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Stortz v. Cherokee Insurance Co.

United States District Court, W.D. North Carolina, Statesville Division

January 10, 2018

CHRISTOPHER STORTZ, Plaintiff,
v.
CHEROKEE INSURANCE COMPANY; CENTRAL TRANSPORT LLC; AND CENTRAL TRANSPORT LLC WELFARE BENEFIT PLAN, Defendants.

          Attorneys for Plaintiff Bryan L. Tyson N.C. Bar No. 32182 Rachel C. Matesic N.C. Bar No. 50516 Marcellino & Tyson, PLLC

          Attorney for Defendants Lia Lesner N.C. Bar No. 36895 Vance Drawdy Pro hac vice Ogletree, Deakins, Nash, Smoak & Stewart, P.C.

          CONSENT JUDGMENT AND ORDER

          GRAHAM C. MULLEN UNITED STATES DISTRICT JUDGE.

         Plaintiff, Christopher Stortz (“Plaintiff”), has filed a Complaint in the above-captioned action (the “Action”) against Defendants Cherokee Insurance Company (“Cherokee”), Central Transport LLC (“Central Transport”), and Central Transport LLC Welfare Benefit Plan (the “Plan”) (collectively the “Defendants”). Plaintiff and Defendants have agreed to resolve all matters in controversy in this Action and any proceedings related thereto except for (i) the amount of attorneys' fees and costs to which Plaintiff is entitled under Section 502(g)(1), 29 U.S.C. § 1132(g)(1) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and (ii) if Plaintiff seeks an award of prejudgment and post-judgment interest on the amount of the benefit claims from his hospitalization as referenced in paragraph I below, whether Plaintiff is entitled to such an award. Plaintiff and Defendants now consent to entry of a Judgment and Order by this Court in accordance herewith as follows:

         A. This Court has subject matter jurisdiction of this Action pursuant to ERISA, Section 502(e)(1), 29 U.S.C. §1132(e)(1) because Plaintiff is seeking benefits and other relief under an employee welfare benefit plan and under 28 U.S.C. §1331 because the matter arises under the laws of the United States. Venue is appropriate under ERISA, Section 502(e)(2), 29 U.S.C. §1132(e)(2).

         B. The Plan is an employee welfare benefit plan sponsored by Central Transport and governed by ERISA. Cherokee fully insures the group health benefits provided through the Plan. Central Transport is the “administrator” of the Plan, as that term is defined under ERISA §3(16), 29 U.S.C. §1102(16). As Plan Administrator of the Plan, Central Transport is a fiduciary of the Plan as defined in ERISA §3(21), 29 U.S.C. §1002(21).

         C. Cherokee makes benefits determinations under the Plan and is therefore a fiduciary of the Plan, as defined in ERISA §3(21), 29 U.S.C. §1002(21), with respect to that activity.

         D. In 2014, Plaintiff was a participant in the Plan. He submitted benefit claims to Cherokee arising from his hospitalization and treatment in November 2014. Cherokee paid some of the claims, but it also denied some of the benefit claims. Plaintiff appealed the denied claims and Cherokee upheld its decision. Plaintiff exhausted his Plan administrative remedies.

         E. After Plaintiff exhausted his Plan administrative remedies, Defendants did not provide Plaintiff with the opportunity for an external review of his denied claims, as required by ERISA.

         F. In his Complaint, Plaintiff's first claim for relief sought group health benefits under the Plan pursuant to ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B).

         G. Plaintiff's second and third claims for relief alleged that the Plan contained no provision providing for an external review of group health claims by an external review organization (“ERO”) as required by ERISA and applicable regulation(s), that he and other Plan participants were not provided required notices concerning external review rights, and that he and other Plan participants were not provided an opportunity for external review by an ERO, seeking relief for breach of fiduciary duty under ERISA Sections 502(a)(2), 29 U.S.C. § 1132(a)(2), and 502(a)(3), 29 U.S.C. § 1132(a)(3) against Central Transport as the Plan administrator and a fiduciary, and against Cherokee as a fiduciary.

         H. Plaintiff's fourth claim for relief pled a claim for attorneys' fees under ERISA § 502(g), 29 U.S.C. § 1132(g) against all Defendants.

         I. After service of the Summons and Complaint, Cherokee offered an external review of the denied claims by an ERO and Plaintiff agreed. The Court granted the parties' joint motion and stayed the matter pending the ERO review. (Dkt. No. 12.) The ERO concluded that the claims arising from Plaintiff's hospitalization in November 2014 were payable under the Plan. As a result of this determination by the ERO, Cherokee admits that Plaintiff is entitled to benefits under ERISA §502(a)(1)(B), 29 U.S.C. §1132(a)(1)(B) for the benefit claims Plaintiff submitted to Cherokee arising from his hospitalization and treatment in November 2014 (i.e., those claims submitted to the ERO). Cherokee represents to the Court and Plaintiff that it has paid all the outstanding claims from Plaintiff's hospitalization.

         J. As a result of Plaintiff's Action, the Plan documents were amended effective November 1, 2017 to address external review rights in accordance with ERISA and applicable regulation(s) and to ...


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