Stortz v. Cherokee Insurance Company et al
Filing
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CONSENT JUDGMENT AND ORDER re: 38 Motion for Entry of Judgment. Signed by Senior Judge Graham Mullen on 1/10/2018. (nvc)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
STATESVILLE DIVISION
CHRISTOPHER STORTZ,
Plaintiff,
v.
CHEROKEE INSURANCE COMPANY; CENTRAL
TRANSPORT LLC; AND
CENTRAL TRANSPORT LLC WELFARE
BENEFIT PLAN,
Defendants.
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Civil Action No. 5:16-cv-00200
CONSENT JUDGMENT AND ORDER
Plaintiff, Christopher Stortz (“Plaintiff”), has filed a Complaint in the above-captioned
action (the “Action”) against Defendants Cherokee Insurance Company (“Cherokee”), Central
Transport LLC (“Central Transport”), and Central Transport LLC Welfare Benefit Plan (the
“Plan”) (collectively the “Defendants”). Plaintiff and Defendants have agreed to resolve all
matters in controversy in this Action and any proceedings related thereto except for (i) the
amount of attorneys’ fees and costs to which Plaintiff is entitled under Section 502(g)(1), 29
U.S.C. § 1132(g)(1) of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”), and (ii) if Plaintiff seeks an award of prejudgment and post-judgment interest on the
amount of the benefit claims from his hospitalization as referenced in paragraph I below, whether
Plaintiff is entitled to such an award. Plaintiff and Defendants now consent to entry of a Judgment
and Order by this Court in accordance herewith as follows:
A.
This Court has subject matter jurisdiction of this Action pursuant to ERISA,
Section 502(e)(1), 29 U.S.C. §1132(e)(1) because Plaintiff is seeking benefits and other relief
under an employee welfare benefit plan and under 28 U.S.C. §1331 because the matter arises
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under the laws of the United States. Venue is appropriate under ERISA, Section 502(e)(2), 29
U.S.C. §1132(e)(2).
B.
The Plan is an employee welfare benefit plan sponsored by Central Transport and
governed by ERISA. Cherokee fully insures the group health benefits provided through the Plan.
Central Transport is the “administrator” of the Plan, as that term is defined under ERISA §3(16),
29 U.S.C. §1102(16). As Plan Administrator of the Plan, Central Transport is a fiduciary of the
Plan as defined in ERISA §3(21), 29 U.S.C. §1002(21).
C.
Cherokee makes benefits determinations under the Plan and is therefore a
fiduciary of the Plan, as defined in ERISA §3(21), 29 U.S.C. §1002(21), with respect to that
activity.
D.
In 2014, Plaintiff was a participant in the Plan. He submitted benefit claims to
Cherokee arising from his hospitalization and treatment in November 2014. Cherokee paid some
of the claims, but it also denied some of the benefit claims. Plaintiff appealed the denied claims
and Cherokee upheld its decision. Plaintiff exhausted his Plan administrative remedies.
E.
After Plaintiff exhausted his Plan administrative remedies, Defendants did not
provide Plaintiff with the opportunity for an external review of his denied claims, as required by
ERISA.
F.
In his Complaint, Plaintiff’s first claim for relief sought group health benefits
under the Plan pursuant to ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B).
G.
Plaintiff’s second and third claims for relief alleged that the Plan contained no
provision providing for an external review of group health claims by an external review
organization (“ERO”) as required by ERISA and applicable regulation(s), that he and other Plan
participants were not provided required notices concerning external review rights, and that he
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and other Plan participants were not provided an opportunity for external review by an ERO,
seeking relief for breach of fiduciary duty under ERISA Sections 502(a)(2), 29 U.S.C. §
1132(a)(2), and 502(a)(3), 29 U.S.C. § 1132(a)(3) against Central Transport as the Plan
administrator and a fiduciary, and against Cherokee as a fiduciary.
H.
Plaintiff’s fourth claim for relief pled a claim for attorneys’ fees under ERISA §
502(g), 29 U.S.C. § 1132(g) against all Defendants.
I.
After service of the Summons and Complaint, Cherokee offered an external review
of the denied claims by an ERO and Plaintiff agreed. The Court granted the parties’ joint motion
and stayed the matter pending the ERO review. (Dkt. No. 12.) The ERO concluded that the claims
arising from Plaintiff’s hospitalization in November 2014 were payable under the Plan. As a
result of this determination by the ERO, Cherokee admits that Plaintiff is entitled to benefits
under ERISA §502(a)(1)(B), 29 U.S.C. §1132(a)(1)(B) for the benefit claims Plaintiff submitted
to Cherokee arising from his hospitalization and treatment in November 2014 (i.e., those claims
submitted to the ERO). Cherokee represents to the Court and Plaintiff that it has paid all the
outstanding claims from Plaintiff’s hospitalization.
J.
As a result of Plaintiff’s Action, the Plan documents were amended effective
November 1, 2017 to address external review rights in accordance with ERISA and applicable
regulation(s) and to provide further information regarding the benefit claim process.
K.
Central Transport admits that prior to Plaintiff’s institution of the Action, it did
not amend its Plan documents to reference external review rights of Plan participants and
beneficiaries. Central Transport admits that it should have amended its Plan documents in
March of 2010 to reference external review rights of participants and beneficiaries. Central
Transport admits that in failing to do so, it breached its fiduciary duty under ERISA.
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L.
Cherokee admits that prior to Plaintiff’s institution of the Action, it did not provide
Plan participants and beneficiaries with the opportunity for an external review. Central Transport
and Cherokee admit that Cherokee should have provided Plan participants and beneficiaries in
March 2010 and moving forward, with notice and an opportunity for external review. Central
Transport and Cherokee admit that in failing to do so, they breached their fiduciary duty
under ERISA.
M.
As a result of Plaintiff’s institution of the Action, and Central Transport’s
subsequent amendment of the Plan and Cherokee’s subsequent amendment of its procedures to
comply with required external review requirements, all 1,928 employee participants in the Plan
as of 2017 will now have access to an external review for any denied health care claims under
the Plan. Therefore, Plaintiff’s institution and prosecution of this Action has benefitted all
current participants of the Plan, in that they will be able to readily exercise their right to external
review of any future group health claims that are denied by Cherokee during the internal claim
review process.
N.
This Order represents a complete resolution of all Plaintiff’s claims asserted in
this Action against Defendants with the exception of (i) the amount of reasonable attorneys’ fees
and costs to which Plaintiff is entitled under ERISA § 502(g)(1), and (ii) if Plaintiff seeks an
award of prejudgment and post-judgment interest on the amount of the benefit claims from his
hospitalization as referenced in paragraph I above, whether Plaintiff is entitled to such an award.
This Order is not binding upon any other individual or entity and only resolves claims arising out
of this Action as between Plaintiff and Defendants.
O.
Plaintiff and Defendants consent to the entry of this Order as a full and complete
resolution of all claims and issues that were, or might have been, alleged in this Action. Plaintiff
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and Defendants agree that the only issues remaining for adjudication by the Court are (i) the
amount of attorneys’ fees and costs due Plaintiff, and (ii) if Plaintiff seeks an award of
prejudgment and post-judgment interest on the amount of the benefit claims from his
hospitalization as referenced in paragraph I above, whether Plaintiff would be entitled to such an
award.
Accordingly, it is ORDERED ADJUDGED AND DECREED that:
1.
Within thirty (30) days following the entry of this Consent Judgment and Order
by the Court, Cherokee will seek written verification from the medical providers who treated
Plaintiff in November 2014 that no balance remains due to the providers with respect to the
claims incurred by Plaintiff and covered by the Plan for his treatment and hospitalization in
November 2014 in accordance with Plan terms and applicable PPO discounts. To the extent any
unpaid balance remains due the providers who treated Plaintiff in November 2014, Cherokee will
indemnify and hold Plaintiff harmless from such unpaid balance due in accordance with Plan
terms and applicable PPO discounts.
2.
Within thirty (30) day following the entry of this Consent Judgment and Order by
the Court, Central Transport and Cherokee will distribute the Plan’s summary plan description,
as amended and restated effective November 1, 2017, and the Cherokee Insurance Booklet,
effective November 1, 2017, to participants in and beneficiaries of the group health benefits
provided through the Plan in accordance with applicable U.S. Department of Labor Regulations.
Defendants will inform Plaintiff’s counsel within thirty (30) days following the entry of this
Consent Judgment and Order that they have distributed the Plan’s summary plan description, as
amended and restated effective November 1, 2017, and the Cherokee Insurance Booklet, effective
November 1, 2017, to participants in and beneficiaries of the group health benefits
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provided through the Plan in accordance with applicable Department of Labor Regulations,
including the method of distribution used.
3.
Defendants agree and consent that Plaintiff is entitled to reasonable attorneys’
fees and costs under ERISA, Section 502(g)(1), 29 U.S.C. § 1132(g)(1) and in accordance with
Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242 (2010) and that Plaintiff has met all
factors to be entitled to an award of attorneys’ fees and costs under Quesinberry v. Life Ins. Co.
of North America, 987 F.2d 1017, 1029 (4th Cir.1993) against all Defendants joint and severally.
The Parties disagree only as to (i) the appropriate amount of attorneys’ fees and costs, and (ii) if
Plaintiff seeks an award of prejudgment and post-judgment interest on the amount of the benefit
claims from his hospitalization as referenced in paragraph I above, whether Plaintiff would be
entitled to such an award. Therefore, the only remaining issues for the Court to decide are (i) the
appropriate amount of Plaintiff’s attorneys’ fees and costs to be determined in accordance with
applicable legal standards, and (ii) if Plaintiff seeks an award of prejudgment and post-judgment
interest on the amount of the benefit claims from his hospitalization as referenced in paragraph I
above, whether Plaintiff would be entitled to such an award, to be determined in accordance with
applicable legal standards.
4.
Within 45 days of entry of this Consent Judgment and Order, Plaintiff will file a
petition for fees, interest, and costs. Defendants will submit a response to the petition within 14
days after it is filed. Plaintiff will submit any reply brief within 7 days after Defendants’
response brief. Briefing with respect to Plaintiff’s petition for fees and cost shall be done in
accordance with LCvR 7.1, WDNC.
5.
This Consent Judgment and Order resolves all of Plaintiff’s claims asserted in this
Action against Defendants with the exception of (i) the amount of reasonable attorneys’ fees and
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costs to which Plaintiff is entitled under ERISA § 502(g)(1), and (ii) if Plaintiff seeks an
award of prejudgment and post-judgment interest on the amount of the benefits claims from
his hospitalization as referenced in paragraph I above, whether Plaintiff would be entitled to
such an award under ERISA §502(g)(1). This Order is not binding upon any other
individual or entity and only resolves claims arising out of this Action as between Plaintiff
and Defendants.
6.
This Court retains jurisdiction for purposes of enforcing compliance with
the terms of this Consent Judgment and Order.
7.
Any person signing this Consent Judgment and Order on behalf of a party
expressly acknowledges and represents that he or she has the authority to sign for and
legally bind that party.
8.
This Consent Judgment and Order may be executed in counterparts, each of
which shall be deemed to be an original, but all of which, taken together, shall constitute one
and the same instrument.
The Court directs the entry of this Consent Judgment and Order as a final order, except as
otherwise provided herein.
IT IS SO ORDERED.
Signed: January 10, 2018
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Attorneys for Plaintiff
/s/ Bryan L. Tyson
N.C. Bar No. 32182
s/ Rachel C. Matesic
N.C. Bar No. 50516
MARCELLINO & TYSON, PLLC
2820 Selwyn Ave., Suite 350
Charlotte, NC 28209
Telephone: 704.919.1519
Facsimile: 980.219.7025
E-mail: bryan@yourncattorney.com
rachel@yourncattorney.com
Attorney for Defendants
/s/ Lia Lesner
N.C. Bar No. 36895
/s/ Vance Drawdy
Pro hac vice
OGLETREE, DEAKINS, NASH,
SMOAK & STEWART, P.C.
201 South College Street, Suite 2300
Charlotte, NC 28244
Telephone: 704.342.2588
Facsimile: 704.342.4379
E-mail: lia.lesner@ogletreedeakins.com
vance.drawdy@ogletreedeakins.com
32028339.1
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