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Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 

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United States Court of Appeals

FOR THE EIGHTH CIRCUIT

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Nos. 04-1051/1759

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Richard Christianson,

Cross-Appellant/ Appellee,

v.

Poly-America, Inc. Medical Benefit

Plan,

 Appellant/Cross-Appellee.

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Appeals from the United States

District Court for the 

District of Minnesota.

 [PUBLISHED]

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Submitted: November 17, 2004

 Filed: June 20, 2005

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Before MURPHY, HANSEN, and MELLOY, Circuit Judges. 

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HANSEN, Circuit Judge.

As an employee of Up North Plastics, a subsidiary of Poly-America, Inc.,

Richard Christianson was a participant in Poly-America's Medical Benefit Plan ("the

Plan"). In January 2001 he was diagnosed and treated for deep venous thrombosis

("DVT"). Poly-America denied Christianson's claim for benefits, and Christianson

Appellate Case: 04-1051 Page: 1 Date Filed: 06/20/2005 Entry ID: 1917568
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The Honorable Richard H. Kyle, United States District Judge for the District

of Minnesota. 

2

Prior to filing briefs, Christianson also filed a motion to dismiss PolyAmerica's appeal for lack of jurisdiction because Poly-America's notice of appeal

was not filed within 30 days of the October 21, 2003, summary judgment order. We

deny that motion. We agree with Poly-America that the district court's October 21,

2003, order cannot be construed as a final judgment for purposes of appeal because

the order granting summary judgment did not quantify the amount of damages that

would be awarded as past-due benefits. This amount was never quantified, and PolyAmerica's request for entry of judgment was denied as moot on December 22, 2003.

In light of this posture, we conclude that Poly-America's appeal was timely filed on

December 30, 2003, for the merits of the judgment as well as the award of attorney's

fees. See Maristuen v. National States Ins. Co., 57 F.3d 673, 678 (8th Cir.1995)("A

judgment awarding damages but not deciding the amount of the damages or finding

liability but not fixing the extent of the liability is not a final decision within the

meaning of § 1291.").

3

"DVT occurs when a blood clot develops in a deep vein, usually in the leg.

It can cause serious complications if the clot breaks off and travels to the lungs or

brain." Witty v. Delta Air Lines, Inc., 366 F.3d 380, 381-82 (5th Cir. 2004). 

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subsequently sued Poly-America pursuant to the Employee Retirement Income

Security Act ("ERISA"), 29 U.S.C. §§1001-1461 (2000). The district court1

 granted

Christianson's motion for summary judgment, and Poly-America appeals. For the

reasons stated below, we affirm the judgment of the district court.2

I. 

The material facts are undisputed. Complaining of leg pain, Christianson

entered a hospital for treatment in January 2001. He was diagnosed with DVT,3

treated, and released six days later after incurring about $50,000 in medical expenses.

In addition to the diagnosis of DVT, the medical records indicated that the risk factors

for DVT included both Christianson's job, which involved prolonged standing, and

the fact that Christianson was a smoker. (Index to App. at 31-37). On June 1, 2001,

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Poly-America denied coverage pursuant to a provision of the Plan that restricted

coverage of tobacco-related conditions. Under a section titled "Summary of expenses

not covered," the Plan provided, "Charges related in any way, shape or form to, or

complicated by, the use of tobacco products or for treatment of an ailment or

condition associated with the use of tobacco [are not covered]." (App. at 42.) While

Christianson's medical records do not specifically state that Christianson's DVT was

caused by smoking, Poly-America argues that the records indicate that the DVT was

"related to" smoking, and therefore the Plan properly denied benefits. On appeal,

Poly-America relies only upon the "related to" language in the restricting provision,

and Poly-America makes no argument that Christianson's condition was "complicated

by" or "associated with" tobacco use. (Appellant's Br. at 4 n.1.)

Christianson appealed the Plan's decision to deny coverage in a letter dated

June 30, 2001. Christianson wrote, 

My doctors have assured me that while occasional tobacco use may be

a risk factor for DVT it is impossible to determine if it had an impact in

this instance. . . . There is no way to determine one way or the other if

smoking was a factor and so I feel it is unconscionable for PolyAmerica, my long term employer, to deny coverage. 

(Index to App. at 39.) After receiving the letter, Poly-America requested an

informal, unwritten medical opinion from Dr. Jerry F. Gurkoff, an osteopath and

orthopedic surgeon. Dr. Gurkoff never evaluated Christianson in person but reviewed

the medical records from the January 2001 hospitalization. In a telephone call, Dr.

Gurkoff told Poly-America that he did not think that Christianson was covered by the

Plan. Relying partly upon that opinion, the Plan again denied coverage.

In response to your letter of June 30, 2001, I have reviewed the Plan's

denial of your recent medical claims. The follow [sic] elements were

considered in my review:

. . . .

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4. Medical records pertaining to the charges in question indicate that

your "deep venous thrombosis" condition was related to tobacco

abuse/dependency.

5. An independent doctor has reviewed these medial records in

conjunction with the 2001 Poly-America Medical Benefits Plan.

In this professional's expert opinion, the subject charges are not

covered by the Plan. 

In light of the above, medical claims regarding your recent

hospitalization have been denied.

(Id. at 40). This letter was dated July, 19, 2001. In August 2001, after the denial, Dr.

Gurkoff submitted a letter to Poly-America formally providing his professional

opinion that Christianson's treatment was not covered by the Plan. (Id. at 49.)

In mid-September 2001 Christianson submitted letters to the Plan from Dr.

Robyn Oliver and Dr. Charles Terzian, two of the physicians who treated him in

January 2001. Both letters clarified that neither physician had concluded that

Christianson's DVT was "related to" or caused by tobacco use. (Id. at 50-51.) The

Plan did not respond to the letters.

Christianson subsequently filed this ERISA lawsuit. The district court held a

 hearing during which the parties discussed the Plan's interpretation of the phrase

"related to." The court posed a question to Poly-America using a hypothetical

diagnosis of lung cancer, and asked how Poly-America would determine when lung

cancer was "related to" tobacco use. Poly-America's counsel, interpreting the relevant

exclusion clause of the policy, said, "I think you do need to show a direct link

between a particular beneficiary's problem and their use of tobacco." (Id. at 80.)

Applying an abuse of discretion standard, the district court granted summary

judgment to Christianson on October 21, 2003. The court made several important

findings. To summarize, the court found (1) that the Plan procedure did not prohibit

Christianson from filing, or prohibit Poly-America from considering, documents

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 Christianson initially filed a cross-appeal challenging the district court's

calculation of attorney's fees, but Christianson later decided not to pursue the crossappeal. (Appellee's Br. at 24 n.8) Accordingly, we dismiss the cross-appeal, No. 04-

1759.

5

Although Poly-America argues that the district court improperly applied a

less-than-deferential standard of review, we disagree. The district court opinion

clearly indicates that it is applying an abuse of discretion standard of review.

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submitted after a certain date; (2) by failing to argue the issue before the district court,

Poly-America waived any argument that the September 2001 letters from

Christianson's doctors could not be considered; (3) Poly-America conceded at a

hearing before the district court that the "related to" language in the policy required

a direct link between the treated condition and tobacco use; and (4) substantial

evidence did not support a finding that Christianson's DVT was related to tobacco

use. (Appellant's App. at 20-25.) The court awarded Christianson past-due benefits,

attorney's fees, prejudgment interest, and costs.4

On appeal, Poly-America argues: (1) the district court improperly defined

"related to" as requiring a causal link; (2) the district court improperly considered the

letters from Christianson's treating physicians, submitted in September 2001; (3) the

district court improperly awarded attorney's fees; and (4) the district court improperly

awarded prejudgment interest. 

II. 

The ultimate question in this case is whether the Plan administrator abused its

discretion in denying Christianson benefits. We review de novo the district court's

grant of summary judgment, using the same standards as the district court. Ortlieb

v. United HealthCare Choice Plans, 387 F.3d 778, 781 (8th Cir. 2004). The district

court properly reviewed the Plan administrator's decision for an abuse of discretion

because the plan at issue grants the Plan administrator discretion in determining

eligibility for benefits and in construing the provisions of the Plan. See id.

5

 For

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(Appellant's App. at 18.) 

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several reasons, we hold that the district court properly granted Christianson's motion

for summary judgment.

Poly-America first argues that the district court impermissibly crafted its own

definition of the "related to" language in the Benefit Plan provision, ignoring other

plausible and reasonable interpretations. The construction of this language is pivotal,

because Poly-America admittedly relied upon it to deny coverage. As we discussed

above, a lawyer for Poly-America, referring to the language in the first clause of the

relevant provision, stated as follows:

When you look at the language of this, it does have the first clause,

charges ["]related in any way, shape or form, or complicated by the use

of tobacco products.["] In that first clause I think you do need to show

a direct link between a particular beneficiary's problem and their use of

tobacco. 

(Index to App. at 80, emphasis added.) Poly-America now maintains that its counsel's

statement cannot be applied to the present case because the court merely was

discussing the hypothetical case of a Plan participant with lung cancer. We reject this

argument. There is no logical reason why the words "related to" would require proof

of a direct link between a medical problem and a Plan participant's use of tobacco

when applied to the medical record of a Plan participant who has lung cancer, but the

same words would not require proof of a direct link when applied to a participant who

has DVT and uses tobacco products. In our estimation, the hypothetical illustrated

Poly-America's interpretation of the phrase "related to" in both situations. We

conclude that the district court correctly determined that Poly-America acknowledged

at the motion hearing that the provision required a direct link. 

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 In any case, it is not at all obvious to us that the Plan prohibited consideration

of the letters. Relying on a provision of the Plan that explains the review process,

section (3)(c), Poly-America insists that the Plan was not obliged to consider these

letters "[b]ecause the Plan administrator's 60-day review process had been completed

two months before the letters of Dr. Oliver and Dr. Terzian were received, and

because the Plan did not allow the Plan administrator to conduct a second review."

(Appellant's Br. at 11.) After reviewing section (3)(c), we believe that the Plan

anticipates the submission of additional materials, even after an initial denial. Dr.

Gurkoff's letter, for example, was submitted to the Plan after the denial.

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Poly-America also argues on appeal that the district court improperly

considered medical records submitted by Doctors Terzian and Oliver in September

2001. Poly-America insists that the Plan did not permit the Plan administrator to

consider the letters submitted by Christianson's doctors because the letters were

submitted too late. The district court, however, held that Poly-America had waived

any objections to the admission of these materials. (Appellant's App. at 15 n.2.)

Poly-America only devotes a footnote of its brief to disputing this particular finding

of the district court:

The district court ignored the untimely nature of Dr. Oliver's and Dr.

Terzian's letters, saying that the Plan had not challenged the timeliness

of these opinions. (A-015 n.2.) The District Court's statement is not

accurate. The Plan argued that Dr. Oliver's and Dr. Terzian's letters were

not entitled to any weight because, among other considerations, the

letters were "post hoc."

(Appellant's Br. at 19 n.4.) Even considering this statement, Poly-America did not

challenge the admissibility of the letters, only the weight to be accorded to them.

Poly-America has not demonstrated that it objected to the admission of these letters.

The district court's determination that Poly-America waived the argument is not in

error.6

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Poly-America next argues that the district court improperly awarded attorney's

fees and prejudgment interest to Christianson. A district court has discretion to award

attorneys' fees under ERISA. Sheehan v. Guardian Life Ins. Co., 372 F.3d 962, 968

(8th Cir. 2004); Lawrence v. Westerhaus, 749 F.2d 494, 494 (8th Cir. 1984). "This

Court will not overturn a District Court's decision regarding attorneys' fees absent an

abuse of discretion." Sheehan, 372 F.3d at 968. "An abuse of discretion occurs when

the district court commits a clear error of judgment in weighing the relevant factors."

Hebert v. SBC Pension Benefit Plan, 354 F.3d 796, 801 (8th Cir. 2004) (internal

citation and marks omitted).

"When considering whether to award such fees, this Court has set forth general

guidelines for district courts to follow, including the five factors set forth in

Westerhaus." Sheehan, 372 F.3d at 968. These factors include: 

(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

could 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 [sic] regarding ERISA itself; and 

(5) the relative merits of the parties' positions. 

Westerhaus, 749 F.2d at 496 (alteration in original); Sheehan, 372 F.3d at 968. 

The district court quoted the Westerhaus factors, and noted that they are not to

be mechanically applied.

Reviewing the relevant considerations, the [district] Court finds that

Christianson is entitled to fees and costs. First, Poly-America committed

a serious breach of its fiduciary duty. Second, there is nothing before the

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Court to indicate that Poly-America would be unable to pay fees and

costs or that they would unduly burden other beneficiaries. Third, the

award in this instance would help deter such breaches in the future.

Fourth, Christianson's action benefits all Plan participants by providing

judicial interpretation of a significant policy exclusion. Finally, the

relative merits of the case clearly favor Christianson. Accordingly,

because all the relevant factors tip in favor of Christianson, he is entitled

to attorneys' fees and costs. 

(Appellant's App. at 26.) The district court ultimately awarded Christianson

$19,354.88 in attorney's fees and costs, after reducing the amount that Christianson

requested by twenty-five percent. Poly-America argues that the district court did not

properly apply the factors because (1) the district court failed to evaluate the degree

of the Plan's bad faith or culpability, and (2) the award is not justified under the other

factors. We hold that the district court did not abuse its discretion by awarding

attorney's fees. The district court clearly considered and discussed all of the relevant

factors. Though Poly-America contends that the district court was required to

determine bad faith, we have recognized that "a district court is not required to

consider all of the factors in every case." Beatty v. N. Cent. Cos., 282 F.3d 602, 605

(8th Cir. 2002).

Finally, Poly-America contests the district court's award of prejudgment

interest. In reference to the award of prejudgment interest, the district court stated,

"Prejudgment interest is appropriate because (1) Poly-America has continued to have

use of the money, (2) the exact amount of liability on the plan was never in doubt, and

(3) an award of prejudgment interest is necessary in order . . . [to] obtain 'appropriate

equitable relief.'" (Appellant's App. at 27 n.10, internal citation and marks omitted.)

According to Poly-America, the award of prejudgment interest constitutes a windfall

to Christianson at the expense of other Plan participants, arguably because

Christianson never spent any of Christianson's money to pay medical costs. 

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We believe that Poly-America's argument misconstrues the purpose of

prejudgment interest. "Prejudgment interest awards are permitted under ERISA

where necessary to afford the plaintiff <other appropriate equitable relief' under

section 1132(a)(3)(B)." Kerr v. Charles F. Vatterott & Co., 184 F.3d 938, 945 (8th

Cir. 1999). While one purpose of the remedy is to compensate the prevailing party

for financial damages incurred, id. at 946, another important purpose is to "promote

settlement and deter attempts to benefit unfairly from the inherent delays of

litigation." Stroh Container Co. v. Delphi Indus., Inc., 783 F.2d 743, 752 (8th Cir.),

cert. denied, 476 U.S. 1141 (1986). "A common thread throughout the prejudgment

interest cases is unjust enrichment–the wrongdoer should not be allowed to use the

withheld benefits or retain interest earned on the funds during the time of the

dispute." Kerr, 184 F.3d at 946. Regardless of whether Christianson spent his own

money, Poly-America does not dispute that Poly-America retained the use of the

funds during the dispute. We conclude that the purpose of prejudgment interest is

served by the award, and thus the district court did not abuse its discretion by

awarding prejudgment interest. 

For the reasons stated, we affirm the judgment of the district court in No. 04-

1051, and we dismiss the cross-appeal, No. 04-1759. 

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