Advocate Health & Hospitals Corp. v. Heber

824 N.E.2d 655, 355 Ill. App. 3d 1076, 291 Ill. Dec. 799, 2005 Ill. App. LEXIS 191
CourtAppellate Court of Illinois
DecidedMarch 4, 2005
Docket2-04-0759
StatusPublished
Cited by17 cases

This text of 824 N.E.2d 655 (Advocate Health & Hospitals Corp. v. Heber) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Advocate Health & Hospitals Corp. v. Heber, 824 N.E.2d 655, 355 Ill. App. 3d 1076, 291 Ill. Dec. 799, 2005 Ill. App. LEXIS 191 (Ill. Ct. App. 2005).

Opinion

JUSTICE CALLUM

delivered the opinion of the court:

Pursuant to section 1132(g)(1) of the Employee Retirement Income Security Act of 1974 (ERISA) (29 U.S.C. § 1132(g)(1) (1994)), the circuit court of Lake County ordered Botts Welding & Truck Repair Employee Benefit Plan (the Plan) and Botts Welding & Truck Service, Inc. (Botts Welding) (collectively Botts), to pay Paul and Phyllis Heher (collectively the Hebers) attorney fees in the amount of $2,500, plus “usual and customary” costs. The Hebers appeal the order, arguing that the circuit court abused its discretion by awarding only $2,500 in attorney fees and by awarding “usual and customary” costs instead of “reasonable” costs. They also request that this court award them fees and expenses for this appeal. We affirm the circuit court’s determination of attorney fees; we vacate the circuit court’s award of “usual and customary” costs, and order the award of “reasonable” costs, to he determined by the circuit court on remand; and we deny an award of fees for this appeal.

I. BACKGROUND

On April 10, 2002, Advocate Health and Hospitals Corp. (Advocate) sued the Hebers to recover fees in the amount of $14,119 for medical services provided to Paul Heber. Paul Heber was employed by Botts Welding and participated in the Plan, which was a health benefits plan that Botts Welding offered to its employees. The Plan, which was governed by ERISA, was administered by Kanawha Benefit Services, Inc. (Kanawha), to which Paul Heber’s medical bills were sent. Shortly after Paul Heber received medical services from Advocate, however, the Plan terminated its relationship with Kanawha. Consequently, Kanawha did not pay Advocate for the medical services provided to Paul Heber.

After Advocate filed its lawsuit for nonpayment, the Hebers filed a third-party complaint against Botts. After its motion to dismiss was denied, Botts filed a third-party complaint against Kanawha. Kanawha, however, successfully moved to dismiss the suit against it, and the remaining parties proceeded through discovery. After discovery, the case proceeded to arbitration on January 23, 2004.

Based on an agreement between Botts and Advocate, the arbitration resulted in a stipulated award of $8,000 to be paid by Botts to Advocate. Additionally, in order to satisfy Paul Heber’s remaining unpaid medical expenses, the arbitration panel awarded $4,780.50 to the Hebers, but reserved for the circuit court the issue of attorney fees and costs. The Hebers rejected this award.

Botts then filed a motion to dismiss the Hebers’ third-party complaint, but the court denied the motion and set a May 18, 2004, trial date. On May 18, 2004, pursuant to a stipulation by the parties, the court entered judgment in favor of the Hebers in the amount of $4,870.50.

On June 15, 2004, the Hebers petitioned for $31,507.50 in attorney fees and for $4,578.55 in costs under ERISA. Botts petitioned for fees under Supreme Court Rule 137 (155 Ill. 2d R. 137). Neither party requested an evidentiary hearing, but the court heard arguments on the motions. On June 28, 2004, the court entered an order that the Hebers’ attorney prepared. In that order, the court denied Botts’s petition, awarded the Hebers $2,500 in attorney fees plus their “usual and customary” costs, and found that Botts’s failure to promptly satisfy the Hebers’ claim demonstrated a lack of good faith. The order provided no reasons or findings with regard to either the reasonableness of the fees and costs or the hours and rates used to calculate the attorney fees.

No motion to reconsider was filed, and Botts has not filed an appeal. On July 28, 2004, however, the Hebers filed a timely notice of appeal from the June 28, 2004, order.

II. ANALYSIS

Section 1132(g)(1) of ERISA (29 U.S.C. § 1132(g)(1) (1994)) gives a court the discretion to award “a reasonable attorney’s fee and costs of action to either party.” A trial court’s decision to award attorney fees and costs pursuant to ERISA will not be disturbed on appeal, absent an abuse of discretion. Cress v. Recreation Services, Inc., 341 Ill. App. 3d 149, 190 (2003). Where, as here, a cause is based solely upon a federal statute, this court’s decision must be made in accordance with federal law. Cress, 341 Ill. App. 3d at 190. Although Illinois practices and procedures generally apply under such circumstances, state rules defer to federal law if following state practices and procedures would prevent the uniform application of a federal statute. Cress, 341 Ill. App. 3d at 190.

A. Attorney Fees

The Hebers aver that an award of $2,500 in attorney fees is arbitrary and unreasonable, especially in light of the facts that they petitioned for $31,507.50 and that this cause of action arose under ERISA. We, however, cannot find an abuse of discretion based on the record before us, and therefore we must affirm the amount of the award.

On its face, the award in this case appears to be remarkably low. Nevertheless, the amount of the fee award is left to the discretion of the trial court for good reason: its “superior understanding of the litigation and the desirability of avoiding frequent appellate review of what essentially are factual matters.” Hensley v. Eckerhart, 461 U.S. 424, 437, 76 L. Ed. 2d 40, 53, 103 S. Ct. 1933, 1941 (1983). The discretion of the trial court, however, is not unchecked. The court may not arbitrarily reduce the award, and a reduction requires a clear and concise explanation. Hutchison v. Amateur Electronic Supply, Inc., 42 F.3d 1037, 1048 (7th Cir. 1994). Because the abuse of discretion standard presupposes a reasoned exercise of discretion, the lack of an explanation for the reduction often is sufficient to constitute an abuse of discretion when the reasons for an unexplained decision are not apparent from the record. Production & Maintenance Employees’ Local 504 v. Roadmaster Corp., 954 F.2d 1397, 1405 (7th Cir. 1992). Under such circumstances, a reviewing court remands the cause to the trial court to allow the trial court to state its reasons for its decision. Hummell v. S.E. Rykoff & Co., 634 F.2d 446, 452 (9th Cir. 1980); see also Schikore v. BankAmerica Supplemental Retirement Plan, 269 F.3d 956, 965 (9th Cir. 2001); Smith v. CMTA-IAM Pension Trust, 746 F.2d 587, 589 (9th Cir. 1984).

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824 N.E.2d 655, 355 Ill. App. 3d 1076, 291 Ill. Dec. 799, 2005 Ill. App. LEXIS 191, Counsel Stack Legal Research, https://law.counselstack.com/opinion/advocate-health-hospitals-corp-v-heber-illappct-2005.