Cardoza v. United of Omaha Life Insurance , 708 F.3d 1196 ( 2013 )

FILED
United States Court of Appeals
Tenth Circuit
February 27, 2013
PUBLISH Elisabeth A. Shumaker
Clerk of Court
UNITED STATES COURT OF APPEALS
TENTH CIRCUIT
JOSE CARDOZA,
Plaintiff - Appellee,
v. No. 12-2033
UNITED OF OMAHA LIFE
INSURANCE COMPANY,
Defendant - Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
(D.C. NO. 1:09-CV-01003-MV-WPL)
Steven T. Collis, Holland & Hart, LLP, Greenwood Village, Colorado (Michael S.
Beaver, Holland & Hart, LLP, Greenwood Village, Colorado, and Marcy G.
Glenn, Holland & Hart, LLP, Denver, Colorado, with him on the briefs), for
Defendant-Appellant.
David L. Duhigg, Duhigg, Cronin, Spring & Berlin, P.C., Albuquerque, New
Mexico, for Plaintiff-Appellee.
Before KELLY, MURPHY, and GORSUCH, Circuit Judges.
MURPHY, Circuit Judge.
I. Introduction
Jose Cardoza brought this lawsuit pursuant to the Employee Retirement
Income Security Act of 1974, 29 U.S.C. § 1001 to § 1461 (“ERISA”), challenging
United of Omaha Life Insurance Company’s (“United of Omaha”) calculation of
his long-term disability benefits (“LTD benefits”). United of Omaha answered,
asserting its calculation was appropriate, and counterclaimed, demanding that
Cardoza reimburse it for payments of short-term disability benefits (“STD
benefits”) which it claimed were miscalculated. On cross-motions, the district
court granted Cardoza’s motion for summary judgment and denied United of
Omaha’s motion, concluding United of Omaha’s decision to calculate Cardoza’s
LTD benefits and recalculate his STD benefits as it did was arbitrary and
capricious.
The district court erred in granting Cardoza’s motion for summary
judgment with respect to United of Omaha’s LTD benefits calculation. The plain
language of the long-term disability benefits policy (“LTD policy”) instructed
United of Omaha to base its calculation of Cardoza’s LTD benefits on his
earnings as verified by the premium it received. Thus, United of Omaha’s
decision to do so was reasonable and made in good faith. The district court did
not err, however, in granting Cardoza’s motion for summary judgment with
respect to United of Omaha’s recalculation of his STD benefits and demand for
reimbursement. The plain language of the short-term disability benefits policy
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(“STD policy”) instructed United of Omaha to base its calculation of Cardoza’s
STD benefits on his earnings. Thus, United of Omaha’s decision to recalculate
Cardoza’s STD benefits based on his earnings verified by premium rather than his
actual earnings was not reasonable. Exercising jurisdiction pursuant to 28 U.S.C.
§ 1291, this court therefore reverses in part, affirms in part, and remands to the
district court with instructions to conduct further proceedings consistent with this
opinion.
II. Background
Cardoza worked as a truck driver for Durango-McKinley Paper Company
(“Durango-McKinley”) until July 2008, when he was involved in an accident and
became disabled. Durango-McKinley provided disability insurance to its
employees, including Cardoza, through United of Omaha under an ERISA plan.
Cardoza initially applied for and received STD benefits for a twelve-week period
from July to September 2008. Under the STD policy, Cardoza’s STD benefits
were calculated using his “Weekly Earnings”:
Weekly Earnings means Your average gross weekly earnings
received from the Policyholder [Durango-McKinley] during the
Calendar Year immediately prior to the year in which Your Disability
began . . . .
It includes commissions, and overtime pay received from the
Policyholder. It also includes employee contributions to deferred
compensation plans. It does not include Policyholder contributions
to deferred compensation plans, bonuses, shift differential, or other
extra compensation received from the Policyholder.
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Cardoza’s weekly earnings and, therefore, his STD benefits, were
calculated using his actual 2007 earnings of $61,881.47. United of Omaha
received this earnings information from Durango-McKinley in July 2008, during
the STD claims process.
Cardoza then applied for LTD benefits, which were also approved. Per the
LTD policy, Cardoza’s LTD benefits were calculated using his “Basic Monthly
Earnings”:
Basic Monthly Earnings means Your average gross monthly
earnings received from the Policyholder [Durango-McKinley] and
verified by premium We have received during the Calendar Year
immediately prior to the year in which Your Disability began . . .
It includes commissions, and overtime pay received from the
Policyholder. It also includes employee contributions to deferred
compensation plans. It does not include Policyholder contributions to
deferred compensation plans, bonuses, shift differential, or other
extra compensation received from the Policyholder.
United of Omaha based its calculation of Cardoza’s basic monthly earnings
and, therefore, his LTD benefits, not on his actual earnings in 2007, but on an
annual earnings figure of $24,273.60. United of Omaha asserted
Durango-McKinley reported and paid premiums on this annual earnings figure in
2007. United of Omaha also asserted that Durango-McKinley had classified
Cardoza as an hourly employee whose annual earnings were less than $40,000, for
purposes of both the LTD and STD policies. Both policies provide that the
premium payable for each period of coverage is the sum of the individual
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premiums for each insured person and that individual premiums are based on an
insured person’s classification when a period of coverage begins.
Cardoza objected to United of Omaha’s LTD benefits calculation and
provided proof of his actual earnings in 2007. The bulk of Cardoza’s 2007
income derived from “per ton” or “per load” earnings (“tonnage pay”)—earnings
he received based on the weight of the loads carried in his truck. The $24,273.60
earnings figure relied on by United of Omaha in calculating Cardoza’s LTD
benefits award did not include all of Cardoza’s tonnage pay.
United of Omaha refused to adjust the LTD benefits calculation. It
reiterated its position that the LTD benefits calculation was properly based on the
earnings figure of $24,273.60 that Durango-McKinley had reported and on which
it paid premiums in 2007. United of Omaha also asserted that Cardoza’s tonnage
pay was considered “extra compensation” under the LTD policy and, therefore,
excluded from the LTD benefits calculation. In addition, United of Omaha
notified Cardoza that it had mistakenly calculated his STD benefits for the same
reasons. Thus, United of Omaha requested that Cardoza reimburse it for the
alleged overpayment of STD benefits. Cardoza refused.
Cardoza unsuccessfully appealed United of Omaha’s LTD benefits decision
using United of Omaha’s appeals process. After exhausting his administrative
remedies, Cardoza filed suit against United of Omaha, challenging its calculation
of his LTD benefits and seeking attorney’s fees and costs. United of Omaha
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answered and counterclaimed, arguing it properly calculated Cardoza’s LTD
benefits and Cardoza owed it for overpayments of STD benefits.
Following limited discovery, United of Omaha moved for judgment on the
administrative record and Cardoza moved for summary judgment. The district
court granted Cardoza’s motion and denied United of Omaha’s motion,
concluding United of Omaha’s decision to treat Cardoza’s tonnage pay as “extra
compensation,” and, therefore, exclude it from the LTD and STD benefits
calculations was arbitrary and capricious. United of Omaha then filed a motion to
alter or amend the judgment, arguing the maximum monthly benefit provision in
the LTD policy applicable to employees making less than $40,000 annually
should be applied to Cardoza, and thereby limit his LTD benefits. The district
court denied that motion. Finally, the district court granted Cardoza’s motion for
attorney’s fees and costs. United of Omaha appeals each of these decisions,
arguing its decision to calculate Cardoza’s LTD and STD benefits using the 2007
earnings and classification information Durango-McKinley reported and paid
premiums on was reasonable and made in good faith.
III. Analysis
A. STD and LTD Benefits Calculations
1. Standard of Review
This court reviews summary judgment orders de novo, applying the same
standards as the district court. LaAsmar v. Phelps Dodge Corp. Life, Accidental
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Death & Dismemberment & Dependent Life Ins. Plan, 605 F.3d 789, 796 (10th
Cir. 2010). In an ERISA case like this, where both parties move for summary
judgment and stipulate that no trial is necessary, “summary judgment is merely a
vehicle for deciding the case; the factual determination of eligibility for benefits
is decided solely on the administrative record, and the non-moving party is not
entitled to the usual inferences in its favor.” Id. (quotation omitted). Moreover,
this court accords no deference to the district court’s decision. Id.The parties agree United of Omaha’s decisions are reviewed under the
arbitrary and capricious or abuse of discretion standard because both the LTD and
STD policies grant United of Omaha discretion and final authority to construe and
interpret the terms of the policy. See id. Under this standard, this court’s “review
is limited to determining whether the interpretation of the plan was reasonable
and made in good faith.” Id. (quotation omitted).
“Certain indicia of an arbitrary and capricious denial of benefits include
lack of substantial evidence, mistake of law, bad faith, and conflict of interest by
the fiduciary.” Graham v. Hartford Life & Acc. Ins. Co., 589 F.3d 1345, 1357
(10th Cir. 2009) (quotation omitted). “Substantial evidence is such evidence that
a reasonable mind might accept as adequate to support the conclusion reached by
the decisionmaker. Substantial evidence requires more than a scintilla but less
than a preponderance.” Sandoval v. Aetna Life & Cas. Ins. Co., 967 F.2d 377,
382 (10th Cir. 1992) (quotations omitted).
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Because United of Omaha acts as both the claims administrator and payor
of benefits, “we must weigh the conflict ‘as a factor in determining whether there
is an abuse of discretion,’ according it more or less weight depending on its
seriousness.” Murphy v. Deloitte & Touche Group Ins. Plan, 619 F.3d 1151,
1158 n.1 (10th Cir. 2010) (quoting Metro. Life Ins. Co. v. Glenn, 544 U.S. 105,
115 (2008)). The seriousness of a conflict of interest is “proportionate to the
likelihood that the conflict affected the benefits decision.” Graham v. Hartford
Life & Acc. Ins. Co., 589 F.3d 1345, 1358 (10th Cir. 2009). “A conflict is more
important when ‘circumstances suggest a higher likelihood that it affected the
benefits decision,’ but less so when the conflicted party ‘has taken active steps to
reduce potential bias and to promote accuracy.’” Hancock v. Metro. Life Ins. Co.,
590 F.3d 1141, 1155 (10th Cir. 2009) (quoting Glenn, 544 U.S. at 117-18).
Cardoza claims United of Omaha’s conflict of interest and procedural
irregularities (i.e., an initial failure to provide Cardoza its internal guidelines,
protocols, and procedures in making claims determinations) compromised its
fiduciary duty to act solely in the interest of the participant and beneficiaries.
Thus, Cardoza asserts, the deference this court would ordinarily accord to United
of Omaha’s benefits decision should be lessened to neutralize the untoward
influence of United of Omaha’s conflict, which contaminated its decision-making
process. United of Omaha argues that, because its conflict played no role in its
benefits calculations, this court should give it only minimal, if any, consideration.
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Cardoza was granted limited discovery in this case in order to obtain
information relevant to United of Omaha’s conflict of interest and to determine
why United of Omaha initially claimed there were no internal guidelines,
protocols, and procedures concerning the determination of Cardoza’s LTD
benefits. As a result, United of Omaha’s Director of Customer Service in the
Clinical Services Department of its Claims Division attested to the following
facts, which show the steps United of Omaha took to minimize its conflict of
interest: (1) “claims analysts are not allowed access to claim reserve information
and are not provided actuarial or financial information regarding their claims
handling or the effect of their claims handling on company financial results” and
(2) “all claim analysts are physically segregated from the Premium, Sales,
Underwriting, and Actuary departments, as well as Quality Auditors.”
Additionally, “claims personnel are paid a salary or hourly wage, and are not paid
any incentive compensation based on the payment or denial of claims” and “any
bonus pay is based on company-wide performance.” Thus, the record shows
United of Omaha has taken active steps to reduce potential bias and to promote
accuracy. Cardoza has provided no evidence to the contrary. Thus, this court
will consider United of Omaha’s conflict of interest as a factor in determining
whether its decisions were arbitrary and capricious. However, because United of
Omaha has taken active steps to reduce potential bias and promote accuracy, this
court will accord the conflict little weight in making that determination.
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2. LTD Benefits Calculation
The terms of the LTD policy and the evidence in the administrative record
show United of Omaha’s calculation of Cardoza’s LTD benefits was reasonable
and made in good faith. Courts review ERISA claims as they “would any other
contract claim by looking to the terms of the plan and other evidence of the
parties’ intent. If plan documents are reviewed and found not to be ambiguous,
then they may be construed as a matter of law.” Hickman v. GEM Ins. Co., 299
F.3d 1208, 1212 (10th Cir. 2002); see also Kennedy v. Plan Adm’r for DuPont
Sav. & Inv. Plan, 555 U.S. 285, 299-302 (2009) (stating the text of the plan
documents controls). In making this determination, this court “consider[s] the
common and ordinary meaning as a reasonable person in the position of the plan
participant would have understood the words to mean.” Scruggs v. ExxonMobil
Pension Plan, 585 F.3d 1356, 1362 (10th Cir. 2009) (quotation and alteration
omitted).
In this case, LTD benefits are calculated based on an insured’s basic
monthly earnings. According to the LTD policy, “Basic Monthly Earnings means
Your average gross monthly earnings received from the Policyholder and verified
by premium We have received during the Calendar Year immediately prior to the
year in which Your Disability began.” Because Cardoza’s disability began in
2008, his basic monthly earnings were his “average gross monthly earnings
received from [Durango-McKinley] and verified by premium” United of Omaha
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received during 2007. The “verified by premium” clause of the LTD policy is
unambiguous and “reasonably susceptible to [only] one meaning.” Miller v.
Monumental Life Ins. Co., 502 F.3d 1245, 1250 (10th Cir. 2007) (quotations
omitted). The plain text of the LTD policy instructs United of Omaha to calculate
Cardoza’s LTD benefits based on his earnings as verified by premium received by
United of Omaha during 2007.
The record supports United of Omaha’s assertion Cardoza’s earnings as
verified by the premium United of Omaha received during 2007 were $24,273.60
annually. The record contains a screenshot, provided by United of Omaha, which
shows the contents of the “earnings tab” in Cardoza’s file on its computer system.
The information on the tab indicates Cardoza’s annual earnings were
“$23,568.50,” effective February 1, 2007, when the LTD policy took effect, but
increased to “$24.273.60” effective June 4, 2007. In a letter sent to Cardoza
during the LTD claims process, United of Omaha asserted the information on this
screenshot “verifies the employer’s report of income and what premium was
received on for the calendar year 2007.” Another screenshot provided by United
of Omaha also reflects an annual basic salary of $24,273.60 and shows Cardoza
was classified as an “A005” employee. 1 United of Omaha asserts this shows
Cardoza was classified as an “Eligible Hourly Employee[] whose Annual
1
The STD claim form submitted by Durango-McKinley in July 2008 also
indicates Cardoza was classified as “A005.”
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Earnings are less than $40,000.” Pursuant to both the LTD and STD policies,
individual premiums are based on an insured’s classification when a period of
coverage begins.
In addition, an internal United of Omaha record of a December 2008 phone
call between a claim handler and an employee who was researching the
calculation of Cardoza’s benefits states: “Benefits were calculated based on the
salary we received premium on. [Durango-McKinley] did not report the ‘per
load’ earnings for this claimant, therefore benefits would reflect the salary as
billed.” Moreover, in several letters sent by United of Omaha to Cardoza during
the claims and administrative appeals process, United of Omaha stated that
Durango-McKinley paid premiums in 2007 based on the $24,273.60 earnings
figure and Cardoza’s classification as an hourly employee earning less than
$40,000 annually.
Finally, Cardoza does not point to any evidence which calls into question
United of Omaha’s assertion that it received premiums based on the $24,273.60
earnings figure and Cardoza’s classification as an hourly employee earning less
than $40,000 annually. Indeed, Cardoza does not dispute, nor does the record
show he has ever disputed, those assertions. In fact, Cardoza expressly admitted
at the summary judgment stage that Durango-McKinley paid premiums based on
the $24,273.60 figure.
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Relying on Mort v. United of Omaha Life Ins. Co., 444 F. App’x 208,
209-10 (9th Cir. 2011), Cardoza argues the “verified by premium” clause is not
“an absolute bar to relying on accurate income statements in calculating benefits.”
In Mort, the Ninth Circuit analyzed “verified by premium” language similar to
that relied on by United of Omaha in this case and concluded:
The policy allows United to obtain income documentation
directly from [the insured] at any time, without further verification,
and “adjust [its] payment to the Employee based on this
information.” The broader context of the policy therefore does not
suggest that the verification clause is an absolute bar to relying upon
accurate income statements in calculating benefits, even if a related
premium is not received.
Id. at 210. Cardoza argues that, like in Mort, the LTD policy in this case allowed
United of Omaha to obtain income documentation directly from
Durango-McKinley at any time, without further verification, and change premium
rates when it discovered a change in eligibility for benefits under the policy.
Thus, Cardoza argues, like in Mort, the broader context of the LTD policy
suggests the verification clause is not an absolute bar to relying upon accurate
income statements in calculating benefits, regardless of the premium United of
Omaha received. Moreover, Cardoza asserts, prior to his claim for LTD benefits,
United of Omaha obtained accurate income statements and had knowledge of
Cardoza’s actual 2007 earnings as of July 2008, when Durango-McKinley filed
his claim for STD benefits. He further asserts that, despite this knowledge, and
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despite having the ability to do so, United of Omaha did not change its premium
rates.
Cardoza’s reliance on Mort is misplaced. In determining that the broader
context of the policy in that case did not suggest the verification clause was an
absolute bar to relying on accurate income statements in calculating benefits, the
Ninth Circuit noted that the policy allowed United of Omaha to “adjust [its]
payment to the Employee” based on updated income documentation. Id. There is
no such clause in the LTD policy in this case. While the LTD policy allowed
United of Omaha to obtain income documentation directly from
Durango-McKinley at any time, without further verification, there is no provision
allowing United of Omaha to adjust its payment to the employee based on that
information. United of Omaha was permitted merely to change its premium rates
if it discovered a change in eligibility for benefits under the policy.
Moreover, whether a change in Cardoza’s premium rates was justified
based on United of Omaha’s receipt of information in July 2008, which showed
his actual earnings in 2007 were much higher than $24,273.60, is irrelevant.
Cardoza’s LTD benefits calculation is based on earnings “verified by premium”
received by United of Omaha during the previous calendar year, in this case,
2007. Thus, any change in premiums that may have been warranted as of July
2008 would not affect the LTD benefits calculation in this case.
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Cardoza also argues it was United of Omaha’s error that led
Durango-McKinley to pay the “wrong premium.” He argues it was United of
Omaha, not Durango-McKinley, that determined the premium using its knowledge
of the nature of Durango-McKinley’s business and its own expertise in
underwriting insurance policies. Thus, he asserts, the district court was correct in
concluding “[t]he issue with premiums received is between Durango-McKinley
and United of Omaha” and Cardoza “should not be penalized for an error that
from the record appears to be due to United of Omaha’s underwriters not initially
considering tonnage pay.”
In making the latter statement, the district court relied on an internal United
of Omaha record of a December 2008 phone call between a claim handler and an
employee who was researching the calculation of Cardoza’s benefits. The
employee wrote: “Benefits were calculated based on the salary we received
premium on. [Durango-McKinley] did not report the ‘per load’ earnings for this
claimant, therefore benefits would reflect the salary as billed,” and “It is
questionable as to whether or not the ‘per load’ amount was initially taken into
consideration when Underwriting rated the case. Since commission[s] are
included under the Definition of Earnings, were ‘per load’ wages to be included
under commissions? If so, we would need clarification from Underwriting.”
These statements do not show any error was made in determining the premium
owed in connection with Cardoza’s disability insurance, let alone an error made
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by United of Omaha’s underwriters. The statements merely raise the question
whether tonnage pay was included as commissions when United of Omaha wrote
the coverage, without answering the question. Indeed, the statement indicates
that not all of Cardoza’s tonnage pay was reported by Durango-McKinley when it
states “[Durango-McKinley] did not report the ‘per load’ earnings” for Cardoza.
Moreover, Cardoza fails to point to any other evidence in the record
supporting his assertion the determination of the premium due in connection with
his disability insurance was an error made by United of Omaha. The evidence is
to the contrary. In three separate letters sent to Cardoza during the claims and
administrative appeals process, United of Omaha stated it determined the
premium due in connection with his disability insurance based on information
provided by Durango-McKinley, which, United of Omaha stated, classified
Cardoza as an hourly employee earning less than $40,000 a year and reported his
annual earnings in 2007 as $24,273.60. Cardoza does not contest those assertions
on appeal and this court is unable to find any record evidence that Cardoza has
ever contested those assertions. Both the LTD and STD policies required
Durango-McKinley to furnish information regarding “persons insured by
classification” and “any other insurance information which [United of Omaha]
may reasonably request” for the purpose of policy administration. Furthermore,
both policies allowed United of Omaha to “rely on the accuracy and completeness
of any information furnished by [Durango-McKinley] or an insured person.”
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Finally, the record shows that when United of Omaha discovered the
discrepancy between Cardoza’s reported and actual earnings, it gave
Durango-McKinley the option of paying back-premiums to insure its drivers,
including Cardoza, for their actual earnings, but Durango-McKinley refused. 2
In sum, the plain text of the LTD policy instructs United of Omaha to
calculate Cardoza’s LTD benefits based on his earnings “verified by premium”
received by United of Omaha during 2007. The record supports United of
Omaha’s assertion it received premiums from Durango-McKinley during 2007
based on reported annual earnings of $24,273.60 and the fact Cardoza was
classified as an hourly employee earning less than $40,000 a year. Thus, United
of Omaha’s decision to base its LTD benefits calculation on that figure was
reasonable and made in good faith and, therefore, not arbitrary and capricious. 3
2
Cardoza also asserts United of Omaha failed to appeal the district court’s
conclusion United of Omaha’s decision to treat Cardoza’s tonnage pay as “extra
compensation” for purposes of calculating his LTD and STD benefits was
arbitrary and capricious. Thus, he argues, the district court’s ruling on that issue
stands and the arguments United of Omaha makes on appeal must be viewed
against the backdrop of that ruling. United of Omaha admits it has abandoned its
so-called “tonnage argument” on appeal. Thus, we need not address the
arguments Cardoza makes on appeal concerning United of Omaha’s tonnage
argument. Moreover, to the extent it is relevant, this court has considered the
district court’s conclusion regarding United of Omaha’s tonnage argument in
reviewing United of Omaha’s argument on appeal.
3
United of Omaha also appeals the district court’s denial of its motion to
alter or amend the judgment. In light of this court’s conclusion United of
Omaha’s decision to calculate Cardoza’s LTD benefits using the earnings of
$24,273.60, as verified by premium it received in 2007, was not arbitrary and
(continued...)
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3. STD Benefits Calculation
The terms of the STD policy and the evidence in the administrative record
show United of Omaha’s recalculation of Cardoza’s STD benefits based on the
annual earnings figure of $24,273.60, which Durango-McKinley paid premiums
on in 2007, is not reasonable. Pursuant to the STD policy, Cardoza’s STD
calculation is based on his weekly earnings. According to the policy, “Weekly
Earnings means Your average gross weekly earnings received from
[Durango-McKinley] during the Calendar Year immediately prior to the year in
which Your Disability began.” Thus, the STD policy lacks the “verified by
premium” language contained in the LTD policy. This language in the STD
policy is unambiguous and “reasonably susceptible to [only] one meaning.”
Miller, 502 F.3d at 1250 (quotations omitted). It instructs United of Omaha to
calculate Cardoza’s STD benefits based on his earnings, as defined by the STD
policy, for 2007. It is undisputed Cardoza’s earnings for 2007 were $61,881.47
and that United of Omaha had this earnings information at the time it calculated
his STD benefits. 4 Thus, United of Omaha’s decision to recalculate Cardoza’s
3
(...continued)
capricious, we need not reach this issue. United of Omaha’s LTD calculation
using that figure puts Cardoza’s monthly benefit at less than the maximum
monthly benefit applicable to hourly employees earning less than $40,000 per
year.
4
On appeal, United of Omaha does not argue any portion of Cardoza’s
actual earnings were excludable from the STD calculation based on the definition
(continued...)
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STD benefits based on the earnings figure upon which Durango McKinley paid
premiums in 2007 is contrary to the plain language of the STD policy, and,
therefore, not reasonable and arbitrary and capricious. Cardoza need not return
any portion of the STD payments he received, which were calculated using the
appropriate earnings figure.
United of Omaha argues, just as it did in connection with the LTD benefits
calculation, that its calculation of Cardoza’s STD benefits using the classification
information and $24,273.60 earnings figure it asserts Durango-McKinley reported
and paid premiums on in 2007, was reasonable. It asserts the STD policy allowed
it to “rely on the accuracy and completeness of any information furnished by the
Policyholder or an insured person.” Thus, it argues, even without the “verified by
premium” language, the plain text of the policy requires Cardoza to return the
alleged STD overpayment. Moreover, it asserts, Durango-McKinley should not
be allowed to under-report earnings (and pay lower premiums) when purchasing
STD coverage, only to report higher earnings (and expect payment of higher
benefits) when claims are actually filed.
These arguments do not support United of Omaha’s position it was
reasonable to calculate Cardoza’s STD benefits based on the earnings figure
4
(...continued)
of Weekly Earnings, which expressly excludes “Policyholder contributions to
deferred compensation plans, bonuses, shift differential, or other extra
compensation received from the Policyholder.”
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Durango-McKinley reported and paid premiums on in 2007. The plain language
of United of Omaha’s own STD policy unambiguously instructs United of Omaha
to calculate Cardoza’s STD benefits based on earnings alone. Whether
Durango-McKinley reported or paid premiums on a different earnings figure is
irrelevant. See Allison v. Bank One-Denver, 289 F.3d 1223, 1236 (10th Cir.
2002) (“We have repeatedly rejected efforts to stray from the express terms of a
plan, regardless of whom those express terms may benefit.”).
B. Attorney’s Fees and Costs
The parties agree this court reviews the district court’s fee decision for an
abuse of discretion. Thorpe v. Ret. Plan of the Pillsbury Co., 80 F.3d 439, 445
(10th Cir. 1996). A fee claimant need not be a prevailing party to be eligible for
an award of attorney’s fees and costs under ERISA. Hardt v. Reliance Standard
Life Ins. Co., 130 S. Ct. 2149, 2152 (2010). A court may award fees and costs
under 29 U.S.C. § 1132(g)(1) as long as the fee claimant has achieved “some
degree of success on the merits.” Id.This court has established five factors a court may consider in deciding
whether to exercise its discretion to award attorney’s fees and costs: (1) the
degree of the opposing party’s culpability or bad faith; (2) the opposing party’s
ability to satisfy an award of fees; (3) whether an award of fees would deter
others from acting under similar circumstances; (4) whether the party requesting
fees sought to benefit all participants and beneficiaries of an ERISA plan or to
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resolve a significant legal question regarding ERISA; and (5) the relative merits
of the parties’ positions. Gordon v. U.S. Steel Corp., 724 F.2d 106, 109 (10th
Cir. 1983). No single factor is dispositive and a court need not consider every
factor in every case. McGee v. Equicor-Equitable HCA Corp., 953 F.2d 1192,
1209 n.17 (10th Cir. 1992).
The district court based its decision to grant Cardoza’s motion for
attorney’s fees and costs largely on its conclusions United of Omaha’s LTD
benefits calculation and its STD benefits recalculation were not reasonable and
not made in good faith. This court has concluded, however, that United of
Omaha’s LTD calculation was reasonable and made in good faith. Because this
court’s decision so significantly alters the district court’s ruling, on remand the
court must address anew all issues related to the award of attorney’s fees and
costs. 5
IV. Conclusion
For the foregoing reasons this court reverses the district court’s grant of
summary judgment for Cardoza with respect to United of Omaha’s LTD benefits
calculation based on our conclusion the LTD benefits calculation was reasonable
and made in good faith. This court affirms the district court’s grant of summary
5
We need not, therefore, address United of Omaha’s argument that the fees
the district court granted were unreasonable and unsupported by the evidence or
its argument that it is entitled to fees and costs.
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judgment for Cardoza with respect to United of Omaha’s STD benefits
recalculation and request for reimbursement based on our conclusion the STD
benefits recalculation was not reasonable. Finally, this court remands for
reconsideration of the issue of attorney’s fees and costs.
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