Koehler v. Aetna Health Inc.

915 F. Supp. 2d 789, 2013 WL 142519, 2013 U.S. Dist. LEXIS 6940
CourtDistrict Court, N.D. Texas
DecidedJanuary 9, 2013
DocketNo. 3-10-CV-1063-F
StatusPublished
Cited by3 cases

This text of 915 F. Supp. 2d 789 (Koehler v. Aetna Health Inc.) is published on Counsel Stack Legal Research, covering District Court, N.D. Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Koehler v. Aetna Health Inc., 915 F. Supp. 2d 789, 2013 WL 142519, 2013 U.S. Dist. LEXIS 6940 (N.D. Tex. 2013).

Opinion

ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF’S MOTION FOR ATTORNEY’S FEES AND COSTS

ROYAL FURGESON, Senior District Judge.

BEFORE THE COURT is Plaintiff Nancy Koehler’s Motion for Attorney’s Fees (Docket No. 71). After this Court granted Summary Judgment for Defendant Aetna Health Inc. (“Aetna”) (Docket No. 46) on April 29, 2011, Plaintiff appealed the ruling to the Fifth Circuit (Docket No. 48). Following the Fifth Circuit’s reversal and remand of this Court’s summary judgment (Docket No. 57), Ms. Koehler now moves for an award of attorney’s fees, currently in the amount of $101,787.10. and of costs in the amount of $276.00. After considering the clarity of the Fifth Circuit’s ruling regarding the merits of both parties’ positions, Plaintiffs motion is GRANTED IN PART and DENIED IN PART. Defendant Aetna Health Inc. is ORDERED to pay to Plaintiff attorney’s fees in the amount of $93,236.60.1

Background

On June 2, 2009, Plaintiff visited an out-of-network physician, Dr. Whitmore, to obtain a sleep apnea device without a referral from her Primary Care Provider (“PCP”) Dr. Checo. Instead, Dr. Kakar, a Participating Provider but not Plaintiffs PCP, sent Plaintiff to Whitmore for the device. In doing so, Dr. Kakar did not seek approval or any authorization from Aetna for a referral to Dr. Whitmore prior to the services being performed. Aetna denied Dr. Whitmore’s medical claim in the amount of $2300, claiming there was no preauthorization for the out-of-network services. Plaintiff sued to recover that amount, asserting a claim for ERISA plan benefits, under 29 U.S.C. § 1132(a)(1)(B).

Aetna moved for summary judgment on the grounds that the COC expressly excluded the out-of-network services at issue. On April 29, 2011, this Court granted Aetna’s motion, relying on the Fifth Circuit’s ERISA abuse of discretion standard articulated in Rhorer v. Raytheon Engineers and Constructors, Inc. 181 F.3d 634, 639-43 (5th Cir.1999).

The Fifth Circuit reversed this Court’s grant of summary judgment for Aetna, [792]*792finding a fact issue on whether Aetna acted in bad faith. Koehler v. Aetna Health Inc., 683 F.3d 182 (5th Cir.2012). The Fifth Circuit did not render final judgment but remanded the case back to this Court for further consideration on the merits of Plaintiffs claim.

Aetna originally denied Ms. Koehler’s claim for $2,300 in medical benefits for a sleep apnea device based on a claimed exclusion in an ERISA benefits plan. Since the Fifth Circuit’s decision, the parties reached agreement on Aetna’s payment of the $2,300 in question (without any admission of liability) (Dkt. No. 70). With Aetna having made the payment with this Court’s approval, the dispute over medical benefits is now moot (Dkt. No. 85). All that is left for the Court to rule on is the dispute over Plaintiffs attorney’s fees.

Summary

In this Court’s opinion, there are two highlights to the Fifth Circuit’s decision. First, the Fifth Circuit’s conclusion that “there is some evidence of bad faith” with respect to Aetna’s decision to invoke preauthorization requirement as basis for denying benefits. Koehler, 683 F.3d at 191. Second, the Fifth Circuit’s published its opinion and provided an extensive critique of Aetna’s policies and violations of ERISA, showing these matters were indeed significant. When weighing the balance of factors, the Court finds that an award of attorney’s fees is appropriate.

Under the ERISA statute, the Court “may allow a reasonable attorney’s fee and costs of action.” 29 U.S.C. § 1132(g)(1). Bellaire General Hosp. v. Blue Cross Blue Shield of Mich., 97 F.3d 822, 832 (5th Cir.1996). In exercising this discretion, the court must perform a two-part analysis. First, the court determines whether the party is entitled to an award of attorney’s fees in light of the five relevant factors outlined by the Fifth Circuit. Second, if the party is so entitled, the court calculates the proper amount of the fee award. Todd v. AIG Life Ins. Co., 47 F.3d 1448, 1459 (5th Cir.1995).

In the Fifth Circuit, if a party is eligible for attorney’s fees under Section 1132(g)(1), a court may consider whether to award fees under the facts and circumstances of the case, guided by the consideration of certain factors, including:

(1) the degree of the opposing party’s culpability or bad faith;
(2) the ability of the opposing party to satisfy an award of attorney’s fees;
(3) whether an award of attorney’s fees against the opposing party would deter other persons acting under similar circumstances;
(4) whether the party requesting attorney’s fees sought to benefit all participants and beneficiaries in an ERISA plan or to resolve a significant legal question regarding ERISA itself; and
(5) the relative merits of the parties’ positions.

See Iron Workers Local # 272 v. Bowen, 624 F.2d 1255, 1264-65 (5th Cir.1980). The Fifth Circuit further notes that “[n]o one of these factors is necessarily decisive, and some may not be apropos in a given case, but together they are the nuclei of concerns” that a court should consider when applying section 1132(g). Wegner v. Standard Ins. Co., 129 F.3d 814, 821 (5th Cir.1997) (quoting Iron Workers, 624 F.2d at 1266).

When considering the balance of factors, the Court holds the following, with regard to each factor: (1) the Fifth Circuit’s ruling indicates evidence of bad faith on the part of Aetna; (2) Aetna can satisfy the award of attorney’s fees; (3) there is sufficient evidence that awarding of attorney’s fees would deter other insurers from acting similarly; (4) while Ms. Koehler’s [793]*793attorney did not necessarily seek to benefit all participants in the ERISA plan, the litigation did resolve significant legal questions; (5) the relative merits of the of the parties’ positions are not completely one-sided, but the Fifth Circuit’s holding shows the Plaintiffs position is more meritorious. As such, awarding attorney’s fees is the proper course of action.

1. Bad Faith or Culpability

The most important factor for the Court to consider is the issue of bad faith or culpability. A party’s conduct may rise to the level of bad faith for particularly wrongful conduct, such as the pursuit of frivolous claims or breach of fiduciary duty. See, e.g., Freedman v. Texaco Marine Servs., Inc., 882 F.Supp. 580, 584-585 (E.D.Tex.1995) (holding that defendant’s “indefensible” interpretation of plan could possibly constitute bad faith). Yet a party may still be culpable for conduct while not actually reaching the level of bad faith. See, e.g., Dial v. NFL Player Supp. Disability Plan,

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Bluebook (online)
915 F. Supp. 2d 789, 2013 WL 142519, 2013 U.S. Dist. LEXIS 6940, Counsel Stack Legal Research, https://law.counselstack.com/opinion/koehler-v-aetna-health-inc-txnd-2013.