Court Opinion

ID: 3025523
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:33:52.6706+00
Date Added: 2024-06-11T11:47:46.738915
License: Public Domain

United States Court of Appeals
                          FOR THE EIGHTH CIRCUIT
            ___________

            No. 98-3635
            ___________

James Gugin,                           *
                                       *
                  Appellee,            *
                                       *
      v.                               *
                                       *
J. C. Penney Company, Inc. Voluntary   *
Employees Beneficiary Association      *
Medical Benefit Plan,                  *
                                       *
                  Appellant.           *

            __________

            No. 98-3989
            __________
                                           Appeals from the United States
James Gugin,                           *   District Court for the Western
                                       *   District of Arkansas.
                  Appellee,            *
                                       *       [UNPUBLISHED]
      v.                               *
                                       *
J. C. Penney Company, Inc. Voluntary   *
Employees Beneficiary Association      *
Medical Benefit Plan,                  *
                                       *
                  Appellant.           *
            __________

            No. 98-4011
            __________

James Gugin,                          *
                                      *
                   Appellant,         *
                                      *
       v.                             *
                                      *
J. C. Penney Company, Inc. Voluntary *
Employees Beneficiary Association     *
Medical Benefit Plan,                 *
                                      *
                   Appellee.          *
                                 ___________

                             Submitted: November 15, 2000

                                 Filed: November 22, 2000
                                  ___________

Before BOWMAN, FAGG, and BEAM, Circuit Judges.
                           ___________

PER CURIAM.

       J. C. Penney Company, Inc. Voluntary Employees Beneficiary Association
Medical Benefit Plan ("the Plan"), set up under the Employment Retirement Security
Act of 1974 (ERISA), denied medical benefits to Plan participant James Gugin for a
portion of the time he was hospitalized for post-stroke psychiatric and related
problems, and for his later treatment at Timber Ridge Ranch (Timber Ridge), based on
the finding of its reviewing physicians that the care was medically unnecessary. The
Plan also denied as untimely one of Gugin's administrative appeals. After Gugin

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brought suit under 29U.S.C. § 1132(a)(1)(B) for wrongful denial of benefits, the district
court decided (1) the administrative appeal should be deemed timely; (2) Gugin was
entitled to recover benefits for his hospitalization; (3) although Gugin was not entitled
to recover the costs of Timber Ridge, he should recover the cost of certain alternative
care for the period of time he spent there; and (4) he was entitled to attorney fees of
$8,400. The Plan appeals the district court's award of benefits and attorney fees.
Gugin cross-appeals the district court's conclusion he was not entitled to coverage for
his Timber Ridge stay. We affirm the award of medical benefits, but remand to the
district court for reconsideration of the attorney fees award.

       Because the Plan gave the administrator--Aetna, or the J. C. Penney Board of
Governors (Board), in an appeal--the exclusive right and discretion to interpret, to rule
on Plan language, and to determine coverage, the district court properly reviewed the
decisions at issue for abuse of discretion. See Birdsell v. United Parcel Serv. of Am.,
Inc., 94 F.3d 1130, 1133 (8th Cir. 1996). We review the district court's determination
de novo. See id. Like the district court, we determine whether the Plan's decisions
were supported by substantial evidence, considering only the evidence that was before
the administrator. See Farley v. Arkansas Blue Cross and Blue Shield, 147 F.3d 774,
777 (8th Cir. 1998). We must affirm if "'a reasonable person could have reached a
similar decision, given the evidence before him, not that a reasonable person would
have reached that decision.'" See Sahulka v. Lucent Tech., Inc., 206 F.3d 763, 769 (8th
Cir. 2000) (citation and emphasis omitted).

       The Plan argues the district court did not apply this deferential standard of
review in considering as timely the administrative appeal the Plan administrator had
rejected as untimely. Our review of the court's thorough order, however, convinces us
the court properly reviewed for an abuse of discretion, and we agree with the court it
was unreasonable for the Plan administrator not to extend the appeal deadline in the
circumstances of this case. We also agree with the district court that the Plan's denial
of hospitalization costs was unreasonable but the Timber Ridge denial was reasonable.

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       The Plan contends the district court was precluded from awarding Gugin the
charges he would have incurred for care in a less medically intense setting for the
period of time he was hospitalized at Timber Ridge once it upheld the Plan's refusal to
provide coverage for Timber Ridge. The Plan also argues the district court wrongly
considered material submitted by the parties, at the court's request, in determining the
proper award. We disagree. The Plan had suggested partial hospitalization or skilled
nursing care in lieu of treatment at Timber Ridge. Further, the Plan presented no
evidence showing Gugin would not have required the suggested alternative care for at
least as long as he incurred charges at Timber Ridge, and the district court sought
additional evidence only to determine the cost of the alternative benefits the Plan had
suggested it would provide--not to determine the reasonableness of the denial of the
requested coverage. Cf. Mansker v. TMG Life Ins. Co., 54 F.3d 1322, 1328 (8th Cir.
1995) (declining to adopt insurer's view that, when plan administrator has discretionary
authority to decide issues concerning payment of benefits but fails to do so because
coverage is being denied, courts may not independently decide issues after determining
benefits were improperly denied). Likewise, we disagree with Gugin that remand to
Aetna to determine the cost of alternative benefits was required.

       Finally, the Plan argues the court failed to apply the relevant factors in awarding
attorney fees, and the amount was unreasonable given Gugin's limited success. We
review the award of attorney fees in an ERISA case for abuse of discretion. See
Dodson v. Woodmen of the World Life Ins. Co., 109 F.3d 436, 440 (8th Cir. 1997).
In deciding whether to award attorney fees, the district court should consider the
opposing party's culpability or bad faith, its ability to pay, the deterrent effect an award
would have on others, whether the requesting party sought to benefit all participants or
to resolve a significant ERISA legal question, and the relative merits of the parties'
positions. See id. Although the amount of the recovery is relevant, see Griffin v. Jim
Jamison, Inc., 188 F.3d 996, 997 (8th Cir. 1999), the district court mentioned only that
factor, see id. at 997-98 (it is unnecessary for the district court to examine explicitly
and exhaustively all factors relevant to fee award, but where court mentioned only

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amount of recovery, other factors deserved explicit consideration). We thus find the
district court abused its discretion in awarding attorney fees without consideration of
the additional factors.

      Accordingly, we affirm the district court's award of medical benefits, we vacate
the award of attorney fees, and we remand for further proceedings consistent with this
opinion.

      A true copy.

             Attest:

                     CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.

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