-4-
Harris, 57 F.3d at 617 n.5. We will apply the second test because
it is more comprehensive and provides a better framework for the
circumstances of this case. In any event, the Seventh Circuit has
indicated that the two tests involve essentially the same inquiry.
See Quinn v. Blue Cross & Blue Shield Ass'n, 161 F.3d 472, 478 (7th
Cir. 1998).

First, we address the most important factor, the merits of the
parties’ positions. For the most part, plaintiff’s position in
this case regarding his ERISA claim in Count I had little to no
merit. Granted, plaintiff received the monies due to him under his
dental insurance policy only after filing suit. But after he
received that payment, the continued prosecution of his ERISA claim
was unreasonable; as we explained in our earlier opinion, he had
received all the relief to which he was entitled. Defendants were
forced to file a summary judgment motion. As for Count II of the
complaint, we held that plaintiff's claim for breach of employment
contract was wholly without merit. Under crystal-clear Illinois
and Seventh Circuit case law, the employee handbook at issue did
not confer contractual rights and contained clear and forthright
language specifically disclaiming contract formation. Because
there was no justification for plaintiff to maintain this suit
after his benefits were paid, we hold that defendants are entitled

to an award of attorneys’ fees under 29 U.S.C. § 1132(g) (1).


-7-
caused by plaintiff’s counsel, but we must keep in mind that the
primary purpose of § 1132(g)(1) is the protection of plan

beneficiaries, see Loving v. Pirelli Cable Corp., 11 F. Supp. 2d

480, 498 (D. Del. 1998), not make-whole compensation.
CONCLUSION
For the reasons stated above, defendants’ motion for
attorneys’ fees and costs is granted. We award defendants
$2,000.00 in attorneys’ fees and $1,504.08 in costs, for a total of
$3,504.08, to be assessed against plaintiff’s counsel. Payment

shall be made by April 30, 2002.

DATE: amy 31,

ENTER: id ~S* a

Ighn Fh Grady, United States Disz idt Judge


-3-
contract between plaintiff and defendants. Defendants now move for
an award of attorneys’ fees and costs.
DISCUSSION
The defendants’ motion is made pursuant to ERISA’s fee-
shifting provision, 29 U.S.C. § 1132(g) (1). That section provides:
“In any action under this subchapter . . . 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.”
In determining whether fees are appropriate, we may apply one
of two tests recognized. by the Seventh Circuit. The first test,
which the parties here appear to use, requires a determination of
whether the losing party’s position was “substantially justified.”

Harris Trust & Sav. Bank v. Provident Life & Accident Ins. Co., 57

F.3d 608, 616 (7th Cir. 1995). Under this standard, we may decline
to award fees and costs if we find that (1) the losing party’s
position had a reasonable or “solid” basis in law and fact; or (2)
special circumstances make an award unjust. See id. (citing

Bittner v. Sadoff & Rudoy Indus., 728 F.2d 820, 830 (7th Cir

1984)). The second test requires consideration of the following
factors:

(1) the degree of the offending parties’ culpability or
bad faith; (2) the degree of the ability of the offending
parties to satisfy personally an award of attorneys’
fees; (3) whether or not an award of attorneys’ fees
would deter other persons acting under’ similar
circumstances; (4) the amount of benefit conferred on
members of the [benefits] plan as a whole; and (5) the
relative merits of the parties’ positions.


~5-

The next question is how much to award; the remaining factors
of the test are relevant to this issue. The fourth factor, the
amount of benefit conferred on members of the [benefits] plan as a
whole, has little relevance here because plaintiff brought suit
simply on his own behalf to recover unpaid benefits. The first
factor, “bad faith,” is closely related to the merits of the
parties’ positions. While plaintiff’s position during most of
these proceedings was not substantially justified, we do not
believe that plaintiff or plaintiff’s counsel exhibited “bad faith”
in the sense of maliciousness. Plaintiff’s position simply did not
have a solid basis. See Production & Maintenance Employees’ Local

504 _yv. Roadmaster Corp., 954 F.2d 1397, 1405 (7th Cir. 1992)

(distinguishing “subjective bad faith” from a position without a
solid basis).

Plaintiff’s briefs address the second factor of the test, the
offending party’s ability to personally satisfy an award of
attorneys’ fees, by pointing out that Moreno has meager assets and
would not be able to pay the $36,122.50 requested by defendants.
However, Moreno’s financial circumstances are irrelevant because
we consider the offending party here to be his counsel. Counsel
for plaintiff--not plaintiff himself--should have known that the
position he took after February 2001 did not have a reasonable
basis. While we do not have specific financial information

regarding counsel’s ability to satisfy an award of attorneys’ fees,


Minute Orier Born (06/97)

United States District Court, Northern District of Illinois

jame of Assigned Judge 2 Sitting Judge if Oth
sine Magistrate Judge John F. Grady ‘than Assigned Judge
CASE NUMBER 01 C 64 DATE January 31, 2002
CASE Moreno v. St. Francis Hospital
TITLE

Un the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the
nature of the motion being presented.]

MOTION:

DOCKET ENTRY:

ql) Oo Filed motion of [ use listing in “Motion” box above.]

Q) a Brief in support of motion due

(3) QO Answer brief to motion due___._ Reply to answer brief due.

(4) o Ruling/Hearing on eset for at

(5) o Status hearing[held/continued to] [set for/re-set for]on__—sset for at

(6) Qa Pretrial conference[held/continued to] [set for/re-set for] on __—ssetfor at

(7) a Trial|set for/re-set for]on at

(8) a [Bench/Jury wial] [Hearing] held/continued to at

(9) a This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
O FRCP4(m) © General Rule 21 O FRCP41(a)(1) © FRCP41(a)(2).

ao) «off [Other docket entry] Defendants’ motion for attorneys’ fees and costs

(34¥-] is granted. We award defendants $2,000.00 in attorneys’ fees and
$1,504.08 in costs, for a total of $3,504.08, to be assessed against
plaintiff’s counsel. Payment shall be made by April 30, 2002. ENTER
MEMORANDUM OPINION.

(Ll) xX [For further detail see order (on reverse side of/attached to) the original minute order.|

Document
Number

56

No notives required, advised in open court,

No notices required.
, number of notices

FEB 4 Aue

X_ | Notices mailed by judge's staff.

Notified counsel by telephone.

date dockewd

Docketing to mail notices.

Mail AO 450 form.

Copy to

date niailed notive

courtroom
KAM deputy’s
initials

Date/time received in
central Clerk’s Office sailing deputy inivals



-6-
it appears that he is a sole practitioner. See Little v. Cox's
Supermarkets, 71 F.3d 637, 644 (7th Cir. 1995) (affirming district
court’s award of fees against both a party and party’s counsel
where district court considered the fact that counsel was a sole
practitioner). This factor weighs in favor of awarding a fee that
is much less than the one requested by defendants.' Moreover, we
must consider the third factor of the test, whether an award of
attorneys’ fees would deter future similar conduct. The answer to
this question is clearly “yes” in this case, but the more useful

inquiry asks what is the appropriate amount of attorneys’ fees that

would achieve the purpose of deterrence without going overboard.

Cf. Harding Univ. v. Consulting Servs. Group, L.P., 48 F. Supp. 2d
765, 772-73 (N.D. Ill. 1999) (discussing deterrence in the context
of Rule 11; stating that the least severe sanction adequate to
serve the purpose should be imposed).

Accordingly, we exercise our discretion under 29 U.S.C. §
1132(g) (1) and assess against plaintiff's counsel a portion of
defendants’ attorneys’ fees in the amount of $2,000.00, as well as
the entire amount of defendants’ costs, $1,504.08.? We recognize

that this award will not wholly compensate defendants for the harm

V If we were applying the first formulation of the test for determining
the appropriateness of attorneys’ fees, this might be considered a “special
circumstance” making an award of attorneys’ fees for the full amount requested
unjust.

¥ Plaintiff does not take issue with any part of defendants’ bill of

costs, and we find that those costs are reasonable.


01-64.021-JcD

THOMAS MORENO,

st.

CENTER, SSM HEALTH CARE, and
FMH BENEFIT SERVICES, INC.,

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

Plaintiff,
v. No. 01 C 64

FRANCIS HOSPITAL & HEALTH

Defendants.

MEMORANDUM OPINION

Before the court is defendants’ motion for attorneys’

For the reasons stated below, the motion is granted.

BACKGROUND
We described the facts of this case in an earlier opini

Plaintiff, Thomas Moreno, brings this action for
breach of contract and for violation of the Consolidated
Omnibus Reconciliation Act (“COBRA”), 29 U.S.C. § 1161 et
seq., which amended and is part of the Employee
Retirement Income Security Act of 1974 (“ERISA”).
Plaintiff was formerly employed at defendant St. Francis
Hospital & Health Center (“St. Francis”), which is
located in Blue Island, Illinois. St. Francis is an
operating division of defendant SSM Regional Healthcare
(“SSM”). SSM administered plaintiff’s COBRA dental plan.
Defendant FMH Benefit Services, Inc. (“FMH”) is a third-
party administrator that paid benefits covered by
plaintiff’s dental plan.

The following relevant facts are taken from the
parties’ statements of undisputed material facts and from
the complaint. Plaintiff worked for St. Francis as a
“unit support partner” until January 5, 1999. His job
involved cleaning patient rooms and bathrooms, assisting
nurses in transporting patients, stocking medical

January 31, 2002

fees.

on:


~2+

supplies, and answering telephones. After plaintiff was
reprimanded and warned at times in 1998 regarding his job
performance, he was placed on disciplinary probation for
six months. He was then suspended in December 1998, and
his failure to appear for a meeting with his supervisor
on January 5, 1999 was treated as a resignation.

After his employment at St. Francis ended, plaintiff
elected to continue his medical, vision, and dental care
coverage pursuant ‘to COBRA. From February 1999 to
February 2000, plaintiff paid a monthly premium for
single dental insurance coverage. Between June 1999 and
September 1999, plaintiff or his dentist submitted three
dental claims to FMH in the amounts of $59.00, $14.00
and $581.00, for a total of $654.00. Those claims were
denied.

Plaintiff filed the instant action on January 4,
2001. Count I of the complaint is an ERISA claim for
wrongful denial of dental benefits. In Count II,
plaintiff alleges that St. Francis and SSM breached the
employment contract with him by terminating him without
giving him an opportunity to reschedule the meeting with
his supervisor and for failing to follow the progressive
disciplinary steps set forth in St. Francis’s employee
handbook. As to Count I, plaintiff seeks recovery of the
benefits that were denied; a declaration that defendants
violated COBRA; a $100/day statutory penalty, pursuant to
ERISA, from the initial refusal of COBRA coverage;
prejudgment interest; and costs and attorney’s fees. As
to Count TI, plaintiff seeks back pay and future pay,
pain and suffering, and punitive damages.

Soon after plaintiff filed this action, FMH tendered
a check to him for $363.50, which represents the first
two dental claims paid at 100% and the third claim paid
at 50% due to co-insurance. Plaintiff has thus received
all monies due to him under the dental insurance policy,
and he does not dispute this.

Memorandum Opinion at 1-3 (October 17, 2001) (citations and
footnote omitted). Defendants moved for summary judgment, which we
granted. We held that plaintiff’s ERISA claim was moot because he
had received payment of his benefits, the only relief to which he
was entitled. We also held that there was no genuine issue of

material fact as to Count II because there was no employment