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Kathleen M. Hackett v. Standard Insurance Company

December 7, 2010

KATHLEEN M. HACKETT,
PLAINTIFF,
v.
STANDARD INSURANCE COMPANY, DEFENDANT.



The opinion of the court was delivered by: Jeffrey L. VIKEN United States District Judge

INTRODUCTION

On June 30, 2010, the parties filed a stipulation and request for order (Docket 84), agreeing that plaintiff Kathleen M. Hackett was entitled to receive long-term disability benefits from Standard Insurance Company from August 26, 2005, to the present and continuing for as long as she continues to meet all the requirements of the long-term disability policy. Associated with that stipulation was the parties' agreement that the only two remaining issues were (1) whether plaintiff is entitled to prejudgment interest; and (2) whether plaintiff is entitled to an award of attorney's fees and costs. Id. On July 7, 2010, the court entered an order granting plaintiff the long-term disability benefits and directing the submission of the remaining issues not resolved by settlement for resolution by the court. (Docket 85). On August 17, 2010, plaintiff filed separate motions for pre-judgment interest and attorney's fees and costs. (Dockets 86 and 89). The motions are granted.

ORDER PROCEDURAL HISTORY

Because of the longstanding nature of this case and its course through the court system, it is necessary to provide some procedural background. On May 25, 2006, plaintiff Kathleen M. Hackett filed her complaint alleging the right to receive long-term disability benefits from her employer's group disability insurance policy with Standard Insurance Company ("Standard"). (Docket 1). The complaint finds its basis in the provisions of the Employee Retirement Security Act of 1974 ("ERISA") under 29 U.S.C. § 1001 et seq. Id. By its answer, Standard asserted that "as a claimed fiduciary under ERISA, [it] discharged its duties 'in accordance with the documents and instruments governing the Plan.' " (Docket 7, ¶ 8). It also asserted plaintiff's claims were without merit, making Standard entitled to attorney's fees pursuant to 29 U.S.C. § 1132(g)(1).*fn1 Id. at ¶ 10.

On January 3, 2007, Standard filed a motion for summary judgment. (Docket 26). On January 29, 2007, Chief United States District Judge Karen

E. Scheier granted in part and denied in part plaintiff's motion to compel discovery. (Docket 37). Following limited discovery, plaintiff filed her cross- motion for summary judgment. (Docket 41). On August 15, 2007, Chief Judge Schreier granted Standard's motion for summary judgment and denied plaintiff's cross-motion for summary judgment. (Docket 56). Applying the "Woo v. Deluxe Corp., 144 F.3d 1157, 1160 (8th Cir. 1998), . . . less deferential standard of review in the ERISA context," Chief Judge Schreier found plaintiff had identified a rebuttable presumption of a conflict of interest because the insurer and the claims administrator were the same entity [Standard], thus creating a "palpable conflict of interest." (Docket 56, pp. 11-12). Under part two of the Woo test, plaintiff was required to show the "conflict of interest or serious procedural irregularity caused a serious breach of the administrator's fiduciary duty." Id. at p. 12. Chief Judge Schreier concluded plaintiff did not satisfy the second prong of the Woo test. Id. Thus, under "Eighth Circuit precedent, [plaintiff] has not made a sufficient showing under Woo to obtain a less deferential review of Standard's denial of benefits." Id. at p. 14. Judgment in favor of Standard was filed that same day. (Docket 57).

On September 12, 2007, plaintiff filed a notice of appeal from the order granting summary judgment and judgment for Standard. (Docket 58). While the case was on appeal, the United States Supreme Court issued its opinion in Metropolitan Life Insurance Co. v. Glenn, 554 U.S. 105 (2008). The Court of Appeals for the Eighth Circuit then issued its decision in this case. Hackett v. Standard Insurance Company, 559 F.3d 825 (8th Cir. 2009). "In Glenn, the Court concluded a conflict of interest exists whenever the plan administrator is also the employer or insurance company which ultimately pays benefits. . . . Additionally, Glenn resolved the question of how the conflict should be considered when determining if a plan administrator abused its discretion." Id. at 830 (internal citation omitted). The Eighth Circuit acknowledged the importance of Glenn to the facts before it in Hackett:

The importance of taking Standard's conflict of interest into account is illustrated by the "combination-of-factors method" employed by the Court in Glenn, where the conflict serves "as a tiebreaker when the other factors are closely balanced" and is "more important . . . where circumstances suggest a higher likelihood that it affected the benefits decision" and "less important . . . where the administrator has taken active steps to reduce potential bias and to promote accuracy."

Id. The court recognized how Glenn actually fit the facts in Hackett:

In Glenn, the Court concluded the conflict took on even greater significance because, as in this case, the insurer 1) encouraged the claimant to apply for social security disability benefits, and then disregarded the Social Security Administration's finding she could do no work, and 2) emphasized medical records which supported a denial of benefits over records suggesting a contrary conclusion. Id. (emphasis added). "Because the district court failed to consider the conflict when it evaluated the plan administrator's decision, [the Eighth Circuit] reverse[d] and remand[ed], thereby allowing the district court to reconsider its decision in light of Glenn." Id. The Eighth Circuit then awarded plaintiff $25,000 for her attorney's fees and expenses related to the appeal. (Docket 66).

Following remand, plaintiff filed a second motion to compel discovery. (Docket 69). Standard resisted plaintiff's motion. (Docket 71). Magistrate Judge Veronica L. Duffy submitted her proposed order in accordance with 28 U.S.C. § 636(b)(1)(A). On April 14, 2010, the court conducted a de novo review of the magistrate judge's proposed order and entered its order granting in part and modifying in part the magistrate judge's order and granting plaintiff's second motion to compel. (Docket 83). That order required Standard to "provide answers and responses to plaintiff's interrogatories 1-6 relating to long-term disability claims for the time period of 2000 through 2006 . . . . [and] plaintiff's interrogatories 9-12." Id. at p. 17. Rather than responding to discovery, Standard stipulated to the payment of benefits.

ANALYSIS

MOTION FOR ATTORNEY FEES AND EXPENSES

Plaintiff's initial motion for attorney fees and costs requests $36,974.03. (Docket 89). She requests payment for 136.00 hours at $250 per hour for attorney's fees of $34,000, together with itemized expenses of $934.03 and sales taxes of $2,040. (Docket 90-1). Her attorney's supplemental declaration seeks an additional $1,961, that is, 7.40 hours at $250 per hour for attorney fees of $1,850, together with sales taxes of $111. (Docket 94-1). Altogether, plaintiff seeks an award of $38,935.03. (Docket 94). Plaintiff submits detailed date and time activity ledgers in support of her requests. (Dockets 90-1 and 94).

Standard objects, in whole, to plaintiff's request for an award of attorney's fees and costs. (Docket 92). It recognizes that a decision to award attorney's fees and expenses under ERISA is discretionary under 29 U.S.C. § 1132(g)(1). Id. at p. 4. However, Standard claims plaintiff did not achieve any degree of success on the merits of her case and thus, she is not eligible for attorney's fees and costs. Id. Standard also identifies separate time periods or activities for which it asserts plaintiff should not be awarded fees or costs. Those are:

1. The time period from April 26, 2006, through June 20, 2007. (Id. at p. 5);

2. The time period from March 27, 2009, through August 16, 2010. (Id. at p. 6);

3. Six date certain identified entries. (Id. at p. 10); and

4. Seven other generic entries involving a "review" of the file. (Id.).

In an ERISA case, a court may "in its discretion . . . award fees and costs to either party . . . as long as the fee claimant has achieved some degree of success on the merits." Hardt v. Reliance Standard Life Insurance Co., ___ U.S. ___, 130 S. Ct. 2149, 2152 (2010) (internal citation and quotation marks omitted). In Hardt, the district court denied both parties' cross-motions for summary judgment and ...


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