No. 92-326 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1993 

JIM G. HEAD and TAM1 J. HEAD, husband and 

wife, on their own behalf, and on behalf 

of their minor daughter, MELISSA HEAD, 

Plaintiffs and Respondents, 

CENTRAL RESERVE LIFE OF NORTH AMERICA 

INSURANCE COMPANY, a foreign corporation, 

Defendant and Third-Party Plaintiff 

and Appellant. 

CENTRAL RESERVE LIFE OF NORTH AMERICA 

INSURANCE COMPANY, a foreign corporation, 

Third-Party Plaintiff and Appellant, 

JAMES R. PAULI, 

Third Party Defendant and Respondent. 

APPEAL FROM: District Court of the Eleventh Judicial District, 

In and for the County of Flathead, 

The Honorable Joe L. Hegel, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Daniel W. Hileman; Murray & Kaufman, P.C., 

Kalispell, Montana 

For Respondent: 

Stephen C. Berg; Warden, Christiansen, Johnson & 

Berg, Kalispell, Montana 

George B. Best, Attorney at Law, Kalispell, Montana 

. . ..> 

Submitted on Briefs: October 22, 1992 

Decided: January 12, 1993 
Justice Fred J. Weber delivered the opinion of the Court. 

Defendant Central Reserve Life of North ~rnerica Insurance 

Company, appeals the decision by the Eleventh ~udicial District, 

Flathead County, Montana, awarding plaintiffs Jim G. Head and Tami 

J. Head a judgment in the amount of $172,765.13 plus attorney's 

fees in the amount of $43,191.28 and costs of $4,165.73, for a 

total judgment of $220,122.14. We affirm. 

The issues presented for our review are: 

1. Whether the ~istrict Court erred in allowing the case to 

be tried by a jury. 

2. Whether the District Court erred in directing a verdict in 

favor of third-party defendant Paul i and in denying Central 

Reserve's motion for a directed verdict. 

3. Whether there was sufficient credible evidence to support 

the jury's verdict. 

4. Whether the District Court abused its discretion in 

awarding attorneyts fees and costs to the Heads. 

plaintiffs Jim G. Head and Tami J. Head (Heads) brought this 

action individually and on behalf of their minor daughter, Melissa 

Head, against Central Reserve Life of North America Insurance 

Company (Central Reserve). Central Reserve provided group 

insurance benefits to employees of Viking Logging (Viking) of 

Columbia Falls, Montana. Jim Head was employed by Viking. 

Viking agreed to provide health insurance coverage for its 

employees in 1984. The testimony during the trial conflicted as to 

the date that the employees met with Bruce Reimer (Reimer), the 

2 
president of Viking, and James R. Pauli (~auli), an insurance 

agent, to discuss health insurance benefits and to complete 

enrollment applications for the group insurance plan. Jim Head 

testified that he could not remember filling out the application 

himself, but he did recall answering questions to facilitate the 

application. Pauli and Ron Kunik, a Central Reserve agent, both 

testified that they probably would have asked questions of 

applicants rather than have the employees fill them out themselves. 

Pauli was not an agent for Central Reserve, but had agreed to act 

as a go-between between Central Resewe and Reimer because he had 

handled other insurance matters for Reimer. Pauli was a *IcaptiveBg 

insurance agent for BankersB Life and thus could not sell policies 

for other insurance providers. Bankersg Life did not provide group 

plans for loggers at that time. The record establishes that 

entries on the application form were completed by at least two 

persons. 

Kunik provided information to Pauli about Central Reserve's 

health insurance coverage and Pauli conveyed this information to 

~eimer and the Viking employees. The completed insurance 

applications were dated July 16, 1984, the date that Reimer issued 

a check for the first premium payment for the policy. The record 

contains conflicting evidence about the date the applications were 

completed, which may have been as early as June 22, 1984. Reimer 

testified that he issued the check on the same date as the only 

meeting with Pauli. Four witnesses (Jim Head, another Viking 

employee, Pauli and Kunik) testified that more than one meeting 
took place and that applications were filled out prior to July 16, 

1984. Various testimony was presented as to who in fact filled out 

the applications. It is not clear who completed the questions 

relating to Tami Jo Head and Melissa Head. However, there is 

evidence that neither Jim Head nor Pauli completed all of the 

questions on the application. 

These factual issues subsequently became critical because on 

July 11, 1984, Dr. Pitman of Columbia Falls tentatively diagnosed 

Melissa Head, then 9 months old, as possibly having Von 

Recklinghausenls disease. He referred Melissa to a Whitefish 

pediatrician, Dr. Casazza, for a second opinion. Dr. Casazza 

confirmed Dr. Pitman1s diagnosis on July 12, 1984. Von 

Recklinghausen's disease is more precisely referred to and known as 

neurofibromatosis. 

The testimony at trial established that neurofibromatosis is 

a condition which manifests itself by brown spots known as cafe-aulait spots and is not a disease, but rather a predisposition to the 

formation of tumors on nerve cells, on the coverings of nerve 

cells, on the spinal cord and on the brain. Neurofibromatosis is 

not recognized by any medical testing, it has no symptoms and there 

is no known medical treatment. Medical testimony established that 

while cafe-au-lait spots are not uncommon in young children, more 

than six such spots is considered a sign of neurofibromatosis. 

Neurofibromatosis is diagnosed only by physical examination and 

requires no medical intervention or treatment prior to the 

development of tumors or other complications. Dr. Mary Anne 
Guggenheim, who first saw Melissa in December 1987, analogized the 

condition to that of having high cholesterol which might predispose 

an individual to heart attack or stroke. 

Except for numerous scattered cafe-au-lait spots indicating 

neurofibromatosis, Dr. Casazza found Melissa to be normal. He 

referred Melissa to a Xalispell ophthalmologist, Dr. Steve Weber, 

to determine whether an optic glioma (tumor) had formed on 

Melissa's optic nerve; referred the Heads to Shodair Hospital in 

Helena, Montana, to determine whether future children might also be 

subject to the condition; and referred Melissa to Shriner's 

Hospital in Spokane to determine if the condition was affecting her 

orthopedically. 

Dr. Casazza testified that neurofibromatosis is untreatable 

prior to formation of tumors. After July 12, 1984, Dr. Casazza saw 

Melissa only for well-baby checks. He testified that he was aware 

of Melissa's neurofibromatosis during these examinations, although 

the condition did not change and required no treatment. He advised 

the Heads to be attentive for additional cafe-au-lait spots and to 

maintain contact with Dr. Weber and Shriner's Hospital as suggested 

by them. Dr. Casazza and Dr. Guggenheim each testified that they 

did not treat Melissa for neurofibromatosis but merely followed her 

condition. 

Dr. Weber continued to examine Melissa periodically to 

determine whether she developed amblyopia (lazy eye) or optic nerve 

glioma. Medical testimony established that neurofibromatosis is 

not classified as a disease or illness. All medical experts 
discussed neurofibromatosis in terms of a condition as opposed to 

a disease or illness. A11 testified that they had not rendered 

medical treatment for the condition of neurofibromatosis prior to 

1987. When asked what he had done for Melissa, Dr. Weber described 

himself as a "tense observer, watching for the appearance of an 

optic nerve glioma or other vision-threatening complications~ which 

would make medical treatment necessary. 

Medical testimony also established that children with 

neurofibromatosis are predisposed to optic nerve glioma although 

tumors can occur at any location in the body where there are 

nerves. Many people with neurofibromatosis never develop any 

symptoms more serious than a few lumps and bumps; others with the 

condition develop serious abnormalities, such as the subject of the 

movie "Elephant Man.u In addition to tumors which can cause bone 

cysts and skeletal deformity, there may be problems with blood 

vessels, bone growth and blood flow through the lungs. With the 

optic nerve, there can be vision problems and loss of sight. Drs. 

Weber and Casazza monitored Melissals condition to make sure she 

did not develop these problems, 

Central Reserve established an effective date of August 1, 

1984 for health insurance coverage under Viking's plan, Central 

Reserve handled Melissa's neurofibromatosis as a preexisting 

condition under the plan. Paragraph 24 of the plan, entitled 

@'General exclusions of the planttt provides: 

No benefits will be paid for charges . . . 

21. Due to a preexisting illness. Benefits will be paid 

for charges incurred after the end of a continuous period 
up to twelve (12) months which ends after the effective 

date of coverage and during which no medical care, 

diagnosis, advice or prescribed drugs were received; . . . 

Central Reserve believed that the visits to Drs. Casazza and Weber 

constituted '9nedical care" so as to defeat the running of the 

twelve-month period for preexisting illnesses. Because Central 

Reserve originally denied a 1984 claim for Melissa which mentioned 

neurofibromatosis, the Heads submitted no further claims to Central 

Reserve relating to neurofibrornatosis until late 1987. Central 

Reserve paid claims for a 1987 CAT scan and an MRI, but later 

denied them. 

In 1987, Melissa began falling, experiencing headaches and a 

bulge formed on the left side of her head. She was referred to Dr. 

Guggenheim at Shodair Hospital in Helena. Dr. Guggenheim testified 

that Melissa had a hole in her skull bone which caused accumulation 

of fluid outside the brain pushing forward into the area behind her 

left eye. Dr. Guggenheim testified that although the team of 

medical specialists initially thought Melissa had a tumor, her 

problems were the result of a rare abnormality which was not easily 

diagnosed. Eventually a craniotomy was performed at Children's 

Hospital in Denver, Colorado, in February 1988. From that time 

until July 31, 1991, Melissa has had nine surgeries in Denver and 

one in Detroit, Michigan. 

Melissa's first surgery was a massive craniotomy using rib and 

cranial grafts to try to reconstruct her skull and get it back to 

a normal position as Melissa had no bone behind her left eye. 

Since then, other surgeries have been performed to try to stop an 
erosion of the skull bone and repair holes in Melissa's skull. In 

December 1990, a shunt was placed in her spine to help drain off 

fluid and keep pressure down in her brain, which seems to be 

stopping further bone erosion. In July 1991, the last surgery 

prior to the trial was performed and more bone was grafted to fill 

holes in hopes that this will finally solve the problem. All bills 

for these surgeries were submitted to Central Reserve and all were 

denied on the ground that the preexisting illness provision of the 

plan had not been met. 

Although Central Reserve had previously denied the December 

1984 claim without explanation, it sent a letter to the Heads dated 

March 28, 1988, denying benefits related to neurofibromatosis 

because Melissa was not "treatment free" for at least a period of 

twelve months in accordance with the preexisting illness provision 

of the plan. Drs. Casazza, Guggenheim and Weber all testified that 

no treatment had been rendered for the disease until late 1987 when 

Melissa began to experience symptoms. 

Mary Decker, owner of Medical Claims Services in Missoula, 

testified to an extensive history of processing health claims for 

different health insurance carriers. She testified that she had 

reviewed all claims related to neurofibromatosis presented to her 

by the Heads and, after reviewing the policy, calculated the total 

owing for unpaid medical expenses, if the neurofibromatosis was 

covered under the plan, at $172,765.13. Ms. Decker also testified 

that she is familiar with preexisting condition clauses containing 

terminology similar to that in Central Reserve's plan. She 
determined that there was no twelve-month period during which 

Melissa was "treatment freeM as this phrase is understood in the 

insurance claims industry because Melissa had not gone without 

medical care for twelve consecutive months. She based her opinion 

on Dr. Casazza's referrals to Dr. Weber, Shodair and Shriner's 

Hospital, which would not have occurred but for the 

neurofibromatosis. 

Ms. Decker testified that the industry interpretation of this 

language would not find that Dr. Casazza's well-baby examinations 

constituted the rendering of medical care to Melissa so as to 

defeat the running of the twelve-month period and that the 

insurance industry would find that only the two visits to Dr. Weber 

would defeat the running of the twelve-month period. However, Dr. 

James Pellagalli, on behalf of Central Reserve, testified that even 

the visits to Dr. Casazza constituted medical care to defeat the 

running of the twelve-month period. He further testified that the 

same would be true if Melissa saw another physician for well-baby 

checks and that physician also knew of or made an independent 

diagnosis of neurofibromatosis. 

Viking's group health insurance plan is considered an employee 

welfare benefit and thus, any state claims relating to insurance 

coverage are preempted by the Employee Retirement Income Security 

Act of 1974 (ERISA), 29 U.S.C. 5 1001, et seq. (1988). Over 

Central Reserve's objection, the case was tried to a jury, 

commencing on September 23, 1991. After hearing most of the 

evidence, the District Court granted third-party defendant Pauli's 
motion for a directed verdict. At the close of the evidence, it 

denied Central Reserve's motion for a directed verdict. The jury 

returned a verdict in the Heads' favor against defendant Central 

Reserve. The District Court subsequently granted the Heads8 posttrial motion for attorney's fees. 

I. 

Did the District Court err in allowing the case to be tried by 

a jury? 

Central Reserve would have this Court reverse the jury verdict 

and remand the case for a non-jury trial, which it maintains is in 

accordance with ERISA. ERISA is silent with respect to jury 

trials. Nonetheless, Central Reserve contends that the federal 

circuit courts have consistently held that there is no right to a 

jury trial in actions governed by ERISA. Central Reserve supports 

this argument by citing cases which have alleged a wrongful denial 

of pension benefits. See, e.s., Pane v. RCA Corp., (3rd Cir. 

1989), 868 F.2d 631; Nevi11 v. Shell Oil Co., (9th Cir. 1987), 835 

F.2d 209; In re Vorpahl (8th Cir. 1982), 695 F.2d 318; and Wardle 

v. Central States, Southeast and Southwest Areas Pension Fund (7th 

Cir. 1980), 627 F.2d 820, cert. denied, 449 U.S. 1112, 101 S.Ct. 

922, 66 L.Ed.2d 841 (1981). 

Prior to the 1975 enactment of ERISA, pension cases were 

traditionally decided by trust law, which was considered to be 

equitable in nature. ERISA provides for civil actions to recover 

benefits as follows: 

(a) Persons empowered to bring a civil action 

A civil action may be brought-- 

10 
(1) by a participant or beneficiary-- 

(A) for the relief provided for in 

subsection (c) of this section, or 

(B) to recover benefits due to him under 

the terms of his plan, to enforce his rights 

under the terms of the plan, or to clarify his 

rights to future benefits under the terms of 

the plan; 

29 U.S.C. 5 1132 (a) (1) (1988). 

The United States Supreme Court has not addressed the issue of 

a jury trial under ERISA and not all federal circuits have analyzed 

the jury trial issue in the same manner as Pane, which held broadly 

that a 5 1132(a)(l)(B) cause of action for recovery of benefits is 

equitable in nature. Pane, 868 F.2d at 636. Although the Supreme 

Court has not ruled directly on this issue, it has looked to the 

common law in place at the time ERISA was enacted to determine the 

standard of review applicable for a denial of benefits. See 

Firestone Tire and Rubber Co. v. Bruch (1989), 489 U.S. 101, 109 

S.Ct. 948, 103 L.Ed.2d 80. 

The legislative history of ERISA makes clear that the Act 

should be construed consistent with the Labor-Management Relations 

Act of 1947 (LMRA). Fuller v. INA Life Ins. Co. of N.Y. (Sup. 

1988) 533 N.Y.S.2d 215, 217 (citing Pollock v. Castrovinci (S.D. 

N.Y. 1979), 476 F.Supp. 606, aff'd 622 F.2d 575 (2d Cir. 1980)). 

Under the LMRA, a suit for money damages under a collective 

bargaining agreement regulated by the LMRA is entitled to a jury 

trial. Fuller, 533 N.Y.S.2d at 217 (citing Allen v. United Mine 

Workers of Am. (6th Cir. 1963, 319 F.2d 594). 

The law is less clear for actions where the participant or 

beneficiary of an ERISA plan seeks to recover medical benefits. 

11 
Steeples v. ~ime Ins. Co. (N.D. Okla. 1991), 139 F.R.D. 688, 691. 

ERISA actions to recover these benefits under 5 1132(a)(l)(B) may 

be brought in either state or federal courts. 29 U.S.C. 5 1132(e) 

(1988). There is a growing trend in the federal courts and the few 

state courts that have addressed the issue, to allow a jury trial 

based on the legal nature of the claim. See, e.4., Rhodes v. 

Piggly Wiggly Ala. Distrib. Co. (N.D. Ala. l99O), 741 F. Supp. 

1542; Vicinanzo v. Brunschwig & Fils, Inc. (S.D. N.Y. l99O), 739 F. 

Supp. 882; Gangitano v. NN Investors Life Ins. Co. (W.D. Fla. 

lggo), 733 F. Supp. 342; Walker v. Sperry & Hutchinson Co. (Sup. 

Ct. 1989), 544 N.Y.S.2d 958: and Springer v. Wal-Mart Associates' 

Group Health Plan (N.D. Ala. 1989), 714 F.Supp. 1168, rev'd 

other urounds, 908 F.2d 879 (11th Cir. 1990). 

Although ERISA as a whole generally deals with trust and 

fiduciary issues, the nature of a particular issue determines 

whether a jury trial is appropriate. Stee~les, 139 F.R.D. at 693. 

The historical basis for suits to recover fringe benefits by 

employees is steeped in contract law, which has not generally 

provided for equitable remedies if legal remedies are available. 

In Firestone, 489 U.S. at 112, 109 S.Ct. at 955, 103 L.Ed.2d at 94, 

the United States Supreme Court noted that the absence of 

discretion regarding the approval or denial of the benefits sought 

made that case "like any other contract claim." 

This Court has adopted the reasoning of the Eleventh Circuit 

Court of Appeals from Lincoln v. Board of Regents of Univ. System 

(11th Cir. 1983), 697 F.2d 928, 934, &. denied, 464 U.S. 826, 
104 S.Ct. 97, 78 L.Ed.2d 102, wherein the court stated: 

An action for reinstatement and back pay under Title VII 

is by nature equitable and entails no rights under the 

seventh amendment. An action for damages under Section 

1981, however, is by nature legal and must be tried by a 

jury on demand. 

Breese v. Steel Mountain Enterprises (1986), 220 Mont. 454, 716 

When ERISA is silent, as it is on the matter of jury trials, 

it is appropriate in a case decided on state contract law 

principles to adopt state law if to do so does not conflict with 

the following three queries (known as the Kimball Foods test): (1) 

whether the issue requires a nationally uniform body of law; (2) 

whether application of state law would frustrate the federal 

program's objectives; and (3) whether application of a federal rule 

would disrupt commercial relationships predicated on state law. 

Mardan Corp. v. C.G.C. Music, Ltd. (9th Cir. 1986), 804 F.2d 1454, 

citing United States v. Kimball Foods (1979), 440 U.S. 715, 99 

S.Ct. 1448, 59 L.Ed.2d 711. Applying state law in this instance 

does not conflict with the Kimball factors. Significantly, there 

is no uniform federal rule to apply. 

Several federal courts have held that a plaintiff seeking 

contract or other legal damages under ERISA is guaranteed a jury 

trial under the Seventh Amendment to the United States 

Constitution. The District Court here relied on Transamerica 

Occidental Life Ins. Co. v. DiGregorio (9th Cir. l989), 811 F.2d 

1249, in which the plaintiff's insurer brought a declaratory 

judgment action to interpret a double indemnity clause in its 
contract. The Transamerica court noted that the nature of the 

underlying controversy, legal or equitable, determines whether a 

party may properly obtain a jury trial. Transamerica, 811 F.2d at 

1251-52. 

In Transamerica, the Ninth Circuit upheld the lower court's 

decision that the claim was legal in nature because it was based 

upon a contract. Transamerica, 811 F.2d at 1252. The contract 

involved a life insurance plan, a type of "employee welfare benefit 

plan" treated like health insurance plans under ERISA. The Heads' 

claim is also a contract action. It is not a suit against a plan 

administrator or a fiduciary, but rather is a suit against an 

insurer to recover benefits under a health insurance policy. 

Contract law is traditionally considered to be legal rather 

than equitable and thus entitles a plaintiff to a jury trial if 

requested. The District Court here recognized this fundamental 

distinction and permitted the trial to proceed with a jury. In the 

Heads' complaint, they alleged a breach of contract and other state 

law claims. The other state law claims were subsequently dismissed 

as preempted by ERISA; thus, the case proceeded solely on the 

contract claim. We agree with the District Court's determination 

that contract law applies. We conclude that a jury trial was 

appropriate when plaintiffs sued in state court based on a breach 

of contract claim under ERISA to recover benefits under a group 

health insurance plan when issues of fact are controverted. 

We hold that the District Court did not err when it denied 

Central Reserve's motion to dismiss the Heads' jury demand. 
11. 

Did the District Court err in denying Central Reserve's motion 

for a directed verdict and in granting Pauli's motion for a 

directed verdict? 

After most of the evidence was presented at trial, the 

District Court granted third-party defendant James R. Pauli's 

motion for a directed verdict. The Heads did not object to Pauli's 

motion. The District Court denied Central Reserve's motion for a 

directed verdict after the remaining evidence was presented. 

Central Reserve contends that the issue of Pauli's negligence 

should have gone to the jury because either Pauli or Jim Head was 

responsible for the errors on the insurance application. It has 

maintained the same throughout this proceeding, despite the 

testimony of its own agent, Ron Kunik, who testified as to his own 

responsibilities in the application procedure. Kunik further 

testified that Pauli followed Kunik's instructions. 

The District Court found no evidence of negligence on the part 

of Pauli. A motion for directed verdict is proper only in the 

complete absence of any evidence to warrant submission to the jury. 

Britton v. Farmers Ins. Group (1986), 221 Mont. 67, 88, 721 P.2d 

303, 317. Contrary to Central Reserve's contention, our review of 

the record has disclosed nothing to support Central Reserve's 

claim. We conclude that the District Court correctly found no 

evidence of negligence on the part of Pauli. 

On the other hand, the Heads presented credible evidence 

relating to the issues of Central Reserve's insurance coverage to 
warrant submission to the jury. When the District Court considers 

a motion for directed verdict, all inferences of fact must be 

considered in the light most favorable to the opposing party. 

Britton, 721 P. 2d at 317. The District Court could reasonably have 

determined that factual issues were controverted. The jury was 

charged to determine whether Melissa had ever gone for a period of 

twelve months without "medical care, diagnosis or advice" relating 

to her neurofibromatosis. To resolve that question, the jury had 

to ascertain what the words "medical careH meant under Central. 

Reserve's health insurance plan. We conclude the factual issues 

warranted submission to the jury. 

We hold that the District Court correctly denied Central 

Reserve's motion for a directed verdict. We further hold that the 

District Court did not err by granting Paulifs motion for the same. 

Does sufficient credible evidence support the jury verdict? 

Central Resene contends that there is no evidence that 

Melissa Head ever went for a twelve-month period without Igmedical 

care, diagnosis or adviceM relating to her neurofibromatosis and 

that all the evidence establishes that she was never twelve months 

without medical care. 

Central Reserve's argument is based on its own interpretation 

of the phrase %edical carertq which is not defined in Central 

Reserve's policy. The jury heard a great deal of testimony 

relating to the definition of that policy term. Medical experts 

testified that in the broadest sense, the care they provided to 
Melissa would be considered medical care. However, Drs. Weber and 

Casazza both testified that they were llfollowedll ~elissals 

condition and did not render medical care and that they provided no 

treatment for neurofibromatosis. Both further testified that they 

made observations and did not give advice or diagnose symptoms. 

Dr. Weber testified that Melissa could have gone without some of 

the appointments with him in which he followed her condition, 

specifically those duringthe twelve-month time period during which 

the jury ultimately determined Melissa was without medical care. 

He further testified that he may not have recommended those visits 

if he had foreseen there would be this problem with insurance 

coverage. 

In fact, Central Reserve did not use the term I1medical caren 

in its correspondence to the Heads refusing to cover the medical 

expenses--it merely used the words #'treatment free1* without further 

explanation. If the terms of an insurance policy are ambiguous, 

obscure or open to different constructions, the construction most 

favorable to the insured or other beneficiary must prevail, 

particularly if an ambiguous provision in the policy attempts to 

exclude the liability of an insurer. Atcheson v. Safeco Ins. Co. 

(1974), 165 Mont. 239, 247, 527 P.2d 549, 553. 

Central Reserve's literal interpretation of Ismedical care" in 

this case attempts to exclude its liability and prevent Melissa 

Head from meeting the requirements of the preexisting conditions 

clause in its policy. In Brasher v. Prudential Ins. Co. of Am. 

(W.D. Ark. 1991), 771 F. Supp. 280, 282-83, the court discussed a 
requirement in a disability insurance policy coming within the 

ambit of ERISA which prevented the plaintiff from qualifying as 

"totally disabledw under the policy. The plaintiff conceded that 

a literal application of the policy language would preclude 

recovery in his case but contended that such an interpretation 

required him to be practically catatonic before being entitled to 

benefits. He supported his public policy argument by citing Helms 

v. Monsanto Co. (11th ~ir. 1984), 728 F.2d 1416, 1420, rehlq 

denied, 734 F.2d 1482 (19841, in which the court refused to adopt 

a strict and literal interpretation of the policyas definition of 

latotal disability" that would preclude all but the entirely 

helpless from receiving benefits and in which the court adopted a 

more realistic definition. Brasher, 771 F. Supp. at 282. See 

also, Russell v. Prudential Ins. Co. of Am. (5th Cir. 1971), 437 

F.2d 602; Madden v. ITT Long Term Disability Plan for Salaried 

Employees (9th Cir. 1990), 914 F.2d 1279, 1285, cert. denied, - 

U.S. I 111 S.Ct. 964, 112 L.Ed. 2d 1051 (citing Helms) ; and Torix 

v. Ball Corp. (10th Cir. 1988), 862 F.2d 1428, 1431 (recovery may 

not be denied on the basis of overly restrictive interpretations of 

the plana s language) . 

The Brasher court noted that under the Helms construction, a 

material question existed as to whether or not the plaintiff was 

I1totally disabled. That analysis is similar to the interpretation 

of "medical carew as applied to Melissa Head. 

Our review of a jury verdict is very narrow in scope. We will 

not reverse the jury's findings if they are supported by 
substantial credible evidence. Whiting v. State (1991), 248 Mont. 

207, 213, 810 P.2d 1177, 1181. Substantial evidence is defined as 

that evidence that a reasonable mind might accept as adequate to 

support a conclusion. When conflicting evidence exists, the weight 

and credibility given to it are within the province of the jury. 

Whitinq, 810 P.2d at 1181. Evidence which is inherently weak and 

conflicting may still be considered substantial. Further, when 

determining if substantial evidence exists, this Court views the 

evidence in the light most favorable to the prevailing party. 

Whitinq, 810 P.2d at 1181. 

We conclude that there is substantial evidence in the record 

for the jury to reasonably interpret the policy to find that 

Melissa received no medical care for neurofibromatosis for a 

twelve-month period. 

We hold that there is substantial credible evidence to support 

the jury verdict. 

IV. 

Did the District Court err when it awarded attorney's fees to 

the Heads? 

The District Court granted the Heads' post-trial motion for 

attorney's fees and costs and awarded an amount of 25% of the jury 

verdict plus costs of $4,165.73 for a total of $47,357.01 in fees 

and costs. Central Reserve contends that the Heads did not meet 

the test for awarding fees. They contend, further, that if fees 

and costs are allowed, the amount awarded here is excessive and 

should be limited to a "lodestar1' determination. 
An award of attorney's fees is discretionary in an ERISA 

action by a participant or beneficiary to recover benefits. 29 

U.S.C. 5 1132 (g) (1) (1988) . A determination to award attorney's 

fees in an ERISA action should only be reversed for abuse of 

discretion. Hummell v. S. E. Rykoff & Co. (9th Cir. l98O), 634 

F.2d 446, 452. An abuse of discretion is found only when there is 

a definite conviction that the court made a clear error of judgment 

in its conclusion upon weighing relevant factors. Hummell, 634 

F.2d at 452. This requires the trial court to state its reasons 

for granting or denying fees. Hummell, 634 F.2d at 452-53. In 

Hummell, the Ninth Circuit adopted the following guidelines to 

apply in the exercise of discretion under S 1132(g)(l): 

They should consider these factors among others: (1) the 

degree of the opposing parties' culpability or bad faith; (2) 

the ability of the opposing parties to satisfy an award of 

fees; (3) whether an award of fees against the opposing 

parties would deter others from acting under similar 

circumstances; (4) whether the parties requesting fees sought 

to benefit all participants and beneficiaries of an ERISA plan 

or to resolve a significant legal question regarding ERISA; 

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

Hummell, 634 F.2d at 453. 

The courts have almost universally adopted the above five factors 

for consideration in determining whether to award fees. Garred v. 

Gen. Am. Life Ins. (W.D. Ark. 1991), 774 F. Supp 1190, 1201. 

In Landro v. Glendenning Motorways, Inc. (8th Cir. 1980), 625 

F.2d 1344, 1356, the court stated that It§ 1132(g), like the rest of 

ERISA, is remedial legislation that should be construed liberally 

in favor of those persons it was meant to benefit and protect" and 

that a prevailing participant in a suit under 5 1132 to enforce 
rights under his plan, itshould ordinarily recover an attorney's fee 

unless special circumstances would render such an award unjust." 

The Landro court further stated that mere absence of bad faith on 

the part of the losing defendant is not such a Ifspecial 

circ~mstance.~ Landro, 625 F.2d at 1356. 

The District Court here noted the Landro rationale for 

awarding fees to those persons who are to be protected and 

benefitted by ERISA in its reasoning for awarding fees to the 

Heads, stating : 

. . . [Tlhe Heads appear totally unable to pay attorney fees 

and if attorney fees are paid out of the jury's award, the 

Heads will still have unpaid medical bills in a similar 

amount. Given the Heads inability to pay and the apparent 

ability of the insurance company to pay, an (sic) given the 

fact that the Heads were required to go to court to obtain an 

interpretation of a somewhat ambiguous provision, Heads should 

recover their attorney fees and costs. 

Balancing the factors traditionally used by Montana 

Courts and also used by the Ninth Circuit, the Court is of the 

opinion that the 25% contingency fee is very reasonable. 

Considering the likelihood that no recovery would be had at 

all, the difficulty and high stress nature of the case, the 

inherent delay and the degree of skill and perseverance 

required, as well as the result obtained, the Court finds that 

both the $43,191.28 attorney fees and the $4,165.73 in 

attorney costs would be allowable. (Citations omitted.) 

The District Court cited Stimac v. State (1991), 248 Mont. 

412, 812 P.2d 1246, in which we held that courts should consider 

eight factors when assessing whether to award the full amount of 

the contingent-fee agreement as a reasonable attorneyls fee under 

§ 39-3-214 (1) , MCA. Those factors include: (1) the novelty and 

difficulty of the issues; (2) the time and labor required to 

properly perform the legal service; (3) the character and 

importance of the litigation; (4) the result obtained; (5) the 
experience, skill and reputation of the attorney; (6) the customary 

fee for similar services; (7) the ability of the client to pay for 

the services; and (8) the risk of no recovery. Stimac, 812 P. 2d at 

1249. The District Court's order specifically states that it 

considered relevant factors from both Humell and ~timac in making 

the decision to allow fees. We conclude that the District Court 

considered the proper factors in determining whether to award 

attorney's fees and clearly stated the reasoning behind the 

decision. 

Central Reserve alternatively asserts that even if the 

District Court properly determined that the Heads were entitled to 

attorney's fees, it abused its discretion by awarding the Heads 

attorney's fees in the amount of $43,357.01. This Court recently 

addressed the proper determination of attorney's fees in an ERISA 

action in Audit Services, Inc. v. Frontier-West, Inc., (1992), 252 

Mont. 142, 827 P.2d 1242. In Audit Services, we approved the 

ulodestar/rnultiplierl~ approach, which essentially contains two 

parts: (I) the district court must determine a "lodestarw amount 

by multiplying a reasonable hourly rate for the area by the number 

of hours reasonably expended on the case; and (2) decrease or 

increase the amount based on other factors from Kerr v. 

Screen Extras Guild, Inc. (9th Cir . 1975) , 526 F. 2d 67, cert . 

denied (1976), 425 U.S. 951, 96 S.Ct. 1726, 48 L.Ed.2d 195, Audit 

Services, 827 P.2d at 1251. 

We further stated that the qlresults obtained" factor is 

particularly important and "where a party has obtained excellent 
results, counsel should recover a full compensatory fee." Audit 

Services, 827 P.2d at 1250. We noted that the district court 

"necessarily has discretion in making the equitable judgment of 

whether the fees requested are excessive. " Audit Services, 827 

P.2d at 1252. 

Here, the District Court followed the "lode~tar/multiplier~~ 

approach. We will not overturn its decision absent an abuse of 

discretion. Counsel for the Heads presented testimony subject to 

cross-examination and submitted an affidavit as well, detailing his 

time spent on the case. He presented testimony to establish that 

208.10 hours was a reasonable amount of time for a case such as 

this. He testified that he multiplied hours by $75 prior to 

January 1, 1991 and $80 after that date for himself, by $70 per 

hour for an associate and by $35 per hour for paralegals to arrive 

at the total of $14,744.50. Another attorney in the Kalispell area 

testified that the hourly rate, whether it be $75 or $80 per hour, 

is very reasonable for that particular area and in fact is probably 

on the low end for someone of similar experience in such a case. 

Counsel for the Heads further testified that he agreed to 

represent the Heads for a 25% contingency fee, less than his 

standard contingent rate, while knowing from the beginning that the 

case would generate many hours of work. He testified that he 

accepted the case because he wanted a declaration that Melissa was 

entitled to future medical benefits as well as past benefits and 

because he was aware of the heavy debt owed by the Heads. He also 

testified that he felt that the issues were such that the case 
could as easily have been lost before the jury as won. The issues 

in this case were by no means clearly in favor 05 his clients and 

he bore a substantial risk of no recovery for them, in which case 

he too may have recovered nothing. 

In Audit Services, we affirmed an award of an attorney's fee 

greater than the lodestar amount. Audit Services, 827 P.2d 1252. 

The initial lodestar amount is presumed to be a reasonable 

attorney's fee. However, the court has discretion to increase or 

decrease this amount as circumstances warrant. ~udit Services, 827 

P.2d at 1250. *Although fee awards are left to the discretion of 

the district court, '[i]t remains important . . . for the district 

court to provide a concise but clear explanation of its reasons for 

the fee award1 .I@ Audit Services, 827 P.2d at 1250-51, quoting 

Hensley v. Eckerhart (1983), 461 U.S. 424, 103 S.Ct 1933, 76 

L.Ed.2d 40. 

The initial lodestar amount here for attorney's fees was 

$14,744.50. The District Court increased the award to $43,357.01, 

an amount equal to 25% of the judgment against Central Reserve for 

medical expenses, the agreed upon contingency fee in this case. In 

its decision to increase the lodestar amount here, the District 

Court properly considered the Stimac factors, which are similar to 

those used by the Ninth Circuit in awarding fees. See Moore v. 

Jas. H. Matthews & Co. (9th Cir. 1982), 682 F.2d 830, 838-39. In 

Moore, the Ninth Circuit remanded the case for a redetermination of 

attorney's fees using a lodestar/multiplier approach. Moore, 682 

F.2d at 839-41. We conclude that the District Court has provided 
an adequate rationale to support its decision as to the amount of 

attorney's fees to be awarded to the Heads and that it was not an 

abuse of discretion to award attorney's fees in excess of the 

original lodestar amount. 

We hold that the District Court did not err in its award of 

attorney's fees. Counsel for the Heads has stated that should this 

appeal be affirmed, he will seek additional attorney's fees 

connected with this appeal. We therefore remand this case to the 

District Court for consideration of an additional award of 

attorney's fees to compensate the Heads' counsel for his services 

connected with this appeal. 

Affirmed and remanded for consideration of additional 

attorney's fees. 

We concur: ,H'