Innova Hospital San Antonio LP v. Blue Cros

Case: 15-10053 Document: 00514291076 Page: 1 Date Filed: 01/02/2018
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
January 2, 2018
No. 15-10053
Lyle W. Cayce
Clerk
VICTORY MEDICAL CENTER HOUSTON, LIMITED PARTNERSHIP,
Plaintiff - Appellee
v.
CAREFIRST OF MARYLAND, INCORPORATED, formerly known as Blue
Cross and Blue Shield of Maryland, Incorporated,
Defendant - Appellant
Appeal from the United States District Court
for the Northern District of Texas
USDC No. 3:12-CV-1607
Before WIENER, ELROD, and SOUTHWICK, Circuit Judges.
PER CURIAM:*
Defendant-Appellant CareFirst of Maryland, Inc. (“CareFirst”) sought
attorneys fees from Victory Medical Center Houston, LP (“Plaintiff”) in relation
to the ERISA case, Innova Hospital San Antonio LP v. Blue Cross & Blue
Shield of GA, et al, No. 14-11300. The district court denied the motion. We
affirm.
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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No. 15-10053
In April 2012, a number of health care providers filed suit in Texas state
court against 42 insurance companies (“Defendants”), including CareFirst. The
Plaintiff alleged that it had provided covered medical treatment to patients
insured by the Defendants, but that when the Plaintiff submitted
reimbursement requests, the Defendants either denied the requests or
“unilaterally reduced the amount of payment to an unacceptable and
unsustainable level.” The Plaintiff contended that these denials and
underpayments violated the Employee Retirement Income Security Act
(“ERISA”), the Federal Employees Health Benefits Act (“FEHBA”), and state
law.
After exchanging initial discovery and filing various pretrial motions, the
Defendants filed a motion to dismiss for failure to state a claim. CareFirst
joined that motion and also filed a separate motion to dismiss, asserting that
it had reimbursed the Plaintiff according to the terms of its insurance policies,
copies of which CareFirst attached to its motion. The district court granted
both motions in part and dismissed the Plaintiff’s claims, except for those
claims that Defendants—including CareFirst—failed to “provide information
upon request.” 1
At that stage in the litigation, the Plaintiff had one remaining claim
against CareFirst—that CareFirst had failed to provide information upon
request, as required under ERISA. On September 12, 2014, the Plaintiff agreed
to dismiss this sole remaining claim if CareFirst would withdraw its pending
motion to compel. On September 15, 2014, CareFirst withdrew that motion and
the Plaintiff voluntarily dismissed its remaining claim against CareFirst.
Plaintiff’s claims for negligent misrepresentation against certain insurers who were
1
not governed by ERISA also survived the motions; however, these claims were not brought
against CareFirst.
2
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CareFirst subsequently filed a motion seeking attorneys fees pursuant to 29
U.S.C. § 1132(g)(1). The Plaintiff opposed that motion.
In January 2015, the district court denied CareFirst’s motion for
attorneys fees. 2 The court explained that even if a party is eligible for attorneys
fees under 29 U.S.C. § 1132(g)(1), the court should consider whether a fee
award is appropriate based on the factors that the Fifth Circuit established in
Iron Workers Local No. 272 v. Bowen. 3 Applying the requirements of
§ 1132(g)(1), the district court stated that “based on the arduous procedural
history of this action, the Court cannot ‘fairly call the outcome of the litigation
some success on the merits without conducting a lengthy inquiry’ into whether
[CareFirst’s] success was not based on a ‘purely procedural victory.’” 4 The court
further explained that even if CareFirst were eligible for attorneys fees, such
an award was not warranted in this case. 5 CareFirst timely appealed that
decision.
In a case governed by ERISA, a “district court has the discretion to award
attorney’s fees to either party.” 6 We review a district court’s decision whether
to award attorneys fees in an ERISA case for abuse of discretion. 7
To recover fees under 29 U.S.C. § 1132(g)(1), “a fees claimant must show
‘some degree of success on the merits’ before a court may award attorney’s
2 Innova Hospital San Antonio LP, et al v. Blue Cross and Blue Shield of Georgia, Inc.,
et al, No. 3:12-cv-01607 (N.D. Tex. Jan. 8, 2015) (order denying attorneys fees).
3 Id. (citing Iron Workers Local No. 272 v. Bowen, 624 F.2d 1255, 1266 (5th Cir. 1980)).
4 Id. (quoting Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242, 255 (2010)).
5 Id. (quoting Hardt, 560 U.S. at 255).
6 Salley v. E.I. DuPont de Nemours & Co., 966 F.2d 1011, 1016 (5th Cir. 1992) (citing
29 U.S.C. § 1132(g)(1)).
7 1 Lincoln Fin. Co. v. Metro. Life Ins. Co., 428 F. App’x 394, 395 (5th Cir. 2011); ERISA
§ 502, 29 U.S.C. § 1132(g)(1) (providing that “the court in its discretion may allow a
reasonable attorney’s fee and costs of action to either party”); E.I. DuPont de Nemours & Co.,
966 F.2d at 1017 (denial of ERISA attorneys fees reviewed for abuse of discretion).
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fees.” 8 A claimant satisfies this requirement “if the court can fairly call the
outcome of the litigation some success on the merits without conducting a
‘lengthy inquir[y] into the question whether a particular party’s success was
substantial or occurred on a central issue.’” 9
Once a court determines that a party is eligible for a fee award, it may
then examine the facts of the case to determine if a fee award is appropriate. 10
When determining whether to award attorneys fees under ERISA, the district
court may consider:
(1) the degree of the opposing parties’ culpability or bad faith; (2)
the ability of the opposing parties to satisfy an award of attorneys’
fees; (3) whether an award of attorneys’ fees against the opposing
parties would deter other persons acting under similar
circumstances; (4) whether the parties requesting attorneys’ fees
sought to benefit all participants and beneficiaries of an ERISA
plan or to resolve a significant legal question regarding ERISA
itself; and (5) the relative merits of the parties’ positions. 11
The United States Supreme Court has explained that “[these] factors are
discretionary,” so district courts may make fee determinations without
evaluating these considerations. 12
As noted above, the district court here determined that the “arduous
procedural history” of this case prevented the court from determining that
CareFirst had necessarily achieved success on the merits, as required for
awarding fees under 29 U.S.C. § 1132(g)(1). The district court’s reasoning,
however, did not end with this threshold declaration. Instead, the court went
on to explain that, even if CareFirst were eligible for fees, a fee award was not
8 Hardt, 560 U.S. at 255 (quoting Ruckelshaus v. Sierra Club, 463 U.S. 680, 694
(1983)).
9 Id. (quoting Ruckelshaus, 463 U.S. at 688 n.9).
10 Id. at 255 n.8; 1 Lincoln Fin. Co., 428 F. App’x at 395.
11 Bowen, 624 F.2d at 1266.
12 See LifeCare Mgmt. Servs. LLC v. Ins. Mgmt. Adm’rs Inc., 703 F.3d 835, 847 (5th
Cir. 2013) (citing Hardt, 560 U.S. at 256).
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warranted in this case. The court first explained that there was no evidence
that the Plaintiff acted in bad faith. The court next stated that it had
considered the remaining Bowen factors and determined that they did not
support an award of attorneys fees.
A district court has “broad discretion” under Hardt in awarding
attorneys fees, limited only by the language of § 1132(g)(1). 13 Not only did the
district court analyze the statutory requirements for awarding attorneys fees,
it also considered the optional Bowen factors. We are satisfied that the district
court did not abuse its discretion in declining to award attorneys fees in this
case and therefore affirm that court’s decision.
AFFIRMED.
13 Hardt, 560 U.S. at 254; see also Carlson v. HSBC-N. Am. (US) Ret. Income Plan,
542 F. App’x 2, 8 (2d Cir. 2013), as corrected (Sept. 17, 2013) (“[W]hether [a fee] award is
merited . . . . is committed to the discretion of the district court, and it is for the district court
to consider the question in the first instance and ‘articulate reasons for its decision to grant
or deny fees.’” (quoting Connors v. Connecticut Gen. Life Ins. Co., 272 F.3d 127, 137 (2d Cir.
2001))).
5