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Marcin v. Reliance Standard Life Insurance Co.

United States District Court, District of Columbia

August 4, 2016

JILL MARCIN, Plaintiff,


          AMY BERMAN JACKSON, United States District Judge

         Since 2010, plaintiff Jill Marcin has been engaged in litigation under the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001, et seq., with defendants Reliance Standard Life Insurance Company (“Reliance”) and Mitre Corporation Long Term Disability Insurance Program (“Mitre”). Reliance denied plaintiff’s claim for disability benefits under the Mitre plan on three previous occasions, but after each denial, the Court found that the denial was not adequately justified, and it remanded the matter to the insurer for further consideration. See Marcin v. Reliance Standard Life Ins. Co. (Marcin I), 895 F.Supp.2d 105 (D.D.C. 2012); Mem. Op. & Order (Apr. 14, 2015) [Dkt. # 43] (“Marcin II”); Marcin v. Reliance Standard Life Ins. Co. (Marcin III), 138 F.Supp.3d 14 (D.D.C. 2015).[1]

         In Marcin III, the Court found that because the insurer’s decision to deny benefits to plaintiff could not stand, judgment would be entered in favor of plaintiff. 138 F.Supp.3d at 30.

         In its Order, the Court directed the parties to address the sole remaining issue of damages in supplemental filings due on October 26, 2015. Order (Oct. 14, 2015) [Dkt. # 47]. Plaintiff responded to the Court’s Order with a motion. Pl.’s Mot. to Determine Damages & Att’y Fees [Dkt. # 49] (“Pl.’s Mot.”); Mem. of P. & A. in Supp. of Pl.’s Mot. [Dkt. # 49-1] (“Pl.’s Mem.”). Defendants responded with a memorandum of law in support of their position, Defs.’ Position as to Damages [Dkt. # 50] (“Defs.’ Mem.”), and they also separately opposed plaintiff’s motion. Defs.’ Mem. of Law in Resp. & Opp. to Pl.’s Mot. [Dkt. # 52] (“Defs.’ Opp.”). Plaintiff replied in support of her motion, Pl.’s Reply to Defs.’ Opp. [Dkt. # 53] (“Pl.’s Reply”), and also responded to defendants’ memorandum of law. Pl.’s Resp. to Defs.’ Mem. [Dkt. # 51] (“Pl.’s Resp.”).

         In light of the parties’ disagreement on the amount of damages that should be awarded, the Court referred the matter to a Magistrate Judge for a Report and Recommendation. Order (Nov. 10, 2015) [Dkt. # 54]. The Magistrate Judge issued a Report and Recommendation on March 18, 2016. R. & R. [Dkt. # 56]. The Magistrate Judge found that plaintiff’s “Covered Monthly Earnings, ” should be based, as plaintiff argued, on an annual salary of $90, 000 per year. R. & R. at 7-8. But the Magistrate Judge agreed with defendants that plaintiff was entitled to only 24 months of benefits under the policy at this time. Id. at 9-10. And the Magistrate Judge found that plaintiff was entitled to some attorneys’ fees, but not the full amount that her counsel requested. Id. at 10-22. In total, the Magistrate Judge recommended that plaintiff should receive $57, 840 in damages, and $108, 360 in attorneys’ fees, for a total award of $166, 200. R. & R. at 22.

         Defendants objected to the recommended calculation of the benefits due based on the “Covered Monthly Earnings” of $7, 500 per month, or $90, 000 per year, the award of attorneys’ fees and costs, and the award of post-judgment interest at the rate of 6 percent. Defs.’ Partial Objs. to R. & R. [Dkt. # 57] (“Defs.’ Objs.”) at 1. Defendants did not object to the part of the Report and Recommendation that found plaintiff entitled to only 24 months of benefits. Id. Plaintiff did not file any objections to the Magistrate Judge’s decision, but she did respond to defendants’ objections. Pl.’s Resp. to Defs.’ Objs. [Dkt. # 58]. Defendants also supplemented their exhibits with a more legible version of one of plaintiff’s pay stubs. Suppl. to Defs.’ Objs. [Dkt. # 61] (“Defs. Suppl.”).


         Where, as here, a matter is referred to a magistrate judge for a report and recommendation, the court must review de novo those portions of the findings and recommendations to which an objection has been filed. LCvR 72.3(c); see also Fed. R. Civ. P. 72(b)(3) (“The district judge must determine de novo any part of the magistrate judge’s disposition that has been properly objected to.”). The court “may make a determination based solely on the record developed before the magistrate judge, or may conduct a new hearing, receive further evidence, and recall witnesses.” Id. The court “may accept, reject, or modify, in whole or in part, the findings and recommendations of the magistrate judge, or may recommit the matter to the magistrate judge with instructions.” Id.; see also Fed. R. Civ. P. 72(b)(3).


         The Court reviews the Covered Monthly Earnings question de novo, in light of defendants’ objection. Based on its review of the record, it concludes that plaintiff’s salary was approximately $90, 000 per year, or about $43 per hour, and that the first 24 months of benefits should be calculated on that basis. And given plaintiff’s lack of objection to this recommended procedure, the Court will remand the matter to Reliance yet again to determine whether plaintiff is entitled to benefits beyond 24 months. As to attorneys’ fees, the Court will apply a larger discount to plaintiff’s counsel’s hours in light of counsel’s insufficient billing practices. The Court also concludes that the post-judgment interest rate should be 0.27 percent.

         I. The Court finds that plaintiff’s salary was equivalent to $90, 000 per year.

         Pursuant to the terms of the Reliance life insurance policy in question, the benefit amount payable is calculated by multiplying the insured’s “Covered Monthly Earnings” by a percentage that is set forth in the policy. Ex. C to Aff. of Karen McGill [Dkt. # 50-1] (“Policy”) at 2.0. Plaintiff contends that her benefits should be based on an annual salary of $90, 000 per year. Pl.’s Mem. at 2-3. Defendants, relying on the affidavit of Karen McGill, an employee of Reliance, take the position that plaintiff’s annual salary at the time that she became disabled was $72, 000 per year, or $6, 000 per month, because she was working a reduced schedule at that time. Defs.’ Mem. at 3; see Aff. of Karen McGill [Dkt. # 50-1] (“McGill Aff.”) ¶¶ 4, 6. Although there appears to be no dispute that plaintiff’s annual salary was $90, 000, defendants point out that the annual figure was based on a 40-hour work week. Defs.’ Mem. at 3. According to defendants, since plaintiff did not work 40 hours per week for “quite a while before she claimed disability, ” and she had reduced her hours to 32 hours per week, “there was a corresponding drop in her salary to $72, 000.” Id.; McGill Aff. ¶ 15.

         The definitions section of the Policy provides that:

“Covered Monthly Earnings” means the Insured’s monthly salary received from [the employer] on the day just before the date of Total Disability, prior to any deductions to a 401(k) or Section 125 plan. Covered Monthly Earnings does not include commissions, overtime pay, bonuses or any other special compensation not received as Covered Monthly Earnings.
If hourly paid employees are insured, the number of hours worked during a regular work week, not to exceed forty (40) hours per week, times 4.333, will be used to determine Covered Monthly Earnings. If an employee is paid on an annual basis, then the Covered Monthly Earnings will be determined by dividing the basic annual salary by 12.

         Policy at 2.0. And the “Monthly Benefit” is calculated as “60% of Covered Monthly Earnings.” Id. at 1.0.

         To calculate her monthly earnings, plaintiff points to an undated memorandum, addressed “To Whom It May Concern” from Mitre payroll supervisor Debra A. Deeb, which explains that “[t]he MITRE annual salary for Jill M. Marcin effective August 2007 was $90, 000.00 and at that time she was scheduled to work 32 hours per week.” Ex. 1 to Pl.’s Mot. [Dkt. # 49-2]. Plaintiff also points to the Personnel Action Notification - which has more evidentiary value than the undated memorandum, as it appears to be a business record - which reflects the raise plaintiff received effective March 19, 2007 from $85, 000 per year to $90, 000 per year. Ex. 2 to Pl.’s Mot. [Dkt. # 49-3]. The document identifies plaintiff as a “Full-Time” employee, explains that the “official pay rate for all employees is the bi-weekly salary, ” and it explains how that number is calculated. Id.

         Defendants point to a different business record, “a payroll record printout from near the time Ms. Marcin stopped working.” McGill Aff. ¶ 5;[2] Ex. B to McGill Aff. [Dkt. # 50-1]. The payroll record is a screenshot of plaintiff’s pay stub dated September 21, 2007, for the two-week pay period from September 3, 2007 to September 16, 2007, for which plaintiff was paid $2, 769.23. McGill Aff. ¶ 6; Ex. B. to McGill Aff.[3] McGill also offers the following information in her affidavit:

Plaintiff claims that her monthly benefit should be based on a yearly salary of $96, 000 instead of $72, 000. I spoke with The Mitre Group and was told that when Plaintiff was working 40 hours per week, her salary was $96, 000; however, prior to and including August 20, 2007, Plaintiff reduced her hours to 32 per week and continued to work 32 hours or less until she stopped working on February 17, 2008. As a result, The Mitre Group reduced her salary to $72, 000.

McGill Aff. ¶ 15.

         Defendants do not dispute that plaintiff’s annual salary for full-time work was supposed to be $90, 000 (indeed, McGill states it was $96, 000), and that figure seems to be amply supported by the Personnel Action Notification. Defendants argue that plaintiff’s “salary was reduced” when she reduced her hours, but what the record shows is that her regular hourly rate was simply applied to a reduced number of hours. Defendants’ exhibit, the Mitre payroll stub, states that plaintiff’s “hourly rate” was $43.27. Defs.’ Suppl. at 1. Since she worked 64 hours during the two-week pay period reflected in the document (which is the only pay period for which the Court has been provided information, although it is not the pay period immediately before the date of disability), the employer multiplied the hourly rate by 64, and plaintiff made $2, 769.23. So while she may have made less for that two week period than she would have made if she worked the full 40 hours per week, the document reflects that plaintiff was paid the hourly rate that would have yielded $90, 000 per year if she did work 40 hours per week. This raises the question: if the reduced number of hours reduced plaintiff’s total earnings, did it reduce her “salary”?

         One problem that arises in this case is that there is a disconnect between the definition of “Covered Monthly Earnings” in the Policy, which speaks in terms of “monthly salary received, ” and Mitre’s payroll records, which reflect a bi-weekly payroll system. So must the Court calculate the monthly earnings as of August 19 based on full-time work, or based on just the 32 hours per week? Defendants offer hearsay presented through McGill that someone at Mitre stated that prior to August 21, plaintiff was working only 32 hours a week. McGill Aff. ¶ 15. But McGill’s affidavit is consistent with plaintiff’s own exhibit, the Deeb memorandum, which raises its own hearsay issues but states, “at that time [August 2007] she was scheduled to work 32 hours per week, ” Ex. 1 to Pl.’s Mot., and the payroll record that reflects that “[f]rom 4/2/07 - 11/4/07 J. Marcin worked 32 hours per week.” Ex. 4 to Pl.’s Mot. [Dkt. # 49-5] at Marcin2 002115.[4]

         Given those difficulties, the Court will turn to the language in the Policy that applies to hourly employees. Plaintiff and defendants both seem to be treating plaintiff as someone who was paid on an annual, and not an hourly basis, but the record produced by defendants suggests that the Court can appropriately utilize the approach set out in the Policy for an hourly employee: after all, it says “Pay Rate: $43.27000 Hourly.” Defs.’ Suppl. If the Court were to treat plaintiff as an hourly employee, all it would have to do is multiply the hourly rate by the hours worked during a “regular work week” and no one, not even Reliance, is claiming that 32 hours was plaintiff’s “regular” work week - defendants describe it as her ...

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