United States Court of Appeals
REVISED July 26, 2007 Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS 20, 2007
July
FOR THE FIFTH CIRCUIT
Charles R. Fulbruge III
Clerk
No. 05-21068
ALFRED WADE
Plaintiff-Appellant
v.
HEWLETT-PACKARD DEVELOPMENT COMPANY LP SHORT TERM
DISABILITY PLAN, formerly known as Compaq Computer International
Corporation Short Term Disability Plan
Defendant-Appellee
Appeal from the United States District Court
for the Southern District of Texas Houston Division
Before JOLLY, HIGGINBOTHAM, and DENNIS, Circuit Judges.
DENNIS, Circuit Judge:
Alfred Wade appeals a summary judgment in favor of the
defendant-appellee, administrator of his employer’s Short-Term
Disability Plan, on his claim for benefits under the Plan. We
affirm.
No. 05-21068
I.
Claimant-appellant Alfred Wade began his employment with
Compaq Computer Corporation (“Compaq”) in 1988 as a Line
Operator; at the time he left his employment, he was employed
as an internal consultant in sales and services at one of
Compaq’s retail stores. On August 24, 2000, Wade consulted a
psychiatrist, Dr. Mary Ann Ty, who diagnosed Wade with major
depression and attention deficit-hyperactivity disorder. Dr.
Ty based her diagnosis on Wade’s symptoms including: feelings
of being “out of control” and “overwhelmed,” hypersomnia,
decrease in energy, difficulty with concentration and
attention, disorganization, and inability to complete tasks.
However, she found that Wade’s ability to make decisions
regarding daily living, relationships, and life was rated as
“good.” She advised him not to go to work.
Upon this diagnosis, Wade, on August 24, 2000, filed a
claim for short-term disability benefits. The Plan defined
“disability” as:
. . . a medical condition (or having such a
condition, as the case may be) determined by the Plan
Administrator to be one which is continuous and
prevents the Employee from performing each of the
material duties of his or her regular occupation.
The Employee (1) must also be under the regular care
of Physician appropriate to the medical condition and
(2) cannot be working at any job for wage or profit
in order to be Disabled or considered to have a
2
No. 05-21068
Disability, except when such a job is for his
Employer or within the terms of Rehabilitative
Employment pursuant to Section 3.9.
Compaq, his employer, was the Plan Administrator and retained
final authority over benefits decisions; however, it outsourced
preliminary short-term disability benefits review to
ValueOptions, a disability care management service company.
Upon receiving Wade’s claim, ValueOptions opened a disability
case file for him on or around August 29, 2000.
The Plan’s benefits review process consisted of three
levels. ValueOptions conducted the first two levels, while
Compaq conducted the third and final level. At the first
level, ValueOptions solicited a neurophysiologist, Dr. Barbara
Uzzell, to conduct a psychiatric and functional assessment of
Wade on September 25, 2000.1 Based upon this assessment, she
diagnosed him with Dysthymic Disorder and Avoidant Personality
Disorder. Her assessment of ten categories revealed Wade’s
moderate impairment in three of the categories, whereas there
was mild to no impairment in the other seven. She recommended
1
Keith Lanier, a disability case manager at ValueOptions, requested, via telephone
messages, that Wade contact Dr. Uzzell to arrange this assessment. When Wade failed to
respond to these messages or to schedule an appointment with Dr. Uzzell, ValueOptions
initially denied Wade’s request for short-term disability benefits on September 5, 2000.
However, when Wade called ValueOptions on September 12, 2000, to express his continued
interest in short-term disability benefits and inquire as to how to proceed, ValueOptions
reinstated his claim, informed him that a disability reassessment would be permitted, and
coordinated a disability assessment with Dr. Uzzell’s office.
3
No. 05-21068
that Wade continue treatment with Dr. Ty and referred him to
Suzi Phelps, a psychologist and therapist. However, because
Dr. Uzzell found that Wade’s condition did not constitute a
disability, she recommended denying benefits. A ValueOptions
psychiatrist, Dr. Frank Webster, reviewed Wade’s file, agreed
with Dr. Uzzell that Wade was not disabled, and upheld Dr.
Uzzell’s recommendation. On September 26, 2000, ValueOptions
contacted Wade via telephone and communicated its decision to
deny benefits; it did not share Dr. Uzzell’s report with him
or send him a denial letter. In this conversation, Wade
immediately advised ValueOptions of his desire to appeal and
to submit information from his treating physician.
At the second level of the claims process, the
ValueOptions Appeals Committee (on which Dr. Webster was a
member) reviewed Wade’s claim and the initial denial of
benefits. They invited Wade’s treating physicians to submit
a letter and a copy of treatment notes for consideration; on
October 4, 2000, Dr. Ty and Dr. Phelps submitted information
to the Committee. Nevertheless, the ValueOptions Appeals
Committee, on October 6, 2000, affirmed the denial of short-
term disability benefits. As it explained in a letter to Wade,
“the clinical information provided does not meet ValueOptions’
Short-term Disability criteria.” Additionally, the letter
4
No. 05-21068
explained to Wade that he had the right to appeal to Compaq and
provided an address and phone number. The letter did not,
however, reference the Plan criteria, explain why his
information failed to meet the criteria, advise him of the
appeal time-line, or detail the information Wade should submit
to perfect his appeal.
Wade’s attorney wrote to Compaq on December 5, 2000,
requesting various Plan documentation and requesting an appeal.
Compaq responded, inviting Wade’s attorney to provide any
additional information for Compaq to assess in its review of
Wade’s claim. At this third and final level, the Compaq
Welfare Benefits Administrative Committee (“WBAC”), comprised
only of Elaine Boddome (a Compaq employee), reviewed Wade’s
claim in May 2001.2 Kathy Collier, a Compaq benefits
representative responsible for preparing Wade’s file to present
to WBAC, noticed several errors in ValueOptions’ processing of
Wade’s claim. Therefore, she requested that ValueOptions re-
review Wade’s case and provide WBAC with additional
information. Additionally, WBAC enlisted another psychiatrist,
Dr. Conway McDanald, to conduct an additional review of all of
the documentation in Wade’s file. Subsequently, on August 24,
2
WBAC is the Committee which Compaq, as Plan Administrator, created to
administrate and make final short-term disability benefits determinations.
5
No. 05-21068
2001, WBAC issued a final denial of short-term disability
benefits via a letter to Wade. This letter explained that
short-term disability benefits were being denied, because the
documentation did not substantiate a claim for short-term
disability.
Wade sued in the United States District Court for the
Southern District of Texas under 29 U.S.C. § 1132(a)(1)(B).3
Upon assessing the parties’ cross-motions for summary judgment,
the district court denied Wade’s motion, granted defendant’s
motion. The court also summarily and sua sponte awarded costs
in favor of the defendant.
Wade timely appealed, wherein he argues that the district
court erred by: (1) applying the abuse of discretion standard
of review to Wade’s case, despite an asserted conflict of
interest; (2) disregarding the impact of significant procedural
errors, which allegedly should have reduced the district
court’s level of deference to the Plan Administrator; (3)
refusing to conclude that the Plan Administrator abused its
discretion; and (4) awarding costs to the defendant.
II.
3
This provision explains that “[a] civil action may be brought by a participant or
beneficiary to recover benefits due to him under the term of his plan. . . .” 29 U.S.C. §
1132(a)(1)(B).
6
No. 05-21068
We review a district court’s grant of summary judgment in
ERISA cases de novo, applying the same standard as the district
court. Baker v. Metropolitan Life Ins., 364 F.3d 624, 627 (5th
Cir. 2004)(citing Performance Autoplex II Ltd. v. Mid-Continent
Casualty Co., 322 F.3d 847, 853 (5th Cir. 2003)). A grant of
summary judgment is proper if there is no genuine issue of
material fact and the moving party is entitled to judgment as
a matter of law. Id. (citing Performance Autoplex, 322 F.3d
at 853; FED. R. CIV. P. 56(c)). In evaluating the existence of
a genuine issue of material fact, we review the evidence and
inferences drawn from that evidence in the light most favorable
to the non-moving party. Id. at 627-28 (citing Daniels v. City
of Arlington, Tex., 246 F.3d 500, 502 (5th Cir. 2001)).
III.
Wade argues on appeal that the district court erred when
it applied the abuse of discretion standard of review,
asserting that it should have given less deference to the Plan
Administrator, given the conflict of interest, i.e., that
Compaq was both the insurer and administrator of the plan.
Whether the district court applied the correct standard of
review is a question of law that we review de novo. MacLachlan
v. ExxonMobil Corp., 350 F.3d 472, 478 (5th Cir. 2003)(citing
7
No. 05-21068
Chevron Chem. Co. v. Oil, Chem. & Atomic Workers Local Union
4-447, 47 F.3d 139, 142 (5th Cir. 1995)).
A plan administrator completes two tasks in making a
benefit determination: (1) determining the facts underlying the
benefit claim; and (2) construing the terms of the plan. The
administrator’s factual determinations are reviewed for abuse
of discretion. Chacko v. Sabre, Inc., 473 F.3d 604, 609-10
(5th Cir. 2006). By contrast, the administrator’s construction
of plan terms is typically reviewed de novo. Firestone Tire
& Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). But where, as
here,4 a plan expressly confers discretion on the plan
administrator to construe the plan's terms, the administrator's
construction is reviewed for abuse of discretion. Chacko, 473
F.3d at 610 (citing Firestone, 489 U.S. at 115; Gosselink v.
AT&T, Inc. 272 F.3d 722, 726 (5th Cir. 2001); Vega v. Nat’l
Life Ins. Servs., Inc., 188 F.3d 287, 295 (5th Cir. 1999)(en
banc)).
Where an administrator’s decision is “tainted by a
conflict of interest,” courts implement a sliding scale
standard of review. MacLachlan, 350 F.3d at 478. The
standard of review does not change, i.e., it remains abuse of
discretion; the existence of a conflict of interest is simply
4
The parties do not dispute that the Administrator retained discretion.
8
No. 05-21068
a factor to be considered in determining whether the
administrator abused its discretion. Vega, 188 F.3d at 296-97.
Less deference is given to the Administrator, in proportion to
the evidence of conflict. Id. Where “a minimal basis for a
conflict is established, the decision is reviewed with ‘only
a modicum less deference than we otherwise would.’” Lain v.
UNUM Life. Ins. Co. of Am., 279 F.3d 337, 343 (5th Cir.
2002)(quoting Vega, 188 F.3d at 301).
Wade concedes that the administrator has the discretion
and final authority to determine eligibility for benefits,
therefore triggering the abuse of discretion standard.
Nonetheless he asserts that because Compaq both administers and
insures the plan that an apparent conflict of interest exists;
thus, he contends that the district court failed to apply the
proper sliding scale standard. Even if a conflict of interest
exists under these facts, the district court detailed the
appropriate standard of review for such cases and nevertheless
granted summary judgment for Compaq, ruling that the
Administrator had not abused its discretion in denying Wade’s
claim. We find no error in the standard of review it employed.
IV.
9
No. 05-21068
Next, Wade encourages us to heighten our standard of
review due to the procedural irregularities in the handling of
his claim, which he alleges violated ERISA and the regulations
promulgated thereunder, effectively denying him a full and fair
review. Wade has cited no direct authority by the Supreme
Court or the Fifth Circuit dictating a change in the standard
of review based upon procedural irregularities alone, and we
see no reason to impose one.
V.
Next, Wade argues that procedural violations in the
processing of his claim justify the award of short-term
disability benefits. Wade points to the alleged following
problems in the processing of his claim: (1) ValueOptions’
initial denial of his claim (at the first level claims
processing) was communicated orally via telephone instead of
in writing; (2) ValueOptions’ second denial of his claim (at
the second level of claims processing) failed to explicate the
appropriate information as to the steps to be taken to submit
a claim for review, the time limits for review, the specific
reasons for the denial of the claim, reference to the specific
plan provisions upon which the denial was based, and what
information was needed to perfect the claim; (3) the plan
relied upon ValueOptions’ criteria for disability, as opposed
10
No. 05-21068
to the plan’s criteria; (4) the plan failed to communicate its
final decision to his attorney; (5) the plan created confusion
during the pendency of the appeal; (6) the plan failed to
notify Wade of its denial of his claims in a timely fashion;
and (7) Wade never received the letter that denied his
benefits.
“ERISA was enacted to promote the interests of employee
and their beneficiaries in employee benefit plans and to
protect contractually defined benefits.” Firestone Tire, 489
U.S. 101, 113 (1989)(citations omitted)). Therefore, ERISA
provides certain minimal procedural requirements upon an
administrator’s denial of a benefits claim. Schadler v. Anthem
Life Ins. Co., 147 F.3d 388, 393 (5th Cir. 1998). These
procedures are set forth in 29 U.S.C. § 1133 and the
regulations promulgated by the Department of Labor thereunder.
Section 1133 provides that:
every employee benefit plan shall--
(1) provide adequate notice in writing to any
participant or beneficiary whose claim for benefits
under the plan has been denied, setting forth the
specific reasons for such denial, written in a manner
calculated to be understood by the participant, and
(2) afford a reasonable opportunity to any
participant whose claim for benefits has been denied
for a full and fair review by the appropriate named
fiduciary of the decision denying the claim.
11
No. 05-21068
The federal regulations, promulgated pursuant to ERISA and
in force at the time explained:
The notification shall set forth, in a manner
calculated to be understood by the claimant-
(i) The specific reason or reasons for the
adverse determination;
(ii) Reference to the specific plan provisions
on which the determination is based;
(iii) A description of any additional material
or information necessary for the claimant to
perfect the claim and an explanation of why such
material or information is necessary;
(iv) A description of the plan’s review
procedures and the time limits applicable to
such procedure. . .
29 C.F.R. 2560.503-1(g)(1)(i)-(iv)(2000). Challenges to ERISA
procedures are evaluated under the substantial compliance
standard. Lacy v. Fulbright & Jaworski, 405 F.3d 254, 256-257
& n.5 (5th Cir. 2005). This means that the “technical
noncompliance with ERISA procedures will be excused so long as
the purpose of section 1133 has been fulfilled.” Robinson v.
Aetna Life Ins., 443 F.3d 389, 393 (5th Cir. 2006). The
purpose of section 1133 is “to afford the beneficiary an
explanation of the denial of benefits that is adequate to
ensure meaningful review of that denial.” Schneider v. Sentry
Long Term Disability, 422 F.3d 621, 627-628 (7th Cir. 2005).
The “substantial compliance” test also “considers all
communications between an administrator and plan participant
to determine whether the information provided was sufficient
12
No. 05-21068
under the circumstances.” Moore v. LaFayette Life Ins. Co.,
458 F.3d 416, 436 (6th Cir. 2006). “All communications” may
include oral communications. White v. Aetna Life Ins. Co., 210
F.3d 412, 417 (D.C. Cir. 2000) (citing Heller v. Fortis Benefit
Ins. Co., 142 F.3d 487, 493 (D.C. Cir. 1998)).
We conclude that the Plan fulfilled the requirements of
Section 1133 and accompanying regulations in its processing of
Wade’s claim. Wade is certainly correct that the first two
levels of review in the Plan’s claims processing arguably
failed to substantially comply with ERISA and the regulations
promulgated thereunder. At the first level, ValueOptions’
communication of the denial of benefits to Wade via telephone
did not comply with ERISA, as ValueOptions did not provide the
notice in writing. At the second level, the letter denying
benefits sent to Wade did not comply with ERISA, as it did not
list the plan criteria, or indicate the specific reasons why
Wade’s clinical information failed to satisfy the criteria.
Further, it also did not specify what information Wade was
required to submit in order to perfect his appeal.
However, at the third level of review, Compaq, as
administrator, required ValueOptions to re-review the file and
solicited another independent physician, Dr. McDanald, to
review it, as well. The administrator, when making its final
13
No. 05-21068
determination to deny Wade’s benefits claims, had in-hand all
of the documentation regarding Wade’s claim. Additionally, the
letter that WBAC sent to Wade substantially complied with
ERISA.
Section 1133 and its corresponding regulations require
that the Plan: (1) provide adequate notice; (2) in writing; (3)
setting forth the specific reasons for such denial; (4) written
in a manner calculated to be understood by the participant; and
(5) afford a reasonable opportunity for a full and fair review
by the administrator. We find that the Plan did meet these
requirements. The statute and regulations do not require
compliance with Section 1133 at each and every level of review
of a Plan’s internal claims processing. The end goal of
judicial intervention in ERISA is not to correct problems at
every level of plan administration, but to encourage resolution
of the dispute at the administrator’s level before judicial
review. See Robinson v. Aetna Life Ins. Co., 443 F.3d 389, 393
(5th Cir. 2006) (noting the Fifth Circuit has a “policy of
encouraging the parties to make a serious effort to resolve
their dispute at the administrator's level before filing suit
in district court.”). Here, although the Plan’s claims
processing at the first two levels of review did not comply
with Section 1133, the final level of review, and the most
14
No. 05-21068
relevant one, substantially complied and intended to correct
the disputed procedural and technical errors below. Therefore,
we find that Wade was provided with “full and fair review” of
his claims based on an examination of all communications at all
levels between the administrator and the beneficiary. The
communications, as a whole, and especially at the
administrator’s level, constituted a meaningful dialogue
between the beneficiary and administrator despite technical
violations. See Gilbertson v. Allied Signal, Inc., 328 F.3d
625, 634-636 (10th Cir. 2003) (noting that the purpose of ERISA
procedural provisions is to create a meaningful dialogue and
as long as a meaningful dialogue existed, there is substantial
compliance).
Even were we to decide otherwise, “[f]ailure to fulfill
procedural requirements generally does not give rise to a
substantive damage remedy.” Hines v. Massachusetts Mutual Life
Ins. Co., 43 F.3d 207, 211 (5th Cir. 1995). There is no reason
to deviate from this general rule in this case.
VI.
We now turn our attention to Wade’s assertion that the
district court erred in ruling that the Administrator did not
abuse his discretion in denying Wade’s claim for benefits.
Because the district court granted summary judgment in the
15
No. 05-21068
defendant’s favor, we review de novo, using the same standard
as the district court. Wade does not challenge the
Administrator’s interpretation of any plan term; instead he
only asserts that his condition qualifies as a disability.
Accordingly, the case hinges upon the Administrator’s factual
determinations, and we therefore review this decision for an
abuse of discretion. Pierre v. Connecticut General Life Ins.
Co./Life Ins. Co. of North America, 932 F.2d 1552, 1562 (5th
Cir. 1991)(“. . . for factual determinations, under ERISA
plans, the abuse of discretion standard of review is the
appropriate standard.”); Sweatman v. Commercial Union Ins. Co.,
39 F.3d 594, 598 (5th Cir. 1994)(disability is more factual in
nature than interpretive).
Abuse of discretion is synonymous with the arbitrary and
capricious standard. Aboul-Fetough v. Employee Benefits Comm.,
245 F.3d 465, 472 (5th Cir. 2001). To assess abuse of
discretion, we “focus on whether the record adequately supports
the administrator’s decision.” Vega, 188 F.3d at 298. To
avoid reversal in the summary judgment context, the
Administrator’s decision must be supported by substantial
evidence in the administrative record, which is evidence that
a reasonable mind might accept as sufficient to support a
conclusion. High v. E-Systems, Inc., 459 F.3d 573, 576 (5th
16
No. 05-21068
Cir. 2006). See also Ellis v. Liberty Life Assur. Co. of
Boston, 394 F.3d 262, 273 (5th Cir. 2004)(defining substantial
evidence as “more than a scintilla, less than a preponderance,
and is such relevant evidence as a reasonable mind might accept
as adequate to support a conclusion.”); Meditrust Fin. Services
Corp. v. Sterling Chemicals, Inc, 168 F.3d 211, 215 (5th Cir.
1999) (“A decision is arbitrary only if made without a rational
connection between the known facts and the decision or between
the found facts and the evidence.”). We should not substitute
our judgment for that of the administrator. Cf. Ellis, 394
F.3d at 273.
As mentioned above, when reviewing for abuse of
discretion, we take into account any conflict of interest by
implementing a sliding scale standard. Vega, 188 F.3d at 296-
97. A potential conflict such as the one presented here, where
an Administrator serves the dual role of both administrator and
insurer, results in only a “modicum less deference” than would
otherwise be afforded. See Vega, 188 F.3d at 301.
The Plan provided short-term disability benefits only for
employees who suffer a medical condition that “prevents the
Employee from performing each of the material duties of his or
her regular occupation.” The record is replete with evidence
that Wade’s depression did not qualify as a disability under
17
No. 05-21068
this definition. Dr. Uzzell determined that Wade suffered only
moderate impairment in three of ten functional areas; he
suffered mild to no impairment in the other seven. Dr. Webster
reviewed and agreed with Dr. Uzzell’s assessment. The
administrator requested that ValueOptions re-review Wade’s file
again, and ValueOptions complied. Dr. McDanald, an independent
physician, reviewed all of the documentation and agreed with
the denial of benefits. Further, Wade’s treating physician,
Dr. Ty, rated Wade’s ability to make decision regarding daily
living, relationships, and life as “good.”5
Even taking into account any alleged conflict of interest
of the Administrator, we affirm the district court’s grant of
summary judgment in favor of the defendant-appellee. There is
substantial evidence in the record to support the
Administrator’s decision to deny benefits. Its decision,
therefore, was not arbitrary and capricious, and likewise, not
an abuse of discretion.
VII.
Finally, Wade appeals the district court’s award of costs
in favor of the defendant. We review the district court’s
5
And even if Wade’s treating physician had concluded otherwise, ERISA does not
mandate that plan administrators must accord special deference to the opinions of treating
physicians. Black & Decker Disability Plan v. Nord, 538 U.S. 822, 831 (2003); Vercher v.
Alexander & Alexander, Inc., 379 F.3d 222, 233 (5th Cir. 2004).
18
No. 05-21068
award in ERISA cases for an abuse of discretion. Bellaire Gen.
Hosp. v. Blue Cross Blue Shield of Michigan, 97 F.3d 822, 832
(5th Cir. 1996).
ERISA provides that “[i]n any action under this
subchapter. . . by a participant, beneficiary, or fiduciary,
the court in its discretion may allow a reasonable attorney's
fee and costs of action to either party.” 29 U.S.C. §
1132(g)(1). The district court uses the “prevailing party”
test from Fed. R. Civ. P. 54(d) to decide the award of costs,
thereby following Salley v. E.I. DuPont de Nemours & Co., 966
F.2d 1011, 1017 (5th Cir. 1992). In Salley, an ERISA case, the
court utilized the Bowen five factor test6 to judge the award
of attorney’s fees, but judged the award of costs based on the
“prevailing party” test from Fed. R. Civ. P. 54(d). A
subsequent case followed Salley’s approach, see Tolson v.
Avondale Indus., Inc., 141 F.3d 604, 611 (5th Cir. 1998).
6
The following five factors were enumerated for consideration in ERISA cases when
shifting attorney’s fees: (1) the degree of the opposing parties' culpability or bad faith; (2) the
ability of the opposing parties to satisfy an award of attorneys' fees; (3) whether an award of
attorneys' fees against the opposing parties would deter other persons acting under similar
circumstances; (4) whether the parties requesting attorneys' fees sought to benefit all
participants and beneficiaries of an ERISA plan or to resolve a significant legal question
regarding ERISA itself; and (5) the relative merits of the parties' position. Iron Workers Local
No. 272 v. Bowen, 624 F.2d 1255, 1266 (5th Cir. 1980). Absent is any requirement that the
party under consideration for fee-shifting under this test be the prevailing one. See Gibbs v.
Gibbs, 210 F.3d 491, 501 (5th Cir. 2000).
19
No. 05-21068
However, this analysis arguably conflicts with our recent
cases that award costs based on the Bowen five factor test.
See Lain v. UNUM Life Ins. Co. Of America, 279 F.3d 337, 347
(5th Cir. 2002) (“When determining whether to award attorneys’
fees and costs, the district court should consider the
following [Bowen] factors”) (emphasis added). See also Gibbs,
210 F.3d at 505 (“In sum, the first, second, third, and fifth
[Bowen] factors all counseled in favor of disallowing General
American's request for attorneys' fees and costs from
Appellant.”) (emphasis added); Roig v. Ltd. Long Term
Disability Program, 275 F.3d 45, 2001 WL 1267475 *5 (5th Cir.
Oct. 9, 2001) (per curiam) (unpublished) (“When exercising [29
U.S.C. § 1132(g)(1)] discretion, the court should consider the
following [Bowen] factors”).
When there are conflicting panel decisions, the earliest
panel decision controls. Camacho v. Texas Workforce Comm'n,
445 F.3d 407, 410 (5th Cir. 2006). Salley is the earliest
panel decision to deal directly with the award of costs under
ERISA. While the pre-Salley case-law never explicitly applied
the Bowen test to an award of costs, a pre-Salley case did
assess the award of costs, along with attorney’s fees, under
the ERISA’s fee-shifting provision and not under Fed. R. Civ.
P. 54(d). See Donovan v. Cunningham, 716 F.2d 1455, 1475 (5th
20
No. 05-21068
Cir. 1983). However, in that case, the court only applied the
Bowen test to the award of attorney’s fees and not costs. Id.
Since Salley conflicts with this controlling prior case-law
that analyzed costs and attorney’s fees both under ERISA’s fee-
shifting provision and not under Fed. R. Civ. P. 54(d), to the
extent Salley held that an award of costs under ERISA is based
in Fed. R. Civ. P. 54(d) does not control our case here.7
Nonetheless, before Salley, it was an open question whether the
“prevailing party” test, instead of the Bowen factors test,
could be adopted for awards of costs and attorney’s fees under
ERISA in certain situations. Cf. Holder v. Prudential Ins. Co.
of America, 951 F.2d 89, 91-92 (5th Cir. 1992). Therefore, we
read Salley now as establishing, for ERISA’s fee-shifting
provision, a “prevailing party” test, analogous to the test
under Fed. R. Civ. P. 54(d), for the award of costs. As Salley
is the first case to discuss the award of costs under ERISA,
Salley’s application of the “prevailing party” test controls
this case.
7
Subsequent cases have similarly reached this conclusion, Fed. R. Civ. P. 54(d) is not
applied when the claims are subject to an express statutory fee-shifting provision, such as
ERISA’s fee-shifting provision, 29 U.S.C. § 1132(g)(1), which explicitly covers “costs of action.”
See FED. R. CIV. P. 54(d) (“Except when express provision therefor is made either in a statute
of the United States . . .”); Gibbs v. Gibbs, 210 F.3d 491, 506 n. 13 (5th Cir. 2000) (noting the
different treatment of fees and costs for different parties, because some parties’ claims were
ERISA claims and subject to 29 U.S.C. § 1132(g)(1), and other parties’ claims were state claims
and subject to Fed. R. Civ. P. 54(d)).
21
No. 05-21068
Even though the district court did not cite to the ERISA
fee-shifting provision, 29 U.S.C. § 1132(g)(1), as the source
for its authority to award costs to the “prevailing party,” the
district court’s award of costs under a “prevailing party” test
is in accordance with Salley, and is, therefore, not an abuse
of discretion. Accordingly, we affirm the district court’s
award of costs to the defendant.8
VIII.
For the foregoing reasons, we AFFIRM the district court’s
grant of summary judgment in favor of the defendant-appellee.
We AFFIRM the district court’s award of costs to the defendant-
appellee.
8
Under recent case law, a district court would abuse its discretion if it did not consider
the Bowen factors before awarding costs and attorney’s fees under ERISA. Cf. Riley v.
Administrator of Supersaver 401K Capital Accumulation Plan, 209 F.3d 780, 782-783 (5th Cir.
2000)("[The District Court] should consider and explicate the five Bowen factors, and . . .
consider relevant non-Bowen factors, if there are any."); Todd v. AIG Life Ins. Co., 47 F.3d
1448, 1458-459 (5th Cir. 1995). Only an en banc determination could resolve this discrepancy
between the recent cases and Salley. See United States v. Rodriguez-Jaimes, 481 F.3d 283,
288 (5th Cir. 2007).
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