McClure v. United Parcel Service Flexible Benefits Plan

191 F. Supp. 3d 721, 2016 U.S. Dist. LEXIS 82386, 2016 WL 3264372
Procedural entryThis page is a short order in McClure v. United Parcel Service Flexible Benefits Plan. Read the opinion of the Court — 162 F. Supp. 3d 607
District Court, W.D. Michigan·Decided June 13, 2016·No. Case No. 1:14-CV-845·Published

Opinion

MEMORANDUM OPINION AND ORDER GRANTING IN PART PLAINTIFF’S MOTION FOR AWARD OF COSTS AND ATTORNEY FEES

GORDON J. QUIST, UNITED STATES DISTRICT JUDGE

Plaintiff, Jason McClure, has filed a motion for an award of costs and attorney’s fees against Defendant State Farm Mutual Automobile Insurance Company pursuant to 29 U.S.C. § 1132(g)(1). State Farm has filed a response, arguing that: (1) § 1132(g)(1) does not apply in this case because State Farm is not an ERISA plan and McClure’s claims against State Farm were based not on ERISA, but on federal common law; (2) even if § 1132(g)(1) applies, based on the pertinent considerations, the Court should deny fees to McClure; and (3) any fee award should be reduced because it is excessive.

For the foregoing reasons, the Court will award McClure costs and fees pursuant to § 132(g)(1), but will reduce the amount of fees requested because some of the fees pertained only to Defendant United Parcel Service Flexible Benefits Plan (Plan),.as to which McClure is not requesting a fee award.

The instant case resulted from two separate automobile accidents that occurred in 2009 and 2011 between McClure and other drivers. The Plan paid McClure’s medical expenses ’ following both accidents. McClure filed a complaint in state court against State Farm and the other drivers involved in the two accidents. McClure sought to recover non-economic damages from the other drivers and his medical expenses from State Farm. State Farm argued that it was not liable for McClure’s medical expenses because the coverage under the no-fault automobile insurance policy it issued to McClure was subordinated to the Plan’s coverage of McClure’s expenses. At some point, the Plan, through Accent Cost Containment,- notified McClure that it would seek reimbursement of medical expenses that the Plan had paid from the proceeds of any recovery that McClure- obtained in the state-court lawsuit.

McClure filed his complaint in this case against State Farm and the Plan pursuant to § 502(a)(3) of ERISA, 29 U.S.C. § 1132(a)(3), seeking, among other things, a declaration by this Court that State Farm is primarily liable for McClure’s medical expenses and that State Farm is required to reimburse McClure if McClure is required to reimburse the Plan out of any third-party recovery he obtains in the state-court action. Shortly after McClure filed his complaint, State Farm moved to dismiss it on ripeness grounds and for failure to state a claim. State Farm also filed a motion for judgment on the pleadings. On February 25, 2015, the Court issued a Memorandum Opinion and Order denying State Farm’s motions. (ECF No. 14.) Subsequently, the parties filed cross motions for summary judgment. On Feb[724]*724ruary 12, 2016, the Court entered an Opinion and separate Order granting McClure’s motion with regard to Counts I, II, and V of his first amended complaint and. declaring that State Farm is primarily liable for McClure’s medical expenses arising out of the 2011 accident and that McClure is entitled to reimbursement from State Farm to the extent that he is required to reimburse the Plan. (ECF Nos. 38, 39.)

Section 1132(g)(1) Applies in this Case

Pursuant to 29 U.S.C. § 1132(g)(1), “[¾ any action under this title ... by a participant, beneficiary, or fiduciary, the court in its discretion may allow a reasonable attorney’s fee and costs of action to either party.” State Farm argues ■ that § 1132(g)(1) does not apply to it because State Farm issues no-fault automobile insurance policies that are not subject to ERISA regulation and State Farm itself is not an entity regulated by ERISA. State Farm further argues that no provision under ERISA authorizes a civil action against a non-ERISA defendant.

These arguments lack merit. In his complaint and his amended complaint, McClure alleged that he was invoking 29 U.S.C. § 1132(a)(3) to declare and enforce the parties’ rights under the terms of the Plan. (ECF No. 1 at PagelD.l; ECF No. 9 at PageID.360.) That provision authorizes civil actions “by a participant, beneficiary, or fiduciary ... to enforce ... the terms of the plan.” Nothing in that language, or in the language of § • 1132(g)(1), limits the parties who may be sued to only ERISA-regulated entities. For example, in Central States, Southeast and Southwest Areas Health and Welfare Fund v. First Agency, Inc., 756 F.3d 954 (6th Cir.2014), invoking § 1132(a)(3)(B), an ERISA plan sued a non-ERISA insurer seeking to resolve a coverage priority dispute. Id. at 955. In fact, the Sixth Circuit affirmed the district court’s award of fees to the ERISA plan against the non-ERISA insurer under § 1132(g)(1). Id. at 962.

State Farm further argues that § 1132(g)(1) does ■ not apply because McClure’s claim seeking declaratory relief regarding the priority dispute was governed by federal common law, as set forth in Auto Owners v. Thorn Apple Valley, Inc., 31 F.3d 371 (6th Cir.1994), rather than ERISA. State Farm urges this Court to follow the reasoning of United Healthcare v. Allstate Insurance Co., No. 1:01— CV-56, 2001 U.S. Dist. LEXIS 19292 (W.D.Mich. Nov. 16, 2001), and conclude that because McClure’s claim is governed by federal common law, § 1132(g)(1) does not apply.

State Farm’s argument misconstrues the nature of federal common law in the context of ERISA. Federal common law is not a body of law separate and apart from ERISA. Rather, “[fjederal common law ... fills the gaps of ERISA’to assist in the interpretation of ERISA plans.” Health Cost Controls v. Isbell, 139 F.3d 1070, 1072 (6th Cir.1997) (citing Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 56, 107 S.Ct. 1549, 1557-58, 95 L.Ed.2d 39 (1987)). Thus, in Auto Owners, the court had to resort to federal common law because ERISA did not directly address priority disputes- between an ERISA plan and a no-fault insurer. Moreover, no provision of ERISA allowed a no fault insurer to sue an ERISA plan regarding a priority dispute. In short, whether a court applies federal common law to resolve a dispute concerning an ERISA plan is wholly unrelated to whether such “action [is brought] under [Title 29]” for purposes of § 1132(g)(1). Accordingly, this Court declines to apply the reasoning of United Healthcare.

An Award of Costs and Fees is Proper Under § 1132(g)(1)

Section 1132(g)(1) “gives district courts more leeway to shift fees than the [725]*725American Rule, the common-law principle that allows fee awards only in rare cases.” Central States, 756 F.3d at 962. However, “a fees claimant must show some degree of success on the merits before a court may award.attorney’s fees under § 1132(g)(1),” Hardt v. Reliance Standard Life Ins. Co., 560 U.S.

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McClure v. United Parcel Service Flexible Benefits Plan, 191 F. Supp. 3d 721, 2016 U.S. Dist. LEXIS 82386, 2016 WL 3264372 (W.D. Mich. 2016).

191 F. Supp. 3d 721 (McClure v. United Parcel Service Flexible Benefits Plan) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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