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