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EGERT v. CONNECTICUT GEN. LIFE INS. CO.

June 7, 1991

ABRAHAM EGERT and CHRISTINE KRAFT-EGERT, Plaintiffs,
v.
CONNECTICUT GENERAL LIFE INSURANCE COMPANY, Defendant


Ann Claire Williams, United States District Judge.


The opinion of the court was delivered by: WILLIAMS

ANN CLAIRE WILLIAMS, UNITED STATES DISTRICT JUDGE

 In 1988, plaintiffs Abraham Egert and Christine Kraft-Egert brought an ERISA action against defendant Connecticut General Life Insurance Company, challenging the carrier's decision that plaintiff's in vitro fertilization (IVF) was not covered under the plan. Petitioners Steven Saltzman and Terence Flynn, counsel for the plaintiffs, seek attorneys fees, and costs pursuant to 29 U.S.C. § 1132(g)(1) as a result of a judgment entered in their favor on August 30, 1990. Defendant argues against both the request for fees, and the specific amount of fees requested by plaintiffs' attorneys. For the reasons explained petitioners request for fees is granted. The defendant does not contest the plaintiffs' request for costs of $ 3,553.20. The court has reviewed the petition for costs, and that request is also granted.

 Discussion

 ERISA's section on awarding attorney's fees, § 1132(g)(1), states that "in any action under the subchapter by a participant, beneficiary or fiduciary, the Court in its discretion may allow reasonable fees and costs of action to either party." The courts recognize that while an award of fees under ERISA is not required, it is expected absent special circumstances which would make an award unjust. Smith v. Retirement Fund Trust, 857 F.2d 587, 592 (9th Cir. 1988); See also, Davis v. Chicago Municipal Employees Credit Union, 891 F.2d 182, 184 (7th Cir. 1989).

 The first issue to consider when awarding fees is whether the party seeking fees has prevailed, and it is clear that the plaintiffs did prevail in this action. See Egert v. Connecticut General Life Insurance, 900 F.2d 1032 (7th Cir. 1990). In addition, the Seventh Circuit has approved the use of five factors to consider whether a prevailing plaintiff is entitled to fees in an ERISA benefit determination case. Bittner v. Sadoff & Rudoy Industries, 728 F.2d 820, 828 (7th Cir. 1984) These factors are:

 
(1) The degree of the offending parties' culpability or bad faith; (2) the degree of the ability of the offending party to satisfy personally an award of attorney's fees; (3) whether or not an award of attorney's fees against the opposing parties would deter other persons acting under similar circumstances; (4) the amount of benefit as a whole; and (5) the relative merits of the parties' positions. Id.

 All five factors need not be present for the court to award fees to the prevailing party. Bradley v. Capital Engineering and Mfg. Co., 678 F. Supp. 1330, 1335 (N.D.Ill. 1988).

 The first factor supports the award of fees. The court agrees that Connecticut General has culpability in this case, even though its culpability may not rise to a legal standard of bad faith. Under the Employee Benefit plan, employees and their spouses were entitled to be reimbursed when "services or supplies provided are recommended by a Physician and are essential for the necessary care and treatment of an Injury or a Sickness." The Seventh Circuit found that the Plan required Connecticut General to authorize payments for Kraft-Egert's IVF treatment, and that the denial of coverage for the IVF treatments was arbitrary and capricious in light of the Plan's coverage for other services related to infertility. Id., 900 F.2d at 1037-1038. In light of this ruling, there is no question but that Connecticut General's is culpable for violating the Plan by refusing coverage for the IVF treatments. The defendant's argument that its denial of coverage amounts to a difference of opinion regarding coverage, is not persuasive.

 The second factor also weighs strongly in favor of an award of fees. As the defendant itself recognizes, Connecticut General is a large insurance company. There is no indication that the defendant would be unable to pay reasonable attorney's fees here, while the plaintiffs have testified that they lack sufficient resources to pay their attorney's fees. See Bradley v. Capital Engineering and Mfg. Co., 678 F. Supp. 1330, 1335 (N.D.Ill. 1988), and Christine Kraft-Egert Deposition, Ex. Q.

 The third factor, whether an award of fees would deter others acting under similar circumstances, also supports an award of fees. While Connecticut General's offer to reimburse the plaintiff for two IVF treatments was admirable, this offer does not preclude an award of fees in favor of the petitioners. Fees are justified in this case because the possibility of paying attorney's fees may well deter plan administrators from developing unreasonable interpretations of ERISA plans as a means of wrongfully denying coverage to plan participants. Bradley, 678 F. Supp. at 1335. *fn1"

 The fourth factor is whether plaintiffs sought to benefit ERISA beneficiaries, or sought to resolve a significant legal question under ERISA. The court agrees that this lawsuit benefited ERISA plan participants generally, in that the Egert decision "struck a blow" against inconsistent denials of medical coverage. Second, the decision clearly benefits any other plan participants who were denied coverage for IVF treatments by Connecticut General. Finally, the decision helped to broaden the scope of relief available under ERISA. The petitioners argue, and the defendant does not contest, that this is the first case in which specific performance relief has been granted to a plaintiff in a benefits discrimination case. *fn2"

 The court finds that the fifth factor, the relative merits of the parties positions, does not strongly support an award of fees, since the court believes that the position of both parties had merit. Nonetheless, in light of the fact that four out of the five factors considered support an award of fees in plaintiffs' favor, the motion for attorney's fees will ...


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