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Charles W. v. Regence Bluecross Blueshield of Oregon

United States District Court, D. Utah, Central Division

November 21, 2019

CHARLES W. and ZOE W., Plaintiffs,
v.
REGENCE BLUECROSS BLUESHIELD OF OREGON, Defendant.

          ORDER AND MEMORANDUM OF DECISION

          TENA CAMPBELL, U.S. DISTRICT COURT JUDGE

         Plaintiffs Charles W. and his daughter, Zoe W., filed this action against Defendant Regence BlueCross BlueShield of Oregon (“Regence”), claiming Regence's denial of certain insurance benefits violated the Employee Retirement Income Security Act (“ERISA”). On September 27, 2019, the court agreed and granted Plaintiffs' motion for summary judgment. See Charles W. v. Regence BlueCross BlueShield of Oregon, No. 2:17-cv-00824-TC, 2019 WL 4736932 (D. Utah Sept. 27, 2019).

         Plaintiffs now request 10% prejudgment interest on the benefits awarded, $400.00 in costs, and $70, 498.00 in attorney's fees. (ECF No. 47.) Regence does not challenge the award of costs but does challenge the requests for prejudgment interest and attorney's fees.[1]

         ANALYSIS

         I. Prejudgment Interest

Under ERISA, “[p]rejudgment interest is . . . available in the court's discretion.” Benesowitz v. Metropolitan Life Ins. Co., 514 F.3d 174, 176 (2d Cir.2007) . . . . see also Allison, 289 F.3d at 1243 (“Prejudgment interest is appropriate when its award serves to compensate the injured party and its award is otherwise equitable.”).
. . .
Calculation of the rate for prejudgment interest also “rests firmly within the sound discretion of the trial court.” Caldwell v. Life Ins. Co. of N. Am., 287 F.3d 1276, 1287 (10th Cir.2002) . . . . Courts commonly look to state statutory prejudgment interest provisions as guidelines for a reasonable rate.

Weber v. GE Group Life Assur. Co., 541 F.3d 1002, 1016 (10th Cir. 2008).

         Here, Plaintiffs request a 10% interest rate, based on the amount provided for in Utah Code Section 15-1-1. Regence argues this provision is inapplicable because although it provides for a 10% interest rate for certain contracts, it does not extend to insurance contracts.

         Regence's argument is unpersuasive for three reasons. First, in 2019, the Utah Legislature amended Section 15-1-1 so that it applied to all contracts. See 2019 Utah Laws Ch. 437. This was apparently in response to a Utah Supreme Court decision that reversed longstanding precedent that had previously interpreted the provision as applying to all contracts. See USA Power, LLC v. PacifiCorp, 372 P.3d 629, 669-70 (Utah 2016). So there was only a brief, three-year period when the statute was interpreted narrowly to exclude some contracts. While the court looks to the statute only as a possible guideline, the fact that the Legislature expanded the law in response to the Utah Supreme Court's decision suggests that Utah is serious about applying a 10% interest rate to contract damages.

         Second, even during the period when the statute was interpreted narrowly, Regence is incorrect in claiming that it did not apply to insurance contracts. While Section 15-1-1 did not specifically mention insurance contracts, it still applied to such contracts due to its incorporation into Utah Insurance Code. The Utah Insurance Code requires that insurers pay “the rate of interest set in accordance with Section 15-1-1” whenever an insurance claim goes unpaid for more than 90 days. See Utah Code Ann. § 31A-26-301.6(8)(c)(ii)(C) (West 2019). Again, this suggests Utah is serious about applying a 10% interest rate to unpaid insurance claims.

         Finally, although Regence has identified two cases from this district where a lower interest rate was ordered (see Dewsnup v. Unum Life Ins. Co. of Am., No. 2:17-cv-00126-TC, 2018 WL 6478886 at *11 (D. Utah Dec. 10, 2018); Lynn R. v. ValueOptions, No. 2:15-cv-362-RJS-PMW, 2018 WL 1737684 at *3 (D. Utah Feb. 27, 2018)), it is much more common for courts in this district to follow state law and apply a 10% rate. See, e.g., B.D. v. Blue Cross Blue Shield of Ga., No. 1:16-cv-00099-DN, 2018 WL 671213 at *13 (D. Utah Jan. 31, 2018); Lynn R. v. ValueOptions, No. 2:12-cv-1201 TS, 2014 WL 4232519 at *10 (D. Utah Aug. 26, 2014); Krum v. Hartford ...


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