Martin v. Arkansas Blue Cross & Blue Shield

Propensi- Regarding DTF’s C. Evidence MARTIN, Individually and as the Brian Scarring or

ty Bruising for Administrator of the Estate of Norma reviews the district The court deceased, Martin, Appellant, admit or refuse evidence court’s decision to States v. abuse of discretion. United AND ARKANSAS BLUE CROSS O’Dell, SHIELD, a Mutual In BLUE omitted). (citation DTF that she testified Company, Appellee. surance an unrelated her wrists from had scars on No. 00-3420. during the To show lack of force incident. assault, defense counsel asked alleged Appeals, Court of United States De DTF had obtained the scars. how she Eighth Circuit. propensi to show her hoped

fense counsel Jan. Submitted: by eliciting that she had sus ty injury Aug. Filed: handcuffs, having from worn tained scars physical signs that there were no having her been resulting trauma from during the wrists the sexual

grabbed at objected under government

assault. The 403, arguing

Federal Rule of Evidence response of DTF’s probative value by the dan outweighed

would have been The court deter

ger prejudice. of unfair

mined that the cause of the scars was jury already was aware

irrelevant. The testimony that DTF had

through witness wrists, no

scars on her and that there were signs injury on her wrists

bruises or agree from the

resulting assault. We relevant,

the evidence was not unfairly prejudiced was not

Chipps ruling.

court’s above, cited we affirm.

For the reasons WOLLMAN,1

Before Judge, Chief McMILLIAN, BOWMAN, BEAM, LOKEN, HANSEN,2 MORRIS ARNOLD, MURPHY, BYE, SHEPPARD RILEY, Judges. BEAM, Judge.

Brian Martin appeals the district court’s denial of this case under Employee Retirement Security Income (ERISA), Act seq. U.S.C. 1001 et We affirm.

1. BACKGROUND Norma Martin asked Arkansas Blue (the Plan) Cross and Blue Shield certify lung benefits for a transplant pursuant to an employee welfare benefit in which she participated. After the Plan benefits, sued, denied Martin that alleging wrongfully benefits had been denied. The district court held that a procedural irregularity rendered the Plan’s denial un- reasonable and ordered the Plan to certify coverage lung for the Martin transplant. petitioned then asked for a contingent fee based on the (one- lung cost of the transplant surgery $125,000, $41,666.67). third of or The dis- trict court denied the petition for fees. The district court applied the five-factor Westerhaus, test set forth Lawrence v. (8th Cir.1984), 749 F.2d 495-96 determined that weighed factors favor of the Plan. The district court ac- knowledged the Landro v. Glendenning Elliott, Jr., argued, Fayetteville, Don R. Motorways, 625 F.2d Odom, brief), AR (Bobby Lee on the for Cir.1980), favor of award- appellant. ing circumstances, fees absent special Matthews, R. argued, Rogers, David concluded that “consideration of the Law- AR, for appellee. rence factors leads the Court to believe Roger 1. stepped The Honorable L. Wollman The Honorable David R. Hansen became Judge down as Chief of the United States Judge Chief of the United States Court of Appeals Eighth Court of for the Circuit at the Appeals Eighth February for the Circuit on January close of business on 2002. He has been succeeded the Honorable David R. Hansen. shift their in support denying are not entitled to stances an plaintiffs award. 1356. We noted that attorneys’ fee onto the shoulders of defen- losing defendant had the burden- prov- in this matter.” dant ing special those circumstances. Id. at also denied the fee The district court Then, Westerhaus, 1356 n. 19. 749 F.2d ground alternative petition on the we identified a five-factor test4 offered evidence concern- Martin had not designed to aid the district court in making reasonably spent number of hours ing the discretionary its determination regarding hourly litigation, on the or the reasonable fees, but failed to presump- mention the services, that a con- holding rate for such tion. See also Jacobs Pickands Mather inappropriate fee award was in an tingent Co., & case. Martin filed a motion for (stating that court should consider the reconsideration, setting hourly forth an fee enumerated in Westerhaus factors exercis- $11,091. in Martin request the amount of ing its discretion concerning whether to the court brought appeal this after district fees). attorney award denied the motion reconsideration.3 Lutheran Medical v. Center Contrac tors, Laborers, Engineers Teamsters and II. DISCUSSION Plan, 616, Health and 25 F.3d Welfare fee-shifting provision un ERISA’s (8th Cir.1994) appears 623-24 to be the gives the district comb discre ambiguously in first case which we referred to the five- attorney par tion to award fees to “either factor test and the presumption the In ty.” 1132(g). making 29 U.S.C. analysis. same In Lutheran Medical we determination, a district court abuses its affirmed the district court’s decision to discretion there is a lack of factual award fees to the plaintiff, and noted that decision, to support for its or when fails any “the Plan has not shown special cir Aramark applicable follow law. Richards v. Moreover, cumstances. the district court (8th rvs., Inc., 925, Se 108 F.3d 927 exhaustively considered all five factors set Cir.1997). Also, forth in Id. at Jacobs.” This case involves the conundrum of affirming the district court’s award at of what, exactly, applicable is the law for torney Larry fees in Stanton v. Fowler attorney fee in this applications ERISA Inc., (8th 723, Trucking, 52 F.3d 730 Cir. hand, circuit. one our circuit was one On 1995), we noted that the defendant bore presumption of the first to the apply showing the circum special burden of prevailing plaintiffs. favor of In preclude attorney stances an fees Landro, prevailing plain- we held that the award, and the credited district court’s tiff was entitled to a favor consideration of the five-factor test its losing of a fee award-limited the defen- plaintiff. decision to award fees to the Id. ability special dant’s to show cireum- at 729-30. See also Milone v. Exclusive stances; (4) argument, parties requesting 3. At oral Martin's counsel clarified whether the fee, longer contingency that he no seeks a but sought participants benefit all appeals simply requested the denial the fee and beneficiaries of a or to resolve a on reconsideration. significant legal question regarding ERISA it self; (5) parties' the relative merits of the (1) degree culpa 4. Those factors are: the Westerhaus, positions. 749 F.2d at 496. The (2) bility opposing party; or bad faith of the quoted Westerhaus court these factors from ability opposing party pay of the attor opinion the Fifth in Iron Circuit's Workers fees; (3) ney whether an award of Bowen, 1255, Local No. 272 v. 624 F.2d 1266 against opposing party might have a 1980). (5th Cir. future deterrent effect under circum similar 970 Inc., 615,

Healthcare, 244 ducting discretionary attorney F.3d 620 West, analysis. v. (referring presump- to both the See McElwaine U.S. (9th Cir.1999) test). 1167, 176 1172 F.3d and five-factor tion (spelling out the five-factor test and stat of our sister circuits indicates A review ing special court should also Fifth, First, Third, Fourth, Sixth, rule); Super circumstances Little v. Cox’s Eleventh,5 circuits have all con and D.C. markets, (7th Cir.1995) 71 F.3d 644 expressly re sidered the (noting that can courts use either the five- E.g., v. jected application. its Cottrill presumption” factor test or “modest Ursillo, Inc., Johnson & 100 Sparrow, formulation, that under either “the ‘bot (1st Cir.1996); Eddy v. F.3d 226 Colo question’ tom-line is the same: was the Am., Ins. 59 F.3d 205- nial Co. Life losing party’s position substantially justi (D.C.Cir.1995); Quesinberry v. Life faith, fied and taken in good or was that Am., Ins. N. 987 F.2d Co. of party simply opponent”). out to harass its (4th Cir.1993); Shenango Ellison v. Inc. In the expressly rejected eases that (3d Bd., 1268, 1274 Pension 956 F.2d Cir. presumption, proponent pre of the 1992); Corp., Armistead v. Vernitron sumption generally analogized Cir.1991); Iron Work fee-shifting structure to the similar fee- Bowen, No. ers Local cases, shifting statute in civil rights citing (5th Cir.1980). 1266 Eckerhart, particularly Hensley v. 461 and Tenth circuits do not The Second 424, 1933, U.S. 103 76 S.Ct. L.Ed.2d 40 have not consid presumption, use the but (1983). Hensley clarified the standards .rejected it. expressly E.g., ered and cases, for attorney rights fees in civil and Masters, v. Mates & Chambless Pilots plaintiffs Court noted that prevailing (2d Plan, 869, 871 Pension 815 Cir. may ordinarily recover fees un 1987); v. States Gordon United Steel special less circumstances make an award (10th 106, Cir.1983).6 724 F.2d 109 Corp., unjust. Id. at 429 (citing Pig Newman v. fact, genesis In the Tenth Circuit is the of Enters., gie Inc., 400, 402, Park 390 U.S. test, as first enunciated in the five-factor (1968) 964, 88 (per S.Ct. 19 L.Ed.2d 1263 Penn, 453, (10th 587 F.2d 465 Eaves v. curiam)). The rejecting cases the New Cir.1978). Hensley man and in approach ERISA and Ninth Finally, the Seventh Circuits cases reason that despite language similar utilize some version of both appear to in the civil rights fee-shifting statutes and presumption test and a in five-factor con- ERISA’s fee-shifting provision,7 the overall Inc., 93-5038, Packaging, 5. While the Eleventh Circuit has not consid No. 1994 WL 609387, *2, rejected presumption, ered and the Fifth at 39 F.3d 1192 Nov. Cir. did, Bowen, 1994). However, case that 624 F.2d unpublished, Circuit because is precedent was decided in 1980 before the Eleventh Cir that case is not considered in the Circuit, by splitting apart 36.3(A), created cuit was Fifth Tenth see Tenth Cir. R. and Circuit, binding prece thus is considered no pre- other Tenth Circuit case mentions sumption. dent on the Eleventh Circuit. See Bonner v. Prichard, City 1209 similar, 7.Though the statutes are there is a banc) (Eleventh 1981) (en adopted Cir. fundamental difference between the civil binding precedent all as decisions of the for statute, rights fee-shifting provides which prior mer Fifth Circuit handed down to Octo “prevailing party,’’ fees to the 42 1, 1981). ber 1988(b) 2000e-5(k), §§ U.S.C. & and the statute, unpublished per opinion 6. An curiam from ERISA which allows the district court the Tenth party,” Circuit does cite Landro and refers to award fees to “either 29 U.S.C. presumption. Bay 1132(g)(1). to the See Jenkins v. Green at rights quite argument, legisla statutes are there is a dearth of aims of the civil ERISA, purpose. E.g., history ERISA’s tive on and certainly different from none protects F.3d at 204-05. ERISA Eddy, suggests which that it was fur enacted to “ “ interests, economic statutorily-created important goals ‘po- ther societal or protect statutes con- rights while the civil Congress considered of the lic[ies] ” ” dignitary and' individual stitutionally-based highest priority.’ (quoting Id. Chris interests, im- uniquely which are economic tiansburg, quoting Piggie 434 U.S. at nation as a whole. Id. The portant to our 402.). Park, Instead, at U.S. both the court also reasoned that it would Eddy neutral, Act and Copyright ERISA have rights the stature accorded civil belittle discretionary attorney language, fee-shifting presumption cases (or equally sparse) neutral legislative his And, types in other of cases. Id. at 205. tory concerning attorney fees. the civil legislative history while the Finally, the “American Rule” rights statutes indicated party normally that each bears the cost of case, in lacks sim- warranted those litigation Congress provides unless history. Id. legislative ilar otherwise, Fogerty, 510 per U.S. agree reasoning Eddy with the We analysis. vades our Congress While did closely cor find that ERISA does not provide shifting for fee in the fee-shifting with the scheme respond cases, court’s discretion the op Instead, rights civil statutes. ERISA’s eration of a in favor language is neutral its reference undermines the “American Rule” and by the similar to the statute construed employed only extraordinary should be Supreme Fogerty Fantasy, Court cases, rights litigation. such as civil In 517, 533, 510 U.S. S.Ct. FogeHy, the Court noted that Congress (1994). In Fogerty, L.Ed.2d 455 the Court “legislates against strong background the considered the Act’s Copyright whether pointed of the American Rule” and out fee-shifting provision, 17 U.S.C. was fee-shifting that the statute’s use of the analogous to civil rights fee-shifting the “ n ‘may’ clearly word connotes discretion. statutes. 510 plaintiff U.S. at 522. The in awarding attorney’s The automatic of Fogerty asserted there should be a dual the prevailing party to would pretermit the (treating standard prevailing plaintiffs exercise of that discretion.” Id. The Court favorably) Copyright more Act fee de rejected argument the that Congress’s in terminations as established Christians by pro modification of the American Rule EEOC, burg Garment Co. v. 434 U.S. viding Copyright for fees in the Act meant (1978), 98 S.Ct. 54 L.Ed.2d 648 adopt that it intended to the “British Rule” rejected for Title VII The cases. Court party be awarded attor prevailing analogy, despite in language similar course, ney as a matter of absent the statutes. at U.S. 523-25. The exceptional circumstances. The Court “important policy objec credited the Court “[sjuch stated, departure a bold from tra statutes,” Rights tives of the Civil practice surely ditional would have drawn objectives in noted that these were absent explicit statutory language legis more involving Copyright a case the Act. Id. at lative comment.” Id. reasons, For all Copyright Like the Act of these we as construed in agree with FogeHy, overwhelming majority the ERISA involves vindication of statutory, rights. economic Also like the circuits that have considered this issue and Act, and as admitted counsel concluded that the not Copyright should may take Although cases. the district court into consider- employed in ERISA be pre- the first to our circuit was ation all of the usual a court factors consid- cases, fee-shifting we sumption fee, determining ers when a amount of now find that use of several non-exclusive including “results obtained” and the factors best facilitates the exercise of the “novelty difficulty questions”). of the discretion ERISA cases. district court’s Fogerty, 510 at 534 n. 19 See also U.S. holding to the con- We overrule Landro’s condoning the (expressly use “several However, that the “five we caution trary. factors that nonexclusive courts should by no by Westerhaus are factors” set forth making attorney’s consider awards of mechanically ap- means or to be exclusive any prevailing party.... fees to long so as Eddy The court noted that a me- plied. faithful such factors are to the purposes” may chanical of the factors application question). of the act in the substantive serve to undermine “both is, The bottom line district courts and the discretion vest- purpose of ERISA rote, obligated are not to regurgitate, carry purpose.” ed the courts to out They well-recog Westerhaus factors. are Instead, 59 F.3d at 207. the district courts guidelines nized general provide which di use the factors and other relevant should court, rection to the district while also guidelines for general considerations as facilitating “meaningful appellate review.” appropriate. a fee is determining when Eddy, Eddy 206. As court instance, considering For when noted, particular application a “[w]hile court should “ability pay,” may subject criticism, the ... factors be keep in mind fundamental differences the factors are reasonable and have been plan funding Ordering large mechanisms. widely by the In accepted courts.” Id. payments employee-funded from an deed, argument Martin admitted at oral hurt plan might actually plan partici few, any, if fee awards have been costs, contrary to the pants by increasing prevailing plaintiff denied a in ERISA statutory purpose of Martin ad ERISA. eases nationwide. This is true even argument vances the that the district court though nine of the circuit of appeals courts should consider obtained” “results any presumption in employ do not kind of determining whether to award Thus, and, favor of fees. the absence of analysis, in that consider the kind of Martin, obviously According if has not doomed results obtained. non-monetary the benefits awarded are attorney fee plaintiffs’ requests, ERISA here where the award nature —as benefit will not do in this circuit and so either. lung a district court ed was should —the The district court used the factors especially important deem this because the presumption, and considered the but it is receiving money not a participant pool is analysis clear that the court’s factors paid. from which can be it is fees While deciding not to award a Martin fee to may true that the district court consider comports holding today. with our The information, may because it consider court cited Landro and its any relevant, all and facts it deems to the analyzed but then the Plan’s actions ac particular truly extent that this factor is a Plan cording following to the factors: the obtained,” prudently “result it is more con fully by expediting the exhaus cooperated determining when the amount of sidered remedies, by tion of administrative plan has judgment, the once the district court stipulated a record to the dis presenting already decided a fee should be awarded. court, a by agreeing trict simultaneous n. Hensley, 461 U.S. at 429 & Cf. (once awarded, schedule, finally, by ap- not briefing it decides a fee should be ruling. III. court’s adverse CONCLUSION pealing Instead, immediately complied the Plan Finding no abuse of discretion the mandate and certi- court’s with the district court, judgment district the is affirmed. Mar- in Norma coverage resulting fied — BYE, Judge, within six with being transplanted Circuit whom lung tin’s McMILLIAN, The joins, case was first filed. Judge, after her months that Martin would court also noted concurring part dissenting part. district a procedural but for prevailed not have agree majority’s I with the decision to decision-making in the Plan’s irregularity abandon the use of the process. considering applica- ERISA to the court was faithful The district § 1132(g). tions under 29 U.S.C. I dis- in analyz ERISA purpose of substantive agree aspects majori- with two other of the as it did. While ERISA’s ing the case ty opinion. remedial, pro it was enacted to

purpose is First, majority re-affirms a district tect, things, “the interests of among other court’s use of the five-factor test when employee plans benefit participants deciding whether to award fees to a suc 1001(b). 29 U.S.C. their beneficiaries.” Ante at 972. plaintiff. cessful ERISA instance, nothing the Plan did In this The five-factor test has been criticized as in an participant interests of a hinder the unhelpful determining “an method for denied, It as ex employee plan. benefit prevailing of awards to appropriateness lung transplant. a benefits for perimental, plaintiffs in actions.” Mark Ber- ERISA to a fair goodA faith denial of benefits due lind, Attorney’s Fees ERISA: under When a over the extent to which disagreement Appropriate?, an Award is Cornell a procedure by plan is covered prospective (1986). 1037,1058 L.Rev. of the Criticisms necessarily endanger participants does not (a) superfluous test include five-factor may in the While it thwart plan. factor, al nature of the first since courts who wishes to re particular participant ability the inherent ready have shift fees procedure, good faith denial ceive (b) faith, because of bad the fact that the remaining plan serve the may well better factor does not to most second participants by keeping costs at a reason plan situations because an ERISA any If are to have able level. the factors prevailing par of a typically pays the fees effect, plan presump force and cannot per than the administrators ty rather every tively charged be with (c) already provides sonally, and deny reversed in its decision to time accomplish fiduciary strict standards Fogerty, 510 U.S. benefits. Cf. factor, deterrence. goals of the third (“The awarding attorney’s automatic 1058-61; see also Cent. States See id. prevailing party preter- to the would Hitch & Areas Pension Fund v. S.E. S.W. discretion.”). mit the exercise of that On 906, 909 Trucking, F.Supp. 492 ings hand, act encouraging plan a the other (E.D.Mich.1980) (“[I]t difficult to deter appropriately and once bene expeditiously to each of relationship mine the of ERISA ultimately best fits have been ordered will factors.”). I de these believe we should promote participants the “interests of velop a better test. employee plans benefit and their beneficia 1001(b). I first three factors would abandon the plan § A ries.” 29 U.S.C. a replace if and them with one—'“whether may understands it avoid fees it brought plaintiff would have and is more reasonable appropriately quickly acts attorney’s fees was if no award of do so. suit likely to Am., possible.” Cir.1999) L.Rev. at 1062. In Cornell case, Martin sued to obtain a Norma (“Logically, plaintiff a who can show that a Plan, monetary from not lung benefits procedural conflict of interest or serious from which a could be portion pay used to irregularity caused a serious breach of the attorney. an In all similar cases where fiduciary duty administrator’s will more recovery of success means the non-mone- likely than have substantial evidence show- benefits, tary plaintiffs difficulty will have ing fiduciary’s decision was arbi- obtaining legal representation but for the trary capricious.”). majority’s and The possibility recovering fees under will discussion have the incongruous effect § 1132(g). participants If who seek non- justifying a denial of fees when that is monetary attorneys, benefits cannot retain very reason a plaintiff prevails. provisions effectively ERISA’s will not be plans now have less incentive to filed, only enforced. Such suits will be procedural avoid they blunders because provisions only effectively ERISA’s will be will responsible not be for paying attorney enforced, if success on the portends merits they fees occur. likely recovery a of fees under 1132(g). ‡ 5{: ifc sfc sis # exercising fees, In discretion to award a Because the district court improperly district court should therefore consider procedural considered the existence of a whether a suit will result in a monetary irregularity justified as a factor that its recovery adequate from which fees can be fees, denial of in my gave view too not, paid. If probably should be little consideration to the fact that Norma § 1132(g). awarded under yielded Martin’s successful suit no mone- Second, fees, in denying tary benefits from which fees could be court noted that Martin would not have paid, I would reverse and remand with prevailed procedural but for a irregularity instructions to award at a reasonable in the Plan’s decision-making process. hourly rate. majority apparently The approves the dis- trict court’s consideration of factor in

denying ante at I greatly but am

troubled this factor because often

leads to imposition liability in the place. first FLANDERS, Appellant, Kenneth M. In ERISA cases which the Plan ad- ministrator the plan, funds the conflict GRAVES, Warden, Appellee. L.W. triggers a less-deferential standard when “(1) a palpable conflict of interest or a No. 01-3413SI. exist[s], 'procedural serious irregularity United States Appeals, Court of (2) which causefs] serious breach of the Eighth Circuit. fiduciary duty.” administrator’s Woo v. Deluxe Corp., Submitted: June 2002. added). (emphasis In other Aug. Filed: words, we heighten our review of a Plan’s Rehearing Rehearing En Banc denial of precisely pro- benefits because of Denied: Oct. irregularities cedural in its decision-mak- ing process, heightened and our standard

of review often outcome-determinative.

See Barnhart v. UNUM Ins. Co. Life

Case Details

Case Name: Martin v. Arkansas Blue Cross & Blue Shield

Court Name: Court of Appeals for the Eighth Circuit

Date Published: Aug 16, 2002

Citation: 299 F.3d 966

Docket Number: 00-3420

Court Abbreviation: 8th Cir.