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Guest-Marcotte v. Life Insurance Company of North America

United States District Court, E.D. Michigan, Northern Division

July 26, 2019


          Patricia T. Morris, Magistrate Judge



         This matter is on remand from the United States Court of Appeals for the Sixth Circuit, for the second time. On March 15, 2016, this Court adopted Magistrate Judge Morris's report and recommendation finding that Defendant's Plan Administrator did not abuse its discretion in rejecting Plaintiff's application for short-term disability benefits. Plaintiff was diagnosed in July of 2013 with Ehlers-Danlos Syndrome, a potentially serious disease with a range of symptoms. The Plan Administrator's decision turned on the absence of Plaintiff's submission of clinical evidence assessing her functional capacity to engage in gainful employment, taking into consideration her medical condition. There has been no reasonable dispute that the Plan Administrator thoroughly and thoughtfully reviewed all of Plaintiff's medical evidence (as supplemented by Plaintiff on numerous occasions) and communicated to Plaintiff and her treaters what it needed to assess her residual functional capacity notwithstanding the fact that it was “in no way stating [that Plaintiff's] symptoms do not exist.” ECF No. 49-1 at 60. Indeed, Dr. Bradley Tinkle, an Ehlers-Danlos Syndrome physician specialist, when contacted by the Plan Administrator simply responded that he “did not do any functional testing as I am not certified in this area” but he did emphasize that “it has been my experience that these patients can vary tremendously on such evaluations depending on the time of day, events preceding day, pain levels, quantity and quality of sleep the night before.”

         The Court of Appeals disagreed. The Court found that the Plan Administrator's decision turned, in fact, on its disbelief of Plaintiff's self-report of her symptoms (“that is the essence of a credibility determination.”), ECF No. 81 at 17, and not on Plaintiff's failure to submit any clinical information addressing her residual functional capacity. The Court of Appeals concluded that the Plan Administrator acted arbitrarily in failing to exercise a plan provision permitting it to require a physical examination of disability applicants. Indeed, failing to exercise the right rendered the Plan Administrator's decision both arbitrary and capricious. The Court of Appeals did not, however, award benefits but remanded the case to this Court to remand for a further assessment by the Plan Administrator. The Plan Administrator thereafter awarded the short-term disability benefit.

         Subsequently, Plaintiff's counsel sought to recover attorney fees which this Court did not find merited for reasons outlined in its July 17, 2018 opinion. ECF No. 88. Again, the Court of Appeals disagreed because this case “[i]s not a case in which we determined on balance that the plan's decision was marginally arbitrary or capricious.” ECF No. 94 at 6. The Court of Appeals explained that its “previous decision did not depend entirely on the lack of a physical examination” but that its failure to do so was a “part of a string of actions that essentially prevented Guest-Marcotte from proving her disability.” Id. at 7. Focusing on the Plan Administrator's interpretation of the language of the plan, the Court of Appeals concluded that “LINA repeatedly made a clear legal error in determining not to get a physical exam in the face of otherwise compelling evidence of disability.” Id. at 8. The decision denying an award of attorney fees was also reversed.

         On April 25, 2019, this Court directed the parties to file supplemental briefing to address Plaintiff's recovery of fees. She initially contended the plan is responsible for $337, 924.35 but has since reduced that to $227, 210.64. Plaintiff filed her supplemental brief On May 10, 2019, seeking the following relief: 1) prejudgment interest of $88, 570.97, which represents 10% interest on the total amount of benefits she was awarded by the plan administrator ($214, 925.49) compounded for the period from June 10, 2013-August 3, 2018; 2) an additional “unjust enrichment” claim for $110, 713.71 which, according to Plaintiff, equates to 8% interest on the same benefit award compounded over the same period of time, and represents the amount by which LINA was unjustly enriched by retaining benefits properly owed to Plaintiff[1]; 3) attorney fees in an amount of $135, 933.00, which represents 507 hours of work at rates ranging from $110-$310 per hour, and 4) $2, 706.67 in costs. Defendants responded on May 24, 2019 (ECF No. 98) and Plaintiff replied on June 10, 2019 (ECF No. 100).



         Plaintiff's request for prejudgment interest is without merit. Plaintiff cites Drennan for the proposition that a discretionary award of prejudgment interest is appropriate in light of “LINA's arbitrary and capricious conduct.” ECF No. 97, PageID.3262. In Drennan, the Sixth Circuit addressed the propriety of awarding prejudgment interest on a damage award in an ERISA claim for breach of fiduciary duty. Drennan v. Gen. Motors Corp., 977 F.2d 246, 253 (6th Cir. 1992). The district court had denied prejudgment interest, finding it unwarranted based on the conduct of the defendants. Id. The court of appeals reversed, explaining that a discretionary award of prejudgment interest is compensatory, not punitive, and that the district court improperly denied the interest claim based solely on the lack of defendant's culpability. Id.

         A review of the Drennan opinion reveals several bases for rejecting Plaintiff's assertion that LINA's “arbitrary and capricious conduct” warrants an interest award under Drennan. First, Plaintiff in this case asserted a claim for wrongful denial of short-term disability benefits, whereas the plaintiff in Drennan asserted a claim for breach of fiduciary duty. Second, Drennan explained that the defendant's conduct is irrelevant because prejudgment interest is compensatory, not punitive. Plaintiff identifies no authority for the proposition that a discretionary interest award is permitted in a claim for wrongful denial of benefits, nor does she identify authority for the proposition that LINA's arbitrary and capricious conduct is a factor the Court can or should consider.

         More importantly, Plaintiff is not entitled to pre-judgment interest because she (unlike the plaintiff in Drennan) has not obtained a money judgment. The Court of Appeals did not hold that Plaintiff was entitled to benefits under the short-term disability plan.[2] Indeed, the Sixth Circuit noted as follows:

As for the proper remedy, Guest-Marcotte contends that this court should simply award her benefits. However, because she is not clearly entitled to STD benefits under the Plan, the proper remedy is a remand. “‘Where the problem is with the integrity of the plan's decision-making process, rather than that a claimant was denied benefits to which he was clearly entitled,' remand to the plan administrator is the appropriate remedy.” Helfman, 573 F.3d at 396 (quoting Cooper, 486 F.3d at 171 (alteration adopted)). Even though LINA's decision-making process was flawed for the reasons identified above, the record does not show that Guest-Marcotte clearly qualifies as disabled within the meaning of the Plan. The correct remedy, therefore, is a remand to permit LINA another chance to conduct a deliberate and principled review of Guest Marcotte's claim.

Op. at 19, ECF No. 81. Rather than awarding benefits outright, the Court of Appeals held that a procedural defect in LINA's decision making process (the failure to exercise its right to have her examined by one of its doctors) required a remand for LINA to readdress the issue. The new benefits decision could have potentially resulted in another denial. Thus, Plaintiff's claim for pre-judgment interest is anomalous under circumstances where she did not obtain a money judgment from the Court, but a remand order requiring a de novo determination for a short-term disability benefit. Plaintiff did not elect to address this issue in her reply.

         Even if Plaintiff was entitled to any pre-judgment interest on the $22, 844 LINA awarded her in short-term disability benefits, Plaintiff also seeks prejudgment interest on $214, 925 in total benefits (that is her short-term disability and her long-term disability benefit). However, only her claim for short term benefits was ever addressed. The plan administrator also apparently awarded her approximately $192, 000 in additional benefits under its long-term disability plan. The claim for long term disability was an independent claim which was never litigated, yet accounts for nearly 90% ...

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