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Storz v. Cherokee Insurance Co.

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

April 12, 2018

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

          ORDER

          GRAHAM C. MULLEN, UNITED STATES DISTRICT JUDGE.

         THIS MATTER is before the Court on the Motion for Attorney Fees, Costs, and Interest (Doc. No. 40) filed by Plaintiff Christopher Stortz. Defendants have responded and Plaintiff has submitted a reply. The matter is now ripe for decision. For the reasons set forth below, Plaintiff's Motion is granted in part and denied in part.

         I. BACKGROUND

         Plaintiff Christopher Stortz (“Plaintiff”), was employed by Defendant Central Transport, LLC (“Central Transport”). As an employee, he was a beneficiary under the Central Transport, LLC, Welfare Benefit Plan (the “Plan”). The Plan offers medical benefits, including coverage for emergency medical services. Defendant Cherokee Insurance Company (“Cherokee”) fully insures the group health benefits provided through the Plan. Cherokee has authority to grant or deny benefits 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. Central Transport is the administrator of the Plan and is thus also a fiduciary of the Plan as defined in ERISA § 3(21), 29 U.S.C. § 1002(21).

         In November 2014, Plaintiff required emergency hospitalization and treatment. Plaintiff submitted medical information to Cherokee in support of a claim for benefits. Cherokee began payment of health benefits on Plaintiff's behalf, but on May 18, 2015, Cherokee denied a portion of Plaintiff's claims. Plaintiff requested an appeal of the denial pursuant to the terms of the Plan, and Cherokee again denied the claim.

         At the time of the denial of Plaintiff's internal appeal, the Plan contained no provisions providing for an external appeal by an external review organization (“ERO”), as required by 42 U.S.C. § 300gg-19. Accordingly, Plaintiff exhausted all available administrative remedies and brought suit against Central Transport, the Plan, and Cherokee (collectively, the “Defendants”) in this Court. Plaintiff's Complaint alleged: (1) that Defendants wrongfully denied him benefits under 29 U.S.C. § 1132(a)(1)(B); (2) that Defendants breached their fiduciary duties in numerous ways; (3) that Plaintiff is entitled to injunctive and other equitable relief; and (4) that Plaintiff is entitled to attorney fees and costs.

         After service of the Summons and Complaint, Cherokee offered an external review of the denied claims by an ERO, and the Court granted a stay in the matter pending the ERO review. On March 2, 2017, the ERO concluded that Plaintiff's claims were payable under the Plan. The Court further stayed proceedings to allow the parties time to try to negotiate a final resolution of the matter. Because agreement could not be reached, Defendants filed a responsive pleading on June 19, 2017.

         Cherokee paid 100% of the claims at issue directly to the providers on or about July 21, 2017. The amount that the providers were requesting from Plaintiff was $120, 829.69, but because Cherokee was able to obtain a PPO discount, it paid off Plaintiff's outstanding medical payments for $92, 497.70. The Defendants also amended the Plan, effective November 1, 2017, to address external review rights in accordance with ERISA.

         Discovery continued with respect to the issue of attorney fees, and on November 9, 2017, the parties attempted to resolve the matter through mediation but reached an impasse. On January 8, 2018, the parties jointly moved the Court for entry of a Consent Judgment and Order, which represented a complete resolution of all of Plaintiff's claims except the amount of reasonable attorney fees and costs and whether Plaintiff is entitled to pre-judgment or post-judgment interest on the amount of his benefit claims. The Court entered the Consent Judgment and Order on January 10, 2018.

         Plaintiff now moves for (1) attorney fees in the amount of $73, 305.00; (2) costs in the amount of $400; (3) pre-judgment interest in the amount of $19, 462.38; and (4) post-judgment interest accrued at the federal rate from January 10, 2018, until Defendants pay reasonable attorney fees, cost, and the pre-judgment interest.

         II. DISCUSSION

         A. Attorney's Fees

         Plaintiff's Motion seeks attorney's fees in the amount of $73, 305.00, based on the effort expended in this matter on Plaintiff's behalf by two attorneys and two paralegals at Marcellino & Tyson, PLLC (“the Firm”). Plaintiff submitted a memorandum and affidavits supporting its claim, as well as an itemized time sheet for the time and labor expended in this action and the initial contingency fee agreement reached by Plaintiff and the Firm. Defendants concede that a fee award is appropriate in this matter-and the Court has already determined as much in its Consent Judgment and Order-but Defendants contest the reasonableness of Plaintiff's claimed fee and argue that Plaintiff should be entitled to no more than $34, 460.00. Plaintiff, in reply, amended its request to $84, 980.00, justifying the increase on 31.4 hours spent working on the reply brief.

         “In calculating an award of attorney's fees, a court must first determine a lodestar figure by multiplying the number of reasonable hours expended times a reasonable rate.” Robinson v. Equifax Info. Servs., LLC, 560 F.3d 235, 243 (4th Cir. 2009). A court must be guided by twelve ...


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