B & S Welding LLC Work Related Injury Plan v. Juan Pedro Oliva-Barron and Avelina Oliva
2014 Tex. App. LEXIS 10303
Tex. App.2014Background
- Juan Pedro Oliva-Barron (Oliva) suffered a serious work injury on June 24, 2009 (fractured wrist, compression fractures of the spine, etc.) and received Plan medical and indemnity benefits.
- Within three months the Plan sued Oliva and his wife for fraud, conspiracy, and unjust enrichment; Oliva counterclaimed for unpaid ERISA benefits. The Plan then sent a denial letter ten days after filing suit.
- The trial court found the Plan abused its discretion in terminating Oliva’s benefits, awarded indemnity benefits and attorney’s fees to Oliva, and dismissed the Plan’s claims against the Olivas; the Olivas’ claims against the employer were tried to a jury and resolved for the employer.
- The Plan appealed, raising (1) failure to exhaust administrative remedies, (2) that the Plan’s termination of benefits was supported by substantial evidence, and (3) insufficiency of evidence for damages and attorneys’ fees.
- The Court of Appeals held the Plan’s early lawsuit and denial made administrative appeal futile, concluded the Plan’s benefit termination was arbitrary and capricious (not supported by substantial evidence), but found no evidence to support a $52,247 medical-expense award and reversed that portion of the judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Exhaustion of administrative remedies | Oliva: exhaustion excused because Plan’s suit, hostility, and timing made appeals futile or waived | Plan: Oliva failed to exhaust; no evidence of bias or futility; must follow plan process | Court: Affirmed — evidence (Plan’s early suit, threatening meeting, timing) supports futility/waiver, so exhaustion not required |
| Termination of benefits (abuse of discretion / substantial evidence) | Oliva: Plan’s denial lacked medical support; relied on surveillance and case‑manager notes; decision arbitrary | Plan: Administrator had discretionary authority; relied on nurse reports and surveillance; can base on ‘‘relevant information’’ | Court: Reversed — termination arbitrary/capricious; no substantial evidence in administrative record (no contemporaneous medical records supporting denial) |
| Damages and attorney’s fees | Oliva: entitled to indemnity benefits, medical expenses, and fees; presented medical records and fee evidence | Plan: challenges sufficiency of evidence for 156‑week disability, $52,247 medical expenses, and fee calculation | Court: Mixed — affirmed indemnity and fee award (Olivas achieved some success); reversed and rendered no recovery for $52,247 medical expenses (billing exhibit not admitted) |
Key Cases Cited
- Bourgeois v. Pension Plan for Emps. of Santa Fe Int’l Corps., 215 F.3d 475 (5th Cir. 2000) (ERISA exhaustion requirement)
- Denton v. First Nat’l Bank of Waco, Texas, 765 F.2d 1295 (5th Cir. 1985) (futility exception to exhaustion)
- Phillips v. Metro. Life Ins. Co., 405 S.W.3d 880 (Tex. App.—Dallas 2013) (abuse of discretion standard for ERISA plan with discretionary language)
- Truitt v. Unum Life Ins. Co. of Am., 729 F.3d 497 (5th Cir. 2013) (evaluating substantial evidence where full administrative record and investigations existed)
- Vega v. Nat’l Life Ins. Servs., Inc., 188 F.3d 287 (5th Cir. 1999) (scope of administrative record review)
- Hardt v. Reliance Standard Life Ins. Co., 130 S. Ct. 2149 (U.S. 2010) ("some degree of success on the merits" for ERISA fee awards)