Health Plan Beneficiary Denied Compensation of Attorneys' Fees

September 25, 2006 ( - The US District Court for the Southern District of West Virginia ruled that a plan beneficiary is not entitled to attorneys' fees and costs associated with litigation, even though she was found in related proceedings to be entitled to benefits.

Lorraine Summer – a beneficiary of her husband’s health plan – was diagnosed with atypical neuropathic facial pain prior to the fall of 2004. Her physicians believed the surgical implantation of a Medtronic Synergy system, a motor cortex stimulation device, was necessary for treatment.

Carelink, the plan administrator, denied Summer’s request for approval of the surgery, contending that the procedure was “experimental and investigational,” according to the opinion.

The Insurance Commissioner of the State of West Virginia said in July 2005 that Carelink was required to provide coverage for Summer – a verdict which the insurer appealed to the Circuit Court of Kanawha Country. Carelink contended that the commissioner applied West Virginia law rather than the law of the Employee Retirement Income Security Act (ERISA).However, the court denied the petition for appeal, at which point Carelink authorized coverage.

Summer went further in September 2005, seeking costs related to the surgical procedure, costs and attorneys’ fees related to litigation, and general damages for the wrongful denial of insurance benefits. The state district court denied those requests.

Summer and her husband also filed a lawsuit in a West Virginia state court claiming that Carelink violated its fiduciary duty by denying coverage for the procedure and complaining about the insurer’s administration of the plan. Carelink brought the claim to federal district court.

The district court is “unable to conclude that plaintiffs are entitled to attorney fees and costs as a “prevailing party” in an ERISA action,” the opinion said. “Plaintiffs can only be said to have prevailed in the state administrative action, in which no ERISA claim was asserted, where they further sought and were denied their request for attorney fees and costs.”

According to the court, Summer forfeited the opportunity to recover attorneys’ fees and costs under ERISA by failing to bring the complaint regarding fees to the West Virginia Supreme Court of Appeals.