Rebecca Hamsher v. North Cypress Medical Center
OPINION on Damages. (Signed by Judge Lynn N Hughes) Parties notified. (ghassan, 4)
SOUTHERN DISTRICT OF TEXAS
UNITED STATES DISTRICT COURT
United States District Court
Southern District of Texas
North Cypress Medical Center
Operating Company, Ltd.,
Employee Medical Benefit Plan,
February 10, 2017
David J. Bradley, Clerk
Opinion on 0 am ages
A medical benefit plan denied a beneficiary's claims because it concluded
that she had not met the requirements to have her hospital treatments
reimbursed. The plan did not prove that she was treated at a hospital as defined
in the plan. The beneficiary will prevail.
Rebecca Hamsher, a nurse at North Cypress Medical Center,
was treated at Timberline Knolls Residential Treatment Center for bulimia
nervosa, depression, post-traumatic stress disorder, suicidal ideation, binge
eating, and other destructive behavior. The N orth Cypress Medical Center
Operating Company, Ltd., Employee Medical Benefit Plan covers her benefits.
If Timberline Knolls had been a hospital, Hamsher would have had to get
both "pre-certification" and "prior authorization" from her employee-benefit
plan. Without prior authorization, she would not have been covered.
Other treatment for mental disorders requires only pre-certification.
Without pre-certification, the plan can charge a $ 500 penalty.
Hamsher obtained neither pre-certification nor prior authorization. The
plan, assuming that Timberline Knolls was a hospital, denied her claims. On
appeal, the court decided that the plan had not proved that Timberline Knolls
was a hospital. Hamsher's claims did not require prior authorization, only precertification.
All of Hamsher' s treatment could have been cleared in advance if she had
followed the plan's rules.
By its terms, the plan owes Hamsher the cost of her treatment minus her
$500 deductible, her $2,000 out-of-pocket maximum, and a one-time $500
penalty for not pre-certifying her treatment. Hamsher's treatment at Timberline
Knolls cost $152, 925.00. The plan will pay Hamsher $149,925.00 in benefits.
The court declines to exercise its discretion to award prejudgment
Fees and Costs.
Hamsher asked for $114,103.81 in attorneys' fees. Under the Employee
Retirement Income Security Act, a court may award attorneys' fees. 2 No factor
is determinative, but a court considers whether to award fees by evaluating five
factors: (a) the degree of the opposing party's culpability or bad faith;
ability of the opposing party to satisfy an award of attorneys' fees; (c) whether
an award of attorneys' fees against the opposing party would deter others acting
under similar circumstances; (d) whether the party seeking attorneys' fees
sought to benefit all participants in an ERISA plan or to resolve a significant legal
question under ERISA; and (e) the relative merits of the parties' positions. 3
rSee Firman 11. Life Insurance Co. of North Amcrica, 684 F'3d 533,546 n. 63 (5 Cir. 2.012).
U.s.c. § II32 (g)(r).
See Iron Workers Local #27211. Bowen, 624 F.2.d 1255,1266 (5 th Cir. r980).
The plan did not act in bad faith. It believed Timberline Knolls was a
hospital and assessed benefits accordingly. Timberline Knolls calls itself a
residential treatment center, and Hamsher was treated there for several months.
The plan's mistake was simply not investigating whether Timberline Knolls in
fact met the plan's definition of hospital. No significant legal question was raised
The factors weigh in favor of awarding attorneys' fees. On appeal,
Hamsher won, and the plan lost. The plan is able to pay attorneys' fees.
The court must decide whether the requested attorneys' fees are
reasonable. The starting point is multiplying the number of hours spent working
on the case by the rate charged. Next, a court looks at twelve - non-exclusive and
overlapping - factors to adjust that amount if necessary.
These factors are: (a) time and labor required - negative; (b) novelty and
difficulty of the questions - negative; (c) skill required to perform the legal work
properly - neutral; (d) preclusion of other employment by accepting this case negative; (e) customary fee - neutral; (fj whether the fee is fixed or contingent
- neutral; (g) time limitations imposed by the client or circumstances - negative;
(h) amount involved and results obtained - neutral; (i) experience, reputation,
and ability of the attorneys - negative; Q) undesirability of the case -neutral; (k)
nature and length of the professional relationship with the client - negative; and
U) awards in similar cases - neutra1.4
This is a case about contract interpretation. It involved neither complex
law nor complex facts. It was resolved on summary judgment. It has continued
for about three and a half years - fifteen months passed between filing and
summary judgment. No time limitations were imposed. Hamsher's attorneys
were not precluded from doing other work, and this was not an undesirable case.
They specialize in ERISA cases. The length of the professional relationship is
short. They would have represented Hamsher only in this matter; people seldom
have recurring benefits-plan cases.
Johnson v. Georgia Highway Express, 488 F.2.d 714 (5 th Cir. 1974).
Although Hamsher's counsel have submitted time sheets based on hourly
billing rates, they ordinarily charge clients contingently. Hamsher has not
claimed that she was not charged contingently. She has not offered evidence of
having received or paid a bill. The attorneys' hourly rates may accord with the
customary hourly rates in Los Angeles and Houston, where they practice.
Neither side has described awards in similar cases. The amount involved here
was just under $ I 50,000. An award of $ I 14,000 would be excessive. Hamsher
succeeded on the merits not because the plan had wrongfully denied her benefits
but because it had not proved that it correctly denied them. She had three
attorneys while the plan had one. The requested fees are not reasonable. A fee
of $50,000.00 is reasonable - approximately 33% of the recovery.
Hamsher will be awarded court costs of $228.00.
Rebecca Hamsher will take $2.00,1 53.00from the North Cypress Medical
Center Operating Company, Ltd., Employee Medical Benefit Plan
Signed on February
2017 , at Houston, Texas.
~---- ~----Lynn N. Hughes
United States DistrictJudge
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