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IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF PENNSYLVANIA

DONNA HOAGLAND, : Case No.: 05cv0099

:

Plaintiff :

: Judge Jones

v :

:

AMERIHEALTH ADMINISTRATORS, :

ET AL., :

Defendants :

MEMORANDUM AND ORDER

March 2, 2006

THE BACKGROUND OF THIS ORDER IS AS FOLLOWS:

Pending before the Court is a Motion to Amend the Judgment to Include the

Award of Attorneys’ Fees in its favor pursuant to 29 U.S.C. § 1132(g)(1) (“the

Motion”) (doc. 44) filed by Defendant Ono Transport Services, Inc., Health and

Medical Benefits Plan (“Defendant” or “Plan”) on January 16, 2006. 

For the reasons that follow, Defendant’s Motion will be denied. 

FACTUAL BACKGROUND/PROCEDURAL HISTORY: 

On January 13, 2005, Plaintiff Donna Hoagland (“Plaintiff” or “Hoagland”)

filed a complaint arising under the provisions of the Employee Retirement Income

Security Act (“ERISA”), 29 U.S.C. § 1001 et seq. in the United States District

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Court for the Middle District of Pennsylvania with Erin Group Administrators, Inc.

(“Erin”), AmeriHealth Administrators (“AmeriHealth”), and J.P. Donmoyer, Inc.

(“Donmoyer”) as named Defendants. (See Rec. Doc. 1). 

On March 21, 2005, all named Defendants in the complaint, Erin,

AmeriHealth, and Donmoyer filed a Motion to Dismiss the complaint. (See Rec.

Doc. 8). The Court’s April 4, 2005 Order denied the Motion to Dismiss as moot

as Plaintiff filed an Amended Complaint on March 30, 2005 naming Erin,

AmeriHealth, and Ono Transport Services, Inc. Health and Medical Benefits Plan

as Defendants. Plaintiff therefore dropped Donmoyer as a Defendant and named

Ono Transport Services, Inc. Health and Medical Benefits Plan in its place. (See

Rec. Docs. 13-14). 

Thereafter, on June 28, 2005, we granted in part and denied in part

Defendants’ Motion to Dismiss the Amended Complaint. (Rec. Doc. 21). In that

Order, we granted Defendants’ Motion to the extent that Count I of the Amended

Complaint was dismissed and Defendant Erin was dismissed from this action. We

denied Defendants’ Motion with respect to Defendant AmeriHealth but noted that

either party reserves the right to raise this issue at a subsequent point in the litigation

if it becomes evident that Plaintiff is not pursuing equitable relief under ERISA as

against Defendant AmeriHealth.

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The parties subsequently filed cross-motions for summary judgment on the

claims pending against AmeriHealth and the Plan. On January 6, 2006, we granted

Defendants’ Motion for Summary Judgment and denied Plaintiff’s Motion for

Summary Judgment. (Rec. Doc. 43). We determined that Defendants’ decision to

deny Plaintiff’s claim for benefits pursuant to the Plan’s Pre-Existing Condition

Exclusion was not arbitrary and capricious as she had been advised prior to the

effective date of coverage to have a colonoscopy performed to determine if she

was suffering from an inflammatory bowel disease (“IBD”) such as Crohn’s

disease, which was the eventual diagnosis of her medical condition.

On January 16, 2006, Defendant filed the instant Motion seeking attorneys’

fees from Plaintiff. The Motion has been fully briefed and is ripe for disposition.

DISCUSSION:

 In the Motion brought pursuant to 29 U.S.C. § 1132(g)(1), Defendant argues

that the Third Circuit Court of Appeal’s five factor test to guide district courts in

determining whether to award attorneys’ fees to the prevailing party reveals that

attorneys’ fees should be awarded in the case sub judice. Defendant contends that

Plaintiff and Plaintiff’s counsel acted unreasonably in pursuing this claim based

upon their unsupported allegation that Dr. Wright misdiagnosed Plaintiff’s

condition. “As this Court made clear in its Memorandum of January 6, 2006, there

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was no misdiagnosis of Plaintiff’s condition. Dr. Wright was very concerned with

Plaintiff’s condition, and strongly recommended that she have a colonoscopy

performed to determine if she was suffering from an inflammatory bowel disease.” 

(Def.’s Mot. Attn. Fees at 5). 

In response, Plaintiff asserts that an analysis of the above-referenced factors

indicates that attorneys’ fees should not be awarded in this case. Plaintiff’s

counsel argues that he was making a good faith argument to extend the rationale of

the McLeod v. Hartford Life and Accident Ins., 372 F.3d 618 (3d Cir. 2004), case

to his client’s factual scenario. In addition, Plaintiff’s counsel maintains that he

filed the instant action believing it might cause Defendants to settle the case and that

a waiver of the Pre-Existing Condition Exclusion may have occurred if Defendants

did not timely file an answer raising such a defense.

We initially note that ERISA contains a fee shifting provision which

provides, in pertinent part, that: “In any action under this title . . . by a participant,

beneficiary, or fiduciary, the court in its discretion may allow a reasonable

attorney’s fee and costs of action to either party.” 29 U.S.C. § 1132(g)(1). 

Accordingly, as accurately submitted by Defendant, a defendant who successfully

defends against a claim for benefits has the statutory right to request that the Court

award it the attorneys’ fees incurred in defending against the unsuccessful claim. 

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Both parties direct the Court to the Third Circuit Court of Appeals’ adoption of a

five factor test to be used in guiding a district court’s determination of whether an

award of attorneys’ fees to the prevailing party under 29 U.S.C. § 1132(g)(1) is

warranted. The five factors are as follows:

(1) the offending parties’ culpability or bad faith;

(2) the ability of the offending parties to satisfy an award of attorney’s

fees;

(3) the deterrent effect of an award of attorneys’ fees against the

offending parties;

(4) the benefit conferred on members of the pension plan as a whole; and

(5) the relative merits of the parties’ position.

See Ursic v. Bethlehem Mines, 719 F.2d 670, 673 (3d Cir. 1983). No single

criterion articulated in Ursic is decisive. They should be considered in balance and

relationship to the others. Vintilla v. United States Steel Corp., 642 F. Supp. 295,

296 (W.D. Pa. 1986). In addition, an award of attorneys’ fees under 29 U.S.C. §

1132(g)(1) “can be assessed against either a party or an attorney.” Loving v. Pirelli

Cable Corp., 11 F.Supp.2d 480, 495 (D. Del. 1998), aff’d, 178 F.3d 1279 (3d Cir.

1999); see also Monkelis v. Mobay Chem., 827 F.2d 935, 937 (3d Cir. 1987)

(affirming a district court’s award of attorneys’ fees against plaintiff). We will

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accordingly consider the Ursic factors in this narrative.

The first factor a court must consider is the “offending parties’ culpability or

bad faith.” Loving, 11 F.Supp.2d at 496. We will consider the first factor and the

fifth factor, the relative merits of the parties’ positions, in concert as they address

related issues. We initially note that in Loving, the United States District Court for

the District of Delaware explained that the first factor does not require an “ulterior

motive or sinister purpose” as a “losing party may be culpable [without] having

acted with an ulterior motive.” Id. (quoting McPherson v. Employees’ Pension

Plan of America Re-Insurance Co., Inc., 33 F.3d 253, 256 (3d Cir. 1994)). In

addition, culpability “is commonly understood to mean conduct that is ‘blameable;

censurable; . . . at fault; involving the breach of a legal duty or the commission of a

fault . . . Such conduct normally involves more than simple negligence . . . [On the

other hand, it] implies that the act or the conduct spoken of is reprehensible or

wrong.” Loving, 11 F.Supp.2d at 496; see also McPherson, 33 F.3d at 256-57.

After a careful review of the record in this case and applicable caselaw, we

cannot ascribe bad faith or culpability to Plaintiff or her counsel and we do not find

that the relative merits of the parties’ positions favors an award of attorneys’ fees,

for the reasons that follow. 

First, it is uncontested that neither Plaintiff nor her counsel acted in bad faith

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because Defendant has never asserted a bad faith argument before the Court. The

issue before us in considering the first factor is therefore whether Plaintiff or her

counsel acted in a culpable manner in arguing that Defendants acted in an arbitrary

and capricious way in denying Plaintiff’s claim for benefits. Although Defendant

asserts that it was clearly “wrong” to falsely accuse Dr. Wright of misdiagnosing

Plaintiff’s condition and to base an ERISA claim against Defendants on this false

accusation, we find this to be a distortion of the facts. In submissions to the Court

at the summary judgment stage, Plaintiff focused upon one argument, specifically

that the decision to deny her disability benefits was arbitrary and capricious

because she was not treated for Crohn’s disease during the six month period

before she became member of the Plan. Rather, Plaintiff contended that she was

diagnosed with irritable bowel syndrome (“IBS”), which is completely different

from Crohn’s disease. Plaintiff accordingly maintained that a misdiagnosis by Dr.

Wright occurred which made the Pre-Existing Condition Exclusion inapplicable to

her case. 

In our January 6, 2006 Order disposing of the summary judgment motions

and closing the case, we determined that no misdiagnosis occurred as Dr. Wright

strongly recommended that Plaintiff have a colonoscopy conducted to rule out an

IBD because her symptoms provided an “absolute indication” for such diagnostic

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 Although Plaintiff argues that the first factor should not apply to an attorney, but that the Court

should instead apply the standard for awarding sanctions under 28 U.S.C. § 1927, which would require

a “high showing of actual bad faith,” Plaintiff presents us with no support for such an argument and we

find it to be contrary to the law in the Third Circuit. See, e.g., Loving, 11 F.Supp.2d 480, aff’d, 178

F.3d 1279 (3d Cir. 1999). The Plan explained in its submissions that it is not claiming Plaintiff’s

counsel violated Rule 11 or 28 U.S.C. § 1927. In addition, as previously noted, the Plan has not

argued that Plaintiff’s counsel acted in bad faith or in a vexatious manner. We will accordingly not

apply the standard for awarding sanctions under 28 U.S.C. § 1927. Moreover, while we will not award

attorneys’ fees in this case, Plaintiff’s counsel is admonished to make himself aware of the standard for

awarding fees in ERISA cases. Failure to do so will undoubtedly place Plaintiff’s counsel at risk of

absorbing a fee award in future cases, and in particular where a Court is not as charitable in judging his

motivations. 

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test. Although we concluded such, we cannot find at this juncture that Plaintiff’s

reliance upon McLeod v. Hartford Life and Accident Ins., 372 F.3d 618 (3d Cir.

2004), and Lawson v. Fortis Ins. Co., 301 F.3d 159 (3d Cir. 2002), in support of

her position that a misdiagnosis occurred, making the Pre-Existing Condition

Exclusion inapplicable, rises to the level of culpability, the breach of a legal duty or

the commission of a fault.1 See Loving, 11 F.Supp.2d at 496; see also McPherson,

33 F.3d at 256-57. Although our January 6, 2006 Order indicated that Plaintiff’s

reliance upon the McLeod and Lawson cases was misplaced and we proceeded to

distinguish them factually, as Defendant likewise does in its submissions, reliance

upon such cases in support of her position in no way ascribes culpability to

Plaintiff or her counsel pursuant to the first factor or dictates that the relative merits

of the parties’ positions warrants an award of attorneys’ fees under the fifth factor

considered in guiding our determination of whether to award attorneys’ fees under

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 While we acknowledge that defense counsel sent a March 22, 2005 letter to Plaintiff’s

counsel providing a detailed explanation of the reasons they believed justified Plaintiff’s voluntary

discontinuance of the action, Plaintiff’s subsequent telephone conversation with defense counsel

revealed that Plaintiff decided to proceed with the matter which Plaintiff’s counsel considered to be a

“close question.” 

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29 U.S.C. § 1132(g)(1). We do not find Plaintiff’s action to be ill-conceived or

that continued litigation was highly speculative. Accordingly, our analysis of the

first and fifth Ursic factors reveals that we cannot ascribe bad faith or culpability to

Plaintiff or her counsel in this action and we do not find that the relative merits of

the parties’ positions favors an award of attorneys’ fees.2

We do note that with regard to the third factor, the deterrent effect of an

attorney fees’ award against others acting under similar circumstances, we disagree

with Defendant’s characterization that Plaintiff distorted and mischaracterized the

facts to state a claim in the hope that Defendants would pay something to settle the

claim. We likewise do not find that Plaintiff’s litigation was speculative and

duplicative on thinly based grounds. See Monkelis, 827 F.2d at 937 (“The third

factor, deterrence, supports an award of fees because we believe that the deterrent

effect will be beneficial upon those who contemplate speculative and duplicative

litigation on thinly based grounds.”). 

Regarding the fourth factor, whether or not the party requesting attorneys’

fees seeks to benefit all participants or members of the ERISA plan, Defendant

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asserts, as does the affidavit of James Kretz, Controller for J.P. Donmoyer, Inc., an

affiliate of Ono Transport Services, Inc., that there is a direct benefit to all

employees/Plan Participants when the Plan’s expenses are reduced or avoided and

that the legal expenses incurred by the Plan in this case increased the overall

administrative expenses of the Plan. (Rec. Doc. 45, Ex. G). “This will require that

the employees’ or employer’s contribution to the Plan be increased. If the

employer’s contribution to the Plan is increased, this increases the expenses of the

employer, which either results in the reduction of benefits or leaves less money

available to provide its employee’s with wage increases. Accordingly, one way or

another, the employees bear the consequences of Plaintiff’s misguided lawsuit

against the Plan and third party administrators.” (Def.’s Mot. Attn. Fees at 6-7). 

To be sure, we recognize that an outlay of money by Defendants occurred in this

case to defend the suit, as would occur in any, similar ERISA action and we

recognize that the Plan asserts that it is a relatively small employee welfare benefit

plan; however, we find Defendant’s argument in this regard to be somewhat

hyperbolic and tenuous. 

Accordingly, a careful review of the record, applicable caselaw, and the

Ursic factors, reveals that attorneys’ fees are not warranted pursuant to 29 U.S.C. §

1132(g)(1).

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NOW, THEREFORE, IT IS ORDERED THAT:

1. Defendant’s Motion to Amend the Judgment to Include the Award of

Attorneys’ Fees in its favor pursuant to 29 U.S.C. § 1132(g)(1) (doc.

44) is DENIED.

s/ John E. Jones III

John E. Jones III

United States District Judge

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