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BLANKENSHIP v. LIBERTY LIFE ASSURANCE COMPANY OF BOSTON

United States District Court, N.D. California


September 19, 2004.

VORRIS BLANKENSHIP, Plaintiff,
v.
LIBERTY LIFE ASSURANCE COMPANY OF BOSTON AS ADMINISTRATOR AND FIDUCIARY OF THE KPMG EMPLOYEE LONG-TERM DISABILITY PLAN AND THE KPMG EMPLOYEE LONG-TERM DISABILITY PLAN, Defendants.

The opinion of the court was delivered by: SAMUEL CONTI, Senior District Judge

JUDGMENT

In accordance with this Court's Findings of Fact and Conclusions of Law entered August 20, 2004 and the Order Re: Costs, Attorney's Fees, Benefits and Interest entered September 15, 2004, it is hereby ORDERED, ADJUDGED, and DECREED that:

Judgment shall be entered in favor of PLAINTIFF and against DEFENDANTS in the amount of $325,451.28.

  IT IS SO ORDERED. ORDER RE: COSTS, ATTORNEY'S FEES, BENEFITS AND INTEREST

  I. Introduction

  Plaintiff Vorris Blankenship ("Plaintiff" or "Blankenship") brought an action in this Court against Defendant Liberty Life Assurance Company of Boston ("Liberty" or "Defendant") to recover long-term disability benefits owed to him under the KMPG Employee Long-term Disability Plan (the "Plan"). On August 20, 2004, this Court issued findings of fact and conclusions of law holding that Liberty improperly terminated Blankenship's long-term disability benefits, and that Blankenship was therefore entitled to the amount of the benefits withheld from April 2000 through May 2003. Pursuant to the Order of the Court, Plaintiff submitted a request for costs, attorney's fees, unpaid benefits and prejudgment interest thereon. Defendant does not dispute Plaintiff's calculations of benefits, attorney's fees or costs. Therefore, the only issue presently before the Court is the applicable rate for prejudgment interest on the improperly terminated disability benefits.

 II. Prejudgment Interest

  It is well-settled that an award of prejudgment interest to an ERISA plaintiff is a "question of fairness, lying within the [district] court's sound discretion." Landwehr v. DuPree, 72 F.3d 726, 739 (9th Cir. 1995). The remedial scheme of ERISA suggests that interest is appropriate if it operates to make the injured party whole. Although "prejudgment interest is an element of compensation, not a penalty," the district court may take a defendant's bad faith conduct into consideration when determining whether an award of prejudgment interest is appropriate in a given case. See, e.g., Dishman v. UNUM Life Ins. Co. of Amer., 269 F.3d 974, 988 (9th Cir. 2001) citing Western Pac. Fisheries, Inc. v. SS President Grant, 730 F.2d 1280, 1288 (9th Cir. 1984). Because this Court determined that Defendant's conduct caused Plaintiff to be deprived of his rightful benefits, prejudgment interest is necessary to compensate Plaintiff in this case. Moreover, this Court must choose a rate of interest which adequately "compensates [Blankenship] for the losses he incurred as a result of [Liberty's} nonpayment of benefits." Id.

  As explained in our previous Order, Liberty improperly terminated Blankenship's disability benefits in April 2000. But for the improper termination, Blankenship would have received benefits in the amount of $6,093.82 per month from April 2000 through May 2003. Blankenship attests that, as a result of Liberty's nonpayment of benefits during that time, he found it necessary to use other personal funds to replace the $6,093.82 per month to pay his family's living expenses. Pl.'s Decl. at ΒΆ 4. Had he timely received his expected benefits, Blankenship asserts that he would have been able to invest an equivalent amount of his personal funds into the Vanguard Inflation-Protected Securities Fund. Id. The Vanguard Fund has earned interest at the rate of 10.01% since its inception in 2000. Id. at Ex. 1 Therefore, in order for Blankenship to be adequately compensated for Liberty's wrongful nonpayment of benefits, this Court awards prejudgment interest at Plaintiff's proposed rate of 10.01%. Accordingly, Plaintiff is entitled to $74,345.48 in prejudgment interest.

  III. Conclusion

  Based on the foregoing, it is HEREBY ORDERED that Plaintiff be awarded $227,319.56 for benefits due, $74,345.48 in interest, $22,800.00 in attorney's fees, and $986.24 in costs, for a total award of $325,451.28.

  IT IS SO ORDERED.

20040919

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