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 INSURANCECOMPANY, 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, Judgepresiding.

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, 1993Justice Fred J. Weber delivered the opinion of the Court.
Defendant Central Reserve Life 

### of North ~rnericaInsurance 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 indirecting

### averdict 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 attorneytsfees and costs 

### to the Heads. plaintiffs Jim G. Head and Tami J. Head (Heads) brought this action individually and onbehalf of theirminor 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 2president 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 applicantsrather thanhave the employees fill themout 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 forReimer. Pauliwas a *IcaptiveBg insurance agent for BankersBLife and thus could 

### not sellpolicies forother insuranceproviders. BankersgLifedid 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 ~eimerand the Viking employees. The completed insurance applications were dated July 16, 1984, the date thatReimer issued

a check for the first premium payment for the policy. The record contains conflicting evidence about the date the applicationswere 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 meetingtook place and that applicationswere filled out prior to July 16, 1984. Various testimony was presented as towho 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 Recklinghausenlsdisease. 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'sdisease ismoreprecisely referred toandknown as neurofibromatosis. The testimony at trial established that neurofibromatosis is

a condition which manifests itselfbybrown spotsknown as cafe-aulait spotsand isnot a disease,but ratherapredispositionto the formation of tumors on nerve cells, on the coverings of nerve cells, on the spinal cord and on the brain. Neurofibromatosis is not recognizedby anymedical testing, ithasno symptomsand there is no knownmedical 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 AnneGuggenheim, who first sawMelissa in December 1987, analogized the conditionto that of having high cholesterol which mightpredispose 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,todetermine whether future children might alsobe subject to the condition; and referred Melissa to Shriner's Hospital in Spokanetodetermine if the conditionwas affectingher orthopedically. Dr. Casazza testified that neurofibromatosis is untreatable prior to formationof 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 conditiondid not changeand requiredno treatment. He advised the Heads tobe attentive for additional cafe-au-lait spots and to maintain contact with Dr.Weber and Shriner'sHospital as suggested by them. Dr. Casazza and Dr. Guggenheim each testified that they did not treatMelissa for neurofibromatosis butmerely followed her condition. Dr. Weber continued to examine Melissa periodically to determine whether shedeveloped amblyopia (lazyeye) or optic nerve glioma. Medical testimony established that neurofibromatosis is not classified as 

### a disease or illness. All medical expertsdiscussed 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 neurofibromatosisprior to 1987. When asked what he had done forMelissa, Dr. Weber described himself as a "tense observer, watching for the appearance of an opticnerveglioma or other vision-threateningcomplications~ 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 symptomsmore serious than a few lumps and bumps; others with the condition develop serious abnormalities, suchas the subjectof the movie "ElephantMan.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 canbe 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 @'Generalexclusions of the planttt provides: No benefits will be paid for charges 

# .. . 21. Due to a preexisting illness. Benefits will bepaid forcharges incurredaftertheend of a continuousperiodup 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 andWeber constituted '9nedical care" so as to defeat the running of the twelve-month period for preexisting illnesses. Because Central Reserve originallydenied a 1984 claim for Melissa which mentioned neurofibromatosis,the Heads submitted no further claimstoCentral 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 sideof her head. She was referred 

### to Dr. Guggenheim atShodairHospital inHelena. Dr. Guggenheimtestified thatMelissa had ahole inher skullbone which caused accumulation of fluid outside thebrain pushing forward into theareabehind her left eye. Dr. Guggenheim testified that although the team of medical specialists initially thought Melissa had 

### a tumor, her problems were the resultof a rare abnormalitywhichwas 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 amassive 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 anerosion of the skull bone and repairholes inMelissa'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 andmore bone was grafted to fill holes in hopes that thiswill finally solve theproblem. All bills for these surgerieswere submittedto Central Reserve and all were denied on the ground that thepreexisting 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 twelvemonths 

### in accordance with thepreexisting illnessprovision of theplan. Drs. Casazza,Guggenheim andWeber all testified that

no treatmenthad been rendered for thedisease until late 1987when 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. Shedetermined that there was no twelve-month period during which Melissa was "treatment freeMas this phrase is understood in the insurance claims industry because Melissa had not gone without medical care for twelve consecutivemonths. Shebased 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 findthat only the two visits to Dr. Weber would defeat the running of the twelve-monthperiod. However, Dr. JamesPellagalli,onbehalf of CentralReserve,testified that even the visits to Dr. Casazza constituted medical care to defeat the running of the twelve-monthperiod. He further testified that the

samewould be true if Melissa saw another physician forwell-baby checks and that physician also knew of or made an independent diagnosis of neurofibromatosis. Viking's group health insurance plan isconsidered 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-partydefendant Pauli'smotion 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 theHeads8posttrial motion for attorney's fees. I. Did the DistrictCourt err in allowing the case tobe triedby

a jury? CentralReservewouldhave thisCourt reversethe 

### juryverdict 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 actionsgovernedby ERISA. Central Reserve supports this argument by citing caseswhich 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., (9thCir. 1987), 835 F.2d 209; In re Vorpahl (8thCir. 1982), 695 F.2d 318; and Wardle

v. Central States,Southeast and SouthwestAreas 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 theplan, or to clarifyhis rights to future benefits under the terms of the plan; 29 U.S.C. 5 1132(a)(1) (1988). TheUnited States SupremeCourthasnot addressedthe issue of

a jurytrial underERISAandnot all federal circuits have analyzed the jury trial issue in the same manner as

### Pane,whichheld 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 ERISAwas enacted todetermine 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 shouldbe construed consistentwith the Labor-ManagementRelations 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. (6thCir. 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. 11Steeplesv. ~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;Vicinanzov. 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 (11thCir. 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. InFirestone,489U.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 thebenefits sought made that case "like any other contract claim." This Court has adopted the reasoning of the Eleventh Circuit Court of Appeals from Lincolnv. Board of Regents of Univ. System

(11thCir. 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 reinstatementandbackpay under TitleVII is by nature equitable and entails no rights under the seventh amendment. An action for damages under Section 1981,however, is by nature legal andmust 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 (knownas 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 applicationof a federal rule would disrupt commercial relationships predicated on state law. Mardan Corp. v. C.G.C. Music, Ltd. (9thCir. 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 conflictwith 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 (9thCir. l989), 811 F.2d 1249, in which the plaintiff's insurer brought a declaratory judgment action to interpret a double indemnity clause in itscontract. 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 insuranceplan,a type of "employeewelfarebenefit plan" treated likehealth insurance plans under ERISA. TheHeads' 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 distinctionandpermitted the trial toproceedwith a jury. Inthe Heads' complaint,they alleged abreach of contract and other state lawclaims. The other state lawclaims 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 theDistrictCourt err indenying CentralReserve'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 fora directed verdict. The Headsdid 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 tohis own responsibilities in the application procedure. Kunik further testified that Pauli followed Kunik's instructions. The District Court foundno evidence of negligenceon thepart of Pauli. 

### A motion for directed verdict is proper only in the complete absence of any evidencetowarrant submissionto 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 thejury. 

### 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, 721P.

### 2d at 317. 

### TheDistrictCourt could reasonably have determined that factual issues were controverted. The jury was charged to determinewhetherMelissa had ever gone for a

### period of twelve months without "medicalcare,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'smotion for a directed verdict. We 

### furtherhold that 

### the District Courtdid not err

### by granting Paulifs motion forthe 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-monthperiod without Igmedical care,diagnosis or adviceM relating to her neurofibromatosis and that all the evidence establishes that shewas never twelvemonths without medical care. Central

### Reserve's argument 

### isbased 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 toMelissa would be consideredmedical care. However, Drs. Weber 

### and Casazza both testified that they were llfollowedll ~elissals conditionand did not rendermedical 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, specificallythoseduringthetwelve-monthtimeperiod during which the jury ultimately determined Melissa was without medical care. He furthertestified that he may not have recommended thosevisits if he had foreseen there would be this problem with insurance coverage. In fact, Central Reserve did not use the term I1medicalcaren in its correspondence to the Heads refusing to cover the medical expenses--itmerely used thewords #'treatmentfree1* without further explanation. If the terms of an insurance policy are ambiguous, obscure or open to different constructions, the constructionmost 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 interpretationof Ismedicalcare" 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 arequirement in a disability insurance policy coming within the ambit of ERISA which prevented the plaintiff from qualifying as "totallydisabledwunder 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 supportedhis public policy argument by citing Helms

v. Monsanto Co. (11th ~ir.1984), 728 F.2d 1416, 1420, rehlq denied, 734 F.2d 1482 (19841,

### inwhich the court refused to adopt

a strict and literal interpretationof the policyasdefinition 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 (9thCir. 1990), 914 F.2d 1279, 1285, cert. denied, 

### - U.S. I 111 S.Ct. 964,112 L.Ed. 2d 1051 (citing Helms) ;andTorix

v. Ball Corp. (10thCir. 1988), 862 F.2d 1428, 1431 (recoverymay notbe denied on thebasis of overlyrestrictive interpretationsof 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 similarto the interpretation of "medical carewas applied to Melissa Head. Our 

### reviewof a juryverdict is

### very narrow in scope. Wewill not reverse the jury's findings if they are supported by

### substantial credible evidence. Whitingv. State (1991),248Mont. 207, 213, 810P.2d 1177, 1181. Substantial evidence is defined as that evidence that a reasonablemind might accept as adequate to supportaconclusion. When conflicting evidence exists,theweight and credibility given to it are within the province of the jury. Whitinq, 810 P.2d at 1181. Evidence which is inherentlyweak 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 thatthere is substantial credible evidence to support the jury verdict. IV. 

### Did the DistrictCourt errwhen 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 onlywhen there is

adefinite convictionthat the court made a clearerror 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 theparties requesting fees sought tobenefit allparticipantsandbeneficiariesof an ERISAplan 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. (8thCir. 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 thosepersons it wasmeant tobenefit and protect" and that 

### a prevailing participant in a suit under 

### 5 1132 to enforcerights under his plan, itshould ordinarilyrecoveranattorney'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:



# ..

# . [TlheHeads 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 Headswere required to go to court to obtain an interpretationof a somewhat ambiguousprovision, Heads should recover their attorney fees and costs. Balancing the factors traditionally used by Montana Courtsand alsoused by theNinth 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,

### aswell as the result obtained,theCourt findsthat both the $43,191.28 attorney fees and the $4,165.73 in attorney costswould be allowable. (Citationsomitted.) 

### 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 attorneylsfee 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, skilland reputationof 

### the attorney; (6)

### the customary fee for 

### similar services; (7)the ability of 

### the client to pay for the 

### services;and (8)

### therisk ofno recovery. Stimac, 812 P.2d 

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

### relevant factors 

### from both Humell and ~timac 

### inmaking 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 Courtproperly 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 

### inAudit 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 

### "lodestarwamount by

### multiplying a 

### reasonablehourly rate for the area by 

### the number of 

### hours reasonably expended on the case; 

### and (2) 

### decrease or 

### increase the amountbased on other factors fromKerr

### v. Screen Extras 

### Guild, Inc. (9th Cir

# . 1975)

### , 526 F.2d 67, cert

# . denied (1976), 425U.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-examinationand submitted an affidavitaswell,detailinghis 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 $35per hour for paralegals to arrive at thetotal of $14,744.50. Another attorney in theKalispell area testified that the hourly rate,whether it be $75 or $80

### per hour, is very reasonablefor thatparticular area and in fact isprobably

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 standardcontingent rate,while knowing fromthebeginning that the

case would generate many hours of work. He testified that he accepted the casebecause he wanted a declaration thatMelissa was entitled to future medical benefits as well as past benefits and because he was aware of theheavy debt owedby theHeads. He also testified that he felt that the issues were such that the case

### could as easily have been lostbefore the jury as won. The issues in 

### this casewere by no means clearly in favor 05 his clients and 

### he bore a substantial risk of 

### no recovery for them, inwhich case he too may have recovered nothing. InAudit 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 thisamountascircumstanceswarrant. ~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 courttoprovide a concisebut 

### 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 agreedupon contingency fee inthis 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. 

### (9thCir. 1982), 682 

### F.2d 830, 838-39. In Moore, the

### Ninth Circuit remanded the case foraredeterminationof 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 forthe Heads has statedthat shouldthis appeal be affirmed, he will seek additional attorney's fees connectedwith 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'