once more. Id. at *5.

First, the court explained the legal standard it would apply to evaluate our client’s claim. Id. at *1-2. MetLife granted itself discretion under the policy, meaning the appropriate legal standard of review would be the arbitrary and capricious standard, which required the insurance company to provide a “‘reasoned explanation’ based on substantial evidence.” Id. at *2 (citing Moon v. Unum Provident Corp., 405 F.3d 373, 379 (6th Cir. 2005)).

Then, the court reviewed the provisions of the policy related to the particular condition for which the magistrate found in our favor. Id. at *2. The relevant portion of the plan limited LTD benefits to 24 months, with an exception for the type of disability we argued our client had developed. Id. MetLife’s reviewing doctor however thought that our client “did not have any physical condition…that fell within the exclusions to the 24-month limitations period for LTD benefits,” id. at *4, but the magistrate found that decision to be “arbitrary and capricious because it failed to consider evidence that [our client] suffered from…a condition that fit[] within the Plan’s exceptions to the 24-month limitation on LTD benefits,” id. at *3.

In the court’s view, the magistrate judge was correct. Id. at *4-5. MetLife’s reviewing doctor had failed to consider two important medical tests. Id. at *4. First, the doctor did not address a CT scan that appeared to support the existence of a condition fitting within the policy’s 24-month exclusions. Id. Second, the doctor did not address an electromyogram study that likewise supported the existence of a covered condition. Id. The court explained that given these failures, MetLife’s decision was indeed arbitrary and capricious, since well-established case law stated that “if an ERISA administrator handpicks among the medical evidence, then the administrator acts arbitrarily and capriciously.” Id.

Finally, the court decided that because of MetLife’s arbitrary and capricious denial decision, it had to review our client’s claim once more, giving attention to the evidence that it previously ignored. Id. at *5. After this win, we requested attorney’s fees from MetLife for the work we put into getting our client another chance at benefits.

MetLife tried to prevent us from receiving attorney’s fees by arguing that a party must prevail on its claims before the court can award attorney’s fees. Frassrand v. Metro. Life Ins. Co., No. 1:07-CV-222, 2009 WL 6313560, at *1 (E.D. Tenn. June 1, 2009). The magistrate that heard our case rejected MetLife’s argument and recommended that we be awarded attorney’s fees. Id. Then later, a reviewing court accepted that recommendation. See Frassrand v. Metro. Life Ins. Co., No. 1:07-cv-222, 2010 WL 1252817, at *1 (E.D. Tenn. Mar. 24, 2010).

To explain its recommendation, the magistrate relied on earlier cases in which courts interpreted ERISA’s attorney’s fee provision not to be limited to “prevailing parties.” Id. at *3 (citing McKay v. Reliance Standard Life Ins. Co., 654 F. Supp. 2d 731, 736 (E.D. Tenn. 2009)). In particular, the magistrate accepted reasoning from an earlier case that noted how Congress has limited attorney’s fees to “prevailing parties” in other federal statutes but not in ERISA, which supports the conclusion that “Congress intended to omit a prevailing party requirement from the ERISA attorney’s fee statute.” Id. (quoting McKay, 654 F. Supp. 2d at 736). Therefore, we did not need to be a “prevailing party” in order to be awarded attorney’s fees. Id. at *4.

The magistrate went even further, however, concluding that it ultimately did not matter whether ERISA’s attorney’s fee provision included a prevailing party requirement, because our client was in fact a “prevailing party,” since we successfully won our client a second chance at benefits. Id.

After establishing that we met the threshold requirements for attorney’s fees, the magistrate analyzed five factors that courts use in determining whether attorney’s fees should be awarded in a particular case. Id. at *4-6. Four of the five factors weighed in our favor, so the magistrate awarded us attorney’s fees. Id. at *6.

The first of the five factors is “the degree of the opposing party’s culpability or bad faith.” Id. at *2 (quoting Schwartz v. Gregori, 160 F.3d 1116, 1119 (6th Cir. 1998)). This factor weighed in our favor because, according to the magistrate, the court that reviewed our earlier claim against MetLife “found a significant degree of culpability on the part of MetLife regarding its determination” of our client’s request for benefits. Id. at *4. MetLife tried to argue that we were required to show that it acted in “bad faith” when handling our client’s claim, but the magistrate rejected that argument, explaining that “this factor requires only culpability ‘or’ bad faith.” Id. (citing Elliott v. Metro. Life Ins. Co., No. 04-174-DLB, 2007 WL 1558519, at * 3 (E.D. Ky. May 29, 2007)). And, the previous court’s finding that MetLife’s decision “was arbitrary and capricious necessarily attributes some degree of culpability to Defendants,” so the factor was satisfied. Id. at *4.

The second factor is “the opposing party’s ability to satisfy an award of attorney’s fees.” Id. at *2 (quoting Schwartz, 160 F.3d at 1119). The magistrate found, and MetLife did not contest, that we had successfully asserted that MetLife was a large insurance company that could pay an attorney’s fee if one was awarded. Id. at *5.

The next factor–“the deterrent effect of an award on other persons under similar circumstances”–also weighed in our favor. Id. at *2 (quoting Schwartz, 160 F.3d at 1119); see also id. at *5. To decide this, the magistrate relied upon a prior case against MetLife in which a court explained that remanding a claim back to the insurance company for another review was “a form of specific deterrence” and that requiring the company to pay a fee award on top of that would have a “heightened deterrent effect.” Id. at *5 (quoting Elliott v. Metro. Life Ins. Co., 473 F.3d 613, 622-23 (6th Cir. 2006)).

The final factor weighing in our favor looked at “the relative merits of the parties’ positions.” Id. at *2 (quoting Schwartz, 160 F.3d at 1119). The magistrate found in our favor because, in addition to our position on the disputed condition being “more meritorious than MetLife’s position,…MetLife’s decision making process on the issue was [also] flawed as it chose to rely on an opinion rendered by a non-examining reviewer of Plaintiff’s medical records who was not provided with all of the Plaintiff’s relevant medical records.” Id. at *6. Lastly, the magistrate concluded that $9,366.50 was the appropriate amount of attorney’s fees, id. at *6-8, and in a later case, a court affirmed the magistrate’s recommendation. Frassrand, 2010 WL 1252817, at *1.