{ "id": 8527666, "name": "WILLIAM O. OVERCASH, Executor of the Estate of PAULINE RILEY OVERCASH, Deceased v. BLUE CROSS AND BLUE SHIELD OF NORTH CAROLINA", "name_abbreviation": "Overcash v. Blue Cross & Blue Shield", "decision_date": "1989-07-18", "docket_number": "No. 8819SC1047", "first_page": "602", "last_page": "619", "citations": [ { "type": "official", "cite": "94 N.C. App. 602" } ], "court": { "name_abbreviation": "N.C. Ct. App.", "id": 14983, "name": "North Carolina Court of Appeals" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "449 U.S. 1112", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 11861856, 11862208, 11861666, 11862152, 11861930, 11862064, 11862000, 11861909, 11861721, 11861787, 11862173 ], "year": 1981, "opinion_index": 0, "case_paths": [ "/us/449/1112-04", "/us/449/1112-11", "/us/449/1112-01", "/us/449/1112-09", "/us/449/1112-06", "/us/449/1112-08", "/us/449/1112-07", "/us/449/1112-05", "/us/449/1112-02", "/us/449/1112-03", "/us/449/1112-10" ] }, { "cite": "479 U.S. 1094", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 6556768, 6556738, 6556675, 6556516, 6556644, 6556706, 6556483, 6556904, 6556617, 6556586, 6556808, 6556563, 6556853, 6556951, 6556541 ], "year": 1987, "opinion_index": 0, "case_paths": [ "/us/479/1094-11", "/us/479/1094-10", "/us/479/1094-08", "/us/479/1094-02", "/us/479/1094-07", "/us/479/1094-09", "/us/479/1094-01", "/us/479/1094-14", "/us/479/1094-06", "/us/479/1094-05", "/us/479/1094-12", "/us/479/1094-04", "/us/479/1094-13", "/us/479/1094-15", "/us/479/1094-03" ] }, { "cite": "477 U.S. 903", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 6217699, 6218309, 6218023, 6217447, 6215309, 6216110, 6215853, 6215572, 6216567, 6216318 ], "year": 1986, "opinion_index": 0, "case_paths": [ "/us/477/0903-08", "/us/477/0903-10", "/us/477/0903-09", "/us/477/0903-07", "/us/477/0903-01", "/us/477/0903-04", "/us/477/0903-03", "/us/477/0903-02", "/us/477/0903-06", "/us/477/0903-05" ] }, { "cite": "846 F. 2d 821", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 1788449 ], "pin_cites": [ { "page": "825" } ], "opinion_index": 0, "case_paths": [ "/f2d/846/0821-01" ] }, { "cite": "473 U.S. 134", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 6196892 ], "weight": 3, "year": 1985, "opinion_index": 0, "case_paths": [ "/us/473/0134-01" ] }, { "cite": "780 F. 2d 823", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 1531253 ], "year": 1986, "pin_cites": [ { "page": "830" } ], "opinion_index": 0, "case_paths": [ "/f2d/780/0823-01" ] }, { "cite": "792 F. 2d 797", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 1583114 ], "year": 1986, "pin_cites": [ { "page": "801" } ], "opinion_index": 0, "case_paths": [ "/f2d/792/0797-01" ] }, { "cite": "98 L.Ed. 2d 60", "category": "reporters:federal", "reporter": "L. 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Supp. 281", "category": "reporters:federal", "reporter": "F. Supp.", "case_ids": [ 3769823 ], "year": 1985, "pin_cites": [ { "page": "285" } ], "opinion_index": 0, "case_paths": [ "/f-supp/611/0281-01" ] }, { "cite": "102 L.Ed. 2d 249", "category": "reporters:federal", "reporter": "L. Ed. 2d", "year": 1988, "opinion_index": 0 }, { "cite": "109 S.Ct. 261", "category": "reporters:federal", "reporter": "S. Ct.", "year": 1988, "opinion_index": 0 } ], "analysis": { "cardinality": 1391, "char_count": 41618, "ocr_confidence": 0.751, "pagerank": { "raw": 1.3728567249758313e-07, "percentile": 0.638627001033651 }, "sha256": "561612298ea3e61a46f02a0f250877e4e4fedfc55d6624e6d0fb20af40a67d63", "simhash": "1:b75a8c22bf496cd4", "word_count": 6725 }, "last_updated": "2023-07-14T20:07:12.068465+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Judges Phillips and Cozort concur." ], "parties": [ "WILLIAM O. OVERCASH, Executor of the Estate of PAULINE RILEY OVERCASH, Deceased v. BLUE CROSS AND BLUE SHIELD OF NORTH CAROLINA" ], "opinions": [ { "text": "PARKER, Judge.\nI.\nThis action arises out of an alleged breach of an insurance contract. Plaintiff\u2019s decedent was a beneficiary of a group medical insurance contract issued by defendant. Decedent suffered from systemic amyloidosis, a progressive, chronic disease that affects several internal organs. Decedent\u2019s condition began to deteriorate in the spring of 1986. At first, her family was able to care for her at home with weekly visits from a nurse. On 4 August 1986, decedent was hospitalized on account of her increased weakness and inability to eat. Decedent was discharged from the hospital on 15 August 1986. At that time, decedent\u2019s physician felt that her condition had deteriorated to the point where she required twenty-four hour nursing care. After consulting with the physician, decedent\u2019s family decided to obtain home nursing care for decedent,\nDecedent remained under twenty-four hour home nursing care until 9 January 1987 when she was again hospitalized. She was discharged on 15 January 1987 and resumed treatment at home. She died on 12 March 1987.\nDefendant provided coverage for nursing services rendered prior to the August 1986 hospitalization and subsequent to the January 1987 hospitalization. Defendant denied coverage, however, for home nursing services rendered from 15 August 1986 to 9 January 1987. Plaintiff filed a complaint in which he stated causes of action based on breach of contract, unfair and deceptive trade practices, and violations of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. \u00a7\u00a7 1001 et seq. Plaintiff sought compensatory and punitive damages, treble damages pursuant to G.S. 75-16, and attorney\u2019s fees. Defendant filed an answer, asserted a counterclaim for attorney\u2019s fees under ERISA, and moved to strike plaintiff\u2019s request for a jury trial as to the causes of action arising under ERISA.\nBoth parties filed motions for partial summary judgment. On 19 April 1988, Judge Robert A. Collier, Jr. entered an order finding that the action was governed by ERISA, dismissing plaintiff\u2019s claims based upon State law, granting summary judgment for plaintiff on his claim under ERISA for payment of benefits, denying defendant\u2019s motion to strike plaintiff\u2019s demand for jury trial, and reserving for trial plaintiff\u2019s remaining claims under ERISA for extra-contractual and punitive damages. The matter came on for hearing before Judge James C. Davis on 24 May 1988. Judge Davis determined that plaintiff was entitled to $37,757.08 in attorney\u2019s fees and costs and so ordered in open court whereupon plaintiff gave notice that he was voluntarily dismissing all remaining claims. On 1 June 1988, defendant filed both a notice of appeal from the 24 May order and a motion for attorney\u2019s fees pursuant to ERISA and Rule 11 of the N.C. Rules of Civil Procedure. In response, plaintiff filed a motion for sanctions pursuant to Rule 11. On 15 August 1988, Judge Julius A. Rousseau, Jr. entered an order denying defendant\u2019s motion and awarding plaintiff $500.00 under Rule 11 for the expense of defending against defendant\u2019s motion.\nDefendant appeals from the trial court\u2019s entry of summary judgment for plaintiff in the amount of $40,419.80, the court\u2019s award of attorney\u2019s fees and costs to plaintiff in the amount of $37,757.08, and the court\u2019s award of $500.00 to plaintiff as sanctions under Rule 11. Defendant contends that each of these actions was error and further asserts that should this Court reverse plaintiff\u2019s summary judgment, plaintiff is not entitled to jury trial on his claim for benefits. Defendant also contends the court erred in denying defendant\u2019s motion for attorney\u2019s fees pursuant to ERISA and Rule 11.\nII.\nBefore determining the merits of defendant\u2019s' appeal, we must clarify the law governing plaintiff\u2019s claims. The trial court found that this action was governed by ERISA rather than State law. Plaintiff filed a notice of appeal which specifically addressed this point but abandoned his appeal. In his brief, however, plaintiff states that he abandoned his appeal only out of concern for the complexity of the case on appeal, but he does not concede that the action is controlled by ERISA. We cannot review the trial court\u2019s actions in this case without first determining whether the court applied the correct law to plaintiff\u2019s claims.\nSubject to certain well-defined exceptions, ERISA covers any \u201cemployee benefit plan\u201d which is established or maintained by an employer or an employee organization. 29 U.S.C. \u00a7 1003. The definition of \u201cemployee benefit plan\u201d includes medical insurance plans. 29 U.S.C. \u00a7 1002(1), (3). Although the exact details of the group insurance plan at issue in this case are unclear, the record does show that the plan was maintained by plaintiff, who was decedent\u2019s husband, to provide insurance for employees of businesses he owned. Therefore, the plan is subject to the provisions of ERISA.\nUnder ERISA, a beneficiary of a covered plan may bring a civil action to obtain several types of relief. 29 U.S.C. \u00a7 1132(a). Jurisdiction of civil actions is vested exclusively in the federal courts with the exception of actions under subsection (a)(1)(B) of 29 U.S.C. \u00a7 1132, for which jurisdiction is concurrent in state and federal courts. 29 U.S.C. \u00a7 1132(e)(1). Subsection (a)(1)(B) of the statute provides that a beneficiary may bring an action \u201cto recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan.\u201d The claim on which plaintiff obtained summary judgment was a claim for benefits due. Therefore, the trial court could properly exercise its jurisdiction over that claim.\nIII.\nHaving determined that plaintiff\u2019s claim for benefits is within the scope of ERISA, we proceed to consider whether the trial court erred in entering summary judgment in plaintiff\u2019s favor.\nA.\nWe begin by noting that the provisions of ERISA pre-empt all state laws that \u201crelate to any employee benefit plan.\u201d 29 U.S.C. \u00a7 1144(a). The pre-emption includes state decisional law as well as statutes. 29 U.S.C. \u00a7 1144 (c). ERISA also pre-empts state common-law contract and tort actions. Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 107 S.Ct. 1549, 95 L.Ed. 2d 39 (1987). The civil enforcement provisions of ERISA are exclusive and are governed by federal substantive law. Id. at 54-56, 107 S.Ct. at 1556-58, 95 L.Ed. 2d at 52-53. This broad pre-emption of state law requires this Court to follow federal decisional law in actions arising under ERISA. See Treadway v. Railroad Co., 53 N.C. App. 759, 760, 281 S.E. 2d 707, 709 (1981) (federal decisional law followed in actions arising under the Federal Employers\u2019 Liability Act).\nUntil recently, the federal courts have refused to reverse a denial of benefits in an action under ERISA unless the decision to deny benefits was arbitrary or capricious. See, e.g., Holland v. Burlington Indus., Inc., 772 F. 2d 1140, 1148 (4th Cir. 1985), aff\u2019d mem., 477 U.S. 901, 106 S.Ct. 3267, 91 L.Ed. 2d 559, cert. denied, 477 U.S. 903, 106 S.Ct. 3271, 91 L.Ed. 2d 562 (1986). In a recent decision, however, the United States Supreme Court held that a denial of benefits under ERISA is subject to de novo review unless the benefit plan gives the plan administrator discretionary authority to determine eligibility for benefits or to construe the plan\u2019s terms. Firestone Tire and Rubber Co. v. Bruch, --- U.S. ---, ---, 109 S.Ct. 948, 956, 103 L.Ed. 2d 80, 95 (1989). The Supreme Court\u2019s decision was based upon established principles of trust law. Id.\nIn the present case, the contract of insurance provides that benefits are payable \u201cfor medically necessary reasonable and customary charges as determined by [defendant].\u201d Although this provision could be interpreted as granting discretionary authority to defendant, it does not clearly vest defendant with discretion to determine eligibility for benefits. Under the law of trusts, the authority of the trustee is determined from the language of the instrument but, if the language is unclear, the nature of the trustee\u2019s authority depends upon several factors including the situation of the beneficiary, the effect of classifying the power as discretionary, and the purposes of the trust. G. Bogert & G. Bogert, Trusts and Trustees \u00a7 552 at 66 (2d rev. ed. 1980). See also Davison v. Duke University, 282 N.C. 676, 708, 194 S.E. 2d 761, 781, 57 A.L.R. 3d 1008, 1035 (1973) (the extent of the trustee\u2019s discretion depends upon the terms of the trust and the nature of the trustee\u2019s powers interpreted in light of the circumstances at the time of execution). Applying these principles to the contract in this case, we find that it does not grant defendant discretionary authority to determine eligibility for benefits or to interpret the contract terms. Accordingly, defendant\u2019s denial of benefits is subject to de novo review.\nB.\nSummary judgment is appropriate when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Hagler v. Hagler, 319 N.C. 287, 289, 354 S.E. 2d 228, 231 (1987). Defendant does not dispute that the contract of insurance in this case provides coverage for home nursing care under appropriate circumstances. The contract\u2019s list of benefits includes \u201cfees for private duty nursing by a registered or licensed practical nurse.\u201d The contract defines \u201cprivate duty nursing\u201d (hereinafter \u201cPDN\u201d) as follows:\n[S]pecial medically necessary nursing care ordered by a doctor when routine nursing care is insufficient because of a patient\u2019s condition. Private duty nursing does not include the services of a sitter or services rendered by a member of the patient\u2019s family or household.\nThe contract also contains the following definition of the term \u201cmedically necessary\u201d:\nThe use of services or supplies as provided by a hospital, skilled nursing facility, doctor or other provider required to identify or treat a participant\u2019s illness or injury and which, as determined by the Corporation are\n1. consistent with the symptoms or diagnosis and treatment of the participant\u2019s condition, disease, ailment, or injury,\n2. appropriate with regard to standards of good medical practice,\n3. not solely for the convenience of the participant, his or her doctor, hospital or other provider, and\n4. the most appropriate supply or level of service which can be safely provided to the participant. When specifically applied to an inpatient, it further means that the participant\u2019s medical symptoms or condition require that the diagnosis or treatment cannot be safely provided to the participant as an outpatient.\nPlaintiff contends that he is entitled to summary judgment because: (i) defendant\u2019s interpretation of the term \u201cmedically necessary\u201d is erroneous as a matter of law, and (ii) the undisputed facts show that the PDN provided for decedent from 15 August 1986 to 9 January 1987 was medically necessary.\nC.\nWe first consider plaintiff\u2019s contentions concerning the interpretation of contract terms. Plaintiff\u2019s contention that any ambiguities must be resolved in his favor is without merit. Plaintiff mistakenly relies on the general rule for construction of insurance contracts. See Industrial Center v. Liability Co., 271 N.C. 158, 162, 155 S.E. 2d 501, 504-05 (1967). The federal courts have held that, because actions under ERISA are controlled by federal substantive law, state contract law does not apply. See Brown v. Retirement Comm. of the Briggs & Stratton Retirement Plan, 797 F. 2d 521, 528-29 (7th Cir. 1986), cert. denied, 479 U.S. 1094, 107 S.Ct. 1311, 94 L.Ed. 2d 165 (1987); Jung v. FMC Corp., 755 F. 2d 708, 713-15 (9th Cir. 1985). The Supreme Court\u2019s decision in Firestone Tire and Rubber Co. v. Bruch, supra merely changed the standard of review in actions for benefits due; it did not alter the substantive law governing the interpretation of benefit plans. The Court affirmed that part of the decision of the Court of Appeals for the Third Circuit which rejected the arbitrary and capricious standard of review. In doing so, the Supreme Court also tacitly adopted that part of the decision by the Court of Appeals for the Third Circuit which expressly rejected a rule of construction that would resolve all ambiguities in favor of the beneficiaries. Bruch v. Firestone Tire and Rubber Co., 828 F. 2d 134, 145 (3d Cir. 1987), aff\u2019d in part and rev\u2019d in part, --- U.S. ---, 109 S.Ct. 948, 103 L.Ed. 2d 80 (1989). The Court of Appeals applied principles governing construction of contracts between parties bargaining at arm\u2019s length. Id.\nIn any event, we find no ambiguity in the contract terms at issue in this case. Plaintiff contends that defendant erroneously interpreted the contract to provide coverage for PDN only when the patient requires \u201cskilled\u201d as opposed to \u201ccustodial\u201d care. The record does show that defendant\u2019s decision to deny benefits was based on its conclusion that decedent did not require skilled nursing services for the period in question and that the nurses who cared for decedent during that time provided primarily custodial services. Defendant\u2019s internal guidelines for review of claims for PDN services make clear that such services are covered only when the patient requires skilled care. Plaintiff argues that the skilled care requirement is inconsistent with the contract\u2019s definition of \u201cmedically necessary.\u201d We disagree.\nThe contract defines PDN as \u201cspecial medically necessary nursing care ordered by a doctor when routine nursing care is insufficient because of a patient\u2019s condition.\u201d Under the contract, services are \u201cmedically necessary\u201d if they are required to identify or treat the patient\u2019s illness, they are not provided solely for purposes of convenience, and they are \u201cthe most appropriate supply or level of service which can be safely provided to the participant.\u201d The contract specifically excludes coverage for custodial care, which is defined as services or supplies provided to an individual \u201cprimarily to assist him or her in the activities of daily living.\u201d\nThus, defendant\u2019s interpretation is supported by the plain meaning of the contract\u2019s provisions. Even under State law, courts must enforce insurance contracts according to their terms where the language of the policy is plain, unambiguous, and susceptible of only one reasonable construction. Duke v. Insurance Co., 286 N.C. 244, 247, 210 S.E. 2d 187, 189 (1974). Although \u201cskilled care\u201d is not included in the definitions of PDN or \u201cmedically necessary,\u201d it is clear that coverage does not extend to services which are not required by the patient\u2019s condition. Since PDN does not include routine nursing services and custodial services are expressly excluded, coverage for PDN must be limited to those cases where the patient requires skilled nursing services. Accordingly, plaintiff is not entitled to summary judgment on the grounds that defendant\u2019s denial of benefits was based upon an erroneous interpretation of the contract.\nD.\nTherefore, in order to prevail on his motion for summary judgment, plaintiff must establish that defendant\u2019s conclusion that decedent did not require skilled nursing services for the period in question is erroneous as a matter of law.\nThere is no dispute in this case as to the nature of decedent\u2019s illness, the treatment she received, or the actual services performed by the nurses who cared for her. Defendant\u2019s decision to deny benefits was based upon its review of decedent\u2019s hospital records and the notes of the nurses. The records show that, as of August 1986, decedent\u2019s disease had progressed to the point where she was suffering from congestive heart failure, respiratory problems, and renal failure. Her mobility was extremely limited, but she was able to feed herself and walk to the bathroom with assistance. Because there is no effective treatment for amyloidosis, the treatments decedent received were designed to prolong her life and alleviate her symptoms.\nDecedent\u2019s condition required her to receive oxygen during the entire period in question. Her treatment included a variety of medications, all of which were taken orally. Her intake and output of fluids and solids was carefully monitored, and she also required care for a skin condition. Her condition and treatment remained substantially the same until her hospitalization in January 1987.\nTo support his contention that decedent required skilled nursing services, plaintiff primarily relies upon the affidavit and deposition of Dr. James H. Black, the physician who recommended the services. Dr. Black admitted on deposition that most of the services recorded in the nurses\u2019 notes were not of the type that ordinarily require skilled nurses. He maintained, however, that the severity of decedent\u2019s illness, her complex medication regime, and the possibility that her condition could become life-threatening at any time required skilled nurses to constantly monitor her condition. For this reason, he believed that decedent required twenty-four hour skilled care, either at home, in a hospital, or in a nursing home.\nApplied to defendant\u2019s own standards, Dr. Black\u2019s opinion could provide a sufficient basis to justify payment of benefits for PDN. The services performed by the nurses in this case were not the type of \u201cinvasive\u201d procedures, such as intravenous injections, which ordinarily require skilled care under defendant\u2019s standards. Defendant\u2019s internal guidelines clearly show, however, that the determination of whether a patient requires skilled care does not depend solely upon the type of services provided but also must be based upon the patient\u2019s particular circumstances. For example, the guidelines provide that the administration of oral medication is a skilled service when it requires close monitoring for possible side effects or changes in dosage. One of defendant\u2019s medical consultants stated on deposition that even purely custodial tasks may rise to the level of skilled care when the patient\u2019s condition requires constant attention. By the same token, however, the guidelines also provide that normally skilled services may become non-skilled when they are prolonged and a non-skilled person may be taught to administer them \u2014such as insulin injections for diabetics.\nUnder these standards, defendant\u2019s employees and consultants concluded that decedent did not require skilled care during the period in question. Defendant offered the depositions of three physicians who reviewed decedent\u2019s case and disagreed with Dr. Black\u2019s opinion that she required twenty-four hour skilled care. Defendant\u2019s position is supported by Dr. Black\u2019s admission that the bulk of the nurses\u2019 services were custodial rather than skilled and plaintiff\u2019s own deposition testimony that he either could have performed or learned to perform most of those services. Although the nurses occasionally performed skilled services such as drawing blood, one of defendant\u2019s consultants testified on deposition that these services could have been performed by a visiting nurse. Decedent had received care from visiting nurses prior to her hospitalization in August 1986, and another of defendant\u2019s consultants testified that her condition was no worse after the hospitalization. Defendant\u2019s experts were of the opinion that neither decedent\u2019s condition nor her treatment required the constant attention of skilled nurses.\nWith the evidence in this posture, the trial court erred in entering summary judgment for plaintiff on his claim for benefits due under the contract. In opposition to plaintiff\u2019s motion, defendant offered evidence tending to show that decedent did not require skilled nursing services and that the PDN provided for her was, therefore, not medically necessary within the meaning of the contract. There is a clear difference of opinion between plaintiff\u2019s expert and defendant\u2019s experts as to the necessity for the services in question. Because the insurance contract only provides coverage for medically necessary services, there is a genuine issue of material fact which precludes summary judgment.\nE.\nWe note that plaintiff also contends that defendant admitted that the services were medically necessary in its answer to an interrogatory. Plaintiffs argument is based upon the following interrogatory and answer:\n16. Describe in detail each and every nursing service provided to Mrs. Overcash between January 15, 1987, and March 10, 1987, which you contend was \u201cmedically necessary.\u201d\nANSWER: Nursing services provided to Mrs. Over cash on a regular basis between January 15, 1987 and March 10, 1987 which were covered by the certificate included: (1) Nursing observation related to (a) congestive heart failure, (b) pulmonary function and respiratory distress, (c) renal failure, (d) seizure activity, and (e) electrolyte imbalance; (2) adjustment of oxygen flow according to patient\u2019s condition; (3) adjustment of complex medical program frequently; (4) insertion and expert management of foley catheter; (5) communication of patient\u2019s status to doctors; (6) received and carried out doctor\u2019s orders; and (7) administration of I.M. medications for pain, nausea and swelling.\nThe above-quoted answer concerns the services rendered after decedent\u2019s hospitalization in January 1987, and defendant paid benefits for those services. Although many of the services are the same as those rendered during the period for which defendant denied coverage, two of the services \u2014 insertion and management of a catheter and I.M. (intramuscular) medication \u2014 are the type of invasive procedures that ordinarily require skilled care. Also, one of defendant\u2019s consultants testified that decedent\u2019s condition had significantly deteriorated at that time and, therefore, skilled care was required. We have already noted that the same services may be classified as skilled or non-skilled depending upon the patient\u2019s condition. Therefore, the answer to the interrogatory does not constitute an admission as to the necessity for PDN from 15 August 1986 to 9 January 1987.\nIV.\nHaving determined that a triable issue of fact exists, we now consider whether plaintiff has the right to trial by jury. The prevailing view in the federal courts has been that actions under ERISA being equitable in nature, there is no right to a jury trial in actions for benefits due unless the plan administrator has admitted to owing a monetary obligation to the beneficiary. See Wardle v. Central States, Southeast and Southwest Areas Pension Fund, 627 F. 2d 820, 829-30 (7th Cir. 1980), cert. denied, 449 U.S. 1112, 101 S.Ct. 922, 66 L.Ed. 2d 841 (1981); Note, The Right to Jury Trial in Enforcement Actions Under Section 502(a)(1)(B) of ERISA, 96 Harv. L. Rev. 737 (1983). Some courts have held, however, that actions for benefits under 29 U.S.C. \u00a7 1132(a)(1)(B) are legal in nature and may be appropriate for jury trial. See Abbarno v. Carborundum Co., 682 F. Supp. 179 (W.D.N.Y. 1988). In arguing for the right to a jury trial, plaintiff contends that State constitutional law provides such a right and the pre-emptive effect of ERISA does not abridge that right. We agree.\nPreliminarily, we note that those courts which have found no right to a jury trial in actions under ERISA have not based their decisions solely upon the equitable nature of the action. The courts have also reasoned that jury trials are incompatible with the application of the arbitrary and capricious standard of review. See Wardle v. Central States, Southeast and Southwest Areas Pension Fund, 627 F. 2d at 830. Since denial of benefits is now subject to de novo review, that consideration is no longer present.\nArticle I, \u00a7 25 of the North Carolina Constitution guarantees the right to trial by jury in \u201call controversies at law respecting property.\u201d The constitutional right to trial by jury applies in all cases where the right existed at common law or by statute in 1868. N.C. State Bar v. DuMont, 304 N.C. 627, 641, 286 S.E. 2d 89, 98 (1982). Although the present case is an action under ERISA, the right to benefits under the plan is a matter of contract and, prior to the enactment of ERISA, courts would review the denial of benefits in the same manner as any other contract claim. See Firestone Tire and Rubber Co. v. Bruch, --- U.S. at ---, 109 S.Ct. at 955, 103 L.Ed. 2d at 94. Even were we to accept the federal courts\u2019 characterization of the action as equitable, our Supreme Court has held that issues of fact must be tried by a jury regardless of the equitable nature of the action. Erickson v. Starling, 235 N.C. 643, 654, 71 S.E. 2d 384, 392 (1952). Therefore, plaintiff in this case has the right to a jury trial under the law of this State.\nMoreover, the validity of federal decisions finding no right to trial by jury in actions under 29 U.S.C. \u00a7 1132(a)(1)(B) may be questioned in light of the Supreme Court\u2019s decision in Firestone Tire and Rubber Co. v. Bruch, supra. Assuming for purposes of argument that those decisions remain good precedent, we hold that they are not controlling in an ERISA action brought in a court of this State. ERISA pre-empts state laws \u201cinsofar as they may now or hereafter relate\u201d to plans covered by the statute. 29 U.S.C. \u00a7 1144(a). This pre-emption prohibits state laws from varying or supplementing the substantive rights, obligations, and remedies provided by ERISA. See Pilot Life Ins. Co. v. Dedeaux, 481 U.S. at 56-57, 107 S.Ct. at 1557-58, 95 L.Ed. 2d at 53-54.\nIt is now clear that the right to a jury trial in federal court is governed by federal law even where the action arises under substantive state law. 9 C. Wright & A. Miller, Federal Practice and Procedure \u00a7 2303 (1971). Similarly, state rules governing jury trials generally control actions under federal law brought in state courts. See Minneapolis & St. Louis R.R. v. Bombolis, 241 U.S. 211, 36 S.Ct. 595, 60 L.Ed. 961 (1916). Federal law must control, however, where the right to a jury trial is a substantial part of the rights accorded by a federal statute. Dice v. Akron, Canton & Youngstown R.R., 342 U.S. 359, 363, 72 S.Ct. 312, 315, 96 L.Ed. 398, 404 (1952) (state law cannot deny the right to a jury trial in actions under the Federal Employers\u2019 Liability Act).\nIn the present case, the right to a jury trial under the law of this State does not conflict with any of the substantive provisions of ERISA. The application of State law in this situation does not abridge any of the rights granted by the Act, nor does it provide a remedy which would otherwise be unavailable under the Act. The right to a jury trial granted by our Constitution is not a right which \u201crelates to\u201d employee benefit plans. Therefore, we hold that State law controls and plaintiff is entitled to have the factual controversy in this action submitted to a jury.\nV.\nBecause we are reversing the trial court\u2019s entry of summary judgment for plaintiff, we also vacate and remand the court\u2019s award of attorney\u2019s fees to plaintiff for reconsideration following a final adjudication of plaintiff\u2019s claim. The trial court must also reconsider its denial of defendant\u2019s claim for fees. Once again, however, we must clarify the correct law to be applied by the trial court.\nUnder ERISA, the trial court has discretion to award attorney\u2019s fees and costs to either party. 29 U.S.C. \u00a7 1132(g)(1). The federal circuit courts almost without exception have adopted a five-factor test, first set out in Eaves v. Penn, 587 F. 2d 453, 465 (10th Cir. 1978), to determine the parties\u2019 entitlement to costs and fees. See Gray v. New England Tel., and Tel. Co., 792 F. 2d 251, 257-59 (1st Cir. 1986). But see Bittner v. Sadoff & Rudoy Indus., 728 F. 2d 820 (7th Cir. 1984) (rejecting the five-factor test as applied to a defendant). In view of its almost unanimous acceptance by the federal courts, we adopt the five-factor test for ERISA actions brought in the courts of this State. The five factors to be considered by the trial court are (i) the degree of the parties\u2019 culpability or bad faith; (ii) the ability of the parties to satisfy an award of attorney\u2019s fees; (iii) whether an award of fees would deter similar conduct in the future; (iv) whether the party seeking fees sought to benefit all plan beneficiaries or resolve a significant legal question regarding ERISA; and (v) the relative merits of the parties\u2019 positions. Iron Workers Local No. 272 v. Bowen, 624 F. 2d 1255, 1266 (5th Cir. 1980). Every factor will not be relevant in all cases, no single factor is determinative, and the list is not exclusive. Id. Nevertheless, the trial court must support any award of fees in this case with findings showing that the award is based upon the above guidelines or similar considerations. We also note that, under ERISA, the prevailing party is not automatically entitled to an award of fees, McKnight v. Southern Life and Health Ins. Co., 758 F. 2d 1566, 1572 (11th Cir. 1985), and the court may award fees to the unsuccessful party in an appropriate case. Sokol v. Bernstein, 812 F. 2d 559 (9th Cir. 1987).\nAs in all cases where statutes provide for an award of a reasonable fee, the trial court must make findings to support the amount of the award. See Owensby v. Owensby, 312 N.C. 473, 476-77, 322 S.E. 2d 772, 774-75 (1984); Epps v. Ewers, 90 N.C. App. 597, 600, 369 S.E. 2d 104, 105 (1988). Accord Ursic v. Bethlehem Mines, 719 F. 2d 670 (3d Cir. 1983). Both the decision to award fees under 29 U.S.C. \u00a7 1132(g)(1) and the amount of the award are matters within the trial court\u2019s discretion and, if supported by proper findings, an award will not be disturbed absent an abuse of discretion.\nVI.\nWe next consider whether the trial court erred in awarding plaintiff $500.00 in attorney\u2019s fees as a sanction pursuant to Rule 11 of the N.C. Rules of Civil Procedure. The trial court awarded the fees for plaintiff\u2019s expenses in defending against defendant\u2019s post-trial motion for attorney\u2019s fees under ERISA and Rule 11. In its motion, defendant contended that it was entitled to recover the fees it expended in defending against plaintiff\u2019s claims under ERISA for extra-contractual and punitive damages because those claims were baseless and made for improper purposes. Plaintiff voluntarily dismissed the claims after the trial court awarded plaintiff attorney\u2019s fees in connection with his claim for benefits.\nRule 11 permits the court to impose appropriate sanctions, including an order to pay attorney\u2019s fees to the opposing party, if a pleading or motion has no basis in law or fact or is interposed for an improper purpose such as harassment or delay. If the trial court finds that grounds for imposing sanctions exist, Rule 11 requires the court to impose sanctions. Turner v. Duke University, 91 N.C. App. 446, 449, 372 S.E. 2d 320, 323, disc. rev. allowed, 323 N.C. 628, 374 S.E. 2d 601 (1988) (quoting Westmoreland v. CBS, Inc., 770 F. 2d 1168 (D.C. Cir. 1985)). The trial court in this case did not specify the grounds for imposition of sanctions. Plaintiff contends that defendant\u2019s post-trial motion was baseless and improper because (i) the trial court had already denied defendant\u2019s claim for attorney\u2019s fees pursuant to 29 U.S.C. \u00a7 1132(g)(1); (ii) the action was terminated when plaintiff voluntarily dismissed the remaining claims; and (iii) defendant had filed a notice of appeal from the earlier order concerning attorney\u2019s fees, thereby divesting the trial court of jurisdiction to consider the matter.\nWe first consider whether the trial court had jurisdiction to rule on defendant\u2019s motion. The termination of the action and defendant\u2019s filing of notice of appeal did not automatically deprive the court of jurisdiction to impose sanctions pursuant to Rule 11. See Langham-Hill Petroleum, Inc. v. Southern Fuels Co., 813 F. 2d 1327 (4th Cir.), cert. denied, --- U.S. ---, 108 S.Ct. 99, 98 L.Ed. 2d 60 (1987); Orange Production Credit Assoc. v. Frontline Ventures Ltd., 792 F. 2d 797, 801 (9th Cir. 1986). Under G.S. 1-294, an appeal does not bar the trial court from proceeding \u201cupon any other matter included in the action and not affected by the judgment appealed from.\u201d\nIn this case, however, defendant had appealed from the earlier denial of its claim for attorney\u2019s fees under ERISA. Although defendant\u2019s post-trial motion also sought fees under Rule 11, the motion was based upon the ERISA action and, therefore, any award of attorney\u2019s fees would be governed by 29 U.S.C. \u00a7 1132(g). Courts should not impose sanctions under Rule 11 when relief is available under another provision which more specifically addresses the situation. See Zaldivar v. City of Los Angeles, 780 F. 2d 823, 830 (9th Cir. 1986). Since the substantive basis of defendant\u2019s motion had been adjudicated in the earlier order, defendant\u2019s appeal therefrom divested the trial court of its jurisdiction to entertain the post-trial motion.\nNevertheless, we do not find that defendant\u2019s motion warranted sanctions under Rule 11. Although we do not consider the merits of plaintiff\u2019s dismissed claims, extra-contractual damages are generally not available in an action under ERISA. See Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 105 S.Ct. 3085, 87 L.Ed. 2d 96 (1985); Drinkwater v. Metropolitan Life Ins. Co., 846 F. 2d 821, 825 (1st Cir.), cert. denied, --- U.S. ---, 109 S.Ct. 261, 102 L.Ed. 2d 249 (1988). Moreover, we also note that plaintiff\u2019s claims for extra-contractual damages should have been dismissed for lack of subject-matter jurisdiction. Under ERISA, the only civil action over which a state court may exercise jurisdiction is an action to recover benefits or enforce rights under a plan. 29 U.S.C. \u00a7 1132(e)(1), (a)(1)(B). Extra-contractual damages are clearly unavailable in a state court action to recover benefits. Thus, defendant\u2019s contention that plaintiff\u2019s claims were baseless was not without merit.\nAlthough defendant\u2019s motion was not substantively baseless, it was, however, procedurally improper in that it sought relief which the trial court had previously denied. Rule 11 sanctions may be appropriate when a party files a motion which is virtually identical to a previously denied motion. Wm. Passalacqua Builders, Inc. v. Resnick Developers South, Inc., 611 F. Supp. 281, 285 (S.D.N.Y. 1985). The transcript of the hearing on the original motions for attorney\u2019s fees in this case shows, however, that the trial court ruled on the motions before plaintiff dismissed his remaining claims. Defendant\u2019s counsel indicated at the hearing that he believed that the remaining claims were to be tried and he was unprepared to litigate the issue of attorney\u2019s fees. In addition, counsel noted an objection to the trial court\u2019s consideration of attorney\u2019s fees before adjudicating plaintiff\u2019s remaining claims. Plaintiff did not dismiss his remaining claims until after the trial court awarded him fees. Defendant filed its post-trial motion because it felt that it did not obtain a fair hearing on the issue of attorney\u2019s fees. Thus, although defendant\u2019s proper remedy was by way of appeal, we do not find its motion to be baseless or interposed for an improper purpose so as to justify sanctions under Rule 11.\nVII.\nFor the foregoing reasons, we reverse the trial court\u2019s entry of summary judgment for plaintiff on his claim for benefits and remand the case for a jury trial on that claim. The trial court\u2019s award of attorney\u2019s fees to plaintiff is vacated and remanded for reconsideration in accordance with this opinion. The trial court\u2019s award of Rule 11 sanctions to plaintiff is reversed.\nJudgment entered 19 April 1988 reversed and remanded.\nOrder entered 24 May 1988 vacated and remanded.\nOrder entered 15 August 1988 reversed.\nJudges Phillips and Cozort concur.", "type": "majority", "author": "PARKER, Judge." } ], "attorneys": [ "Faison & Brown, by Charles Gordon Brown and M. LeAnn Nease, for plaintiff-appellee.", "Weinstein & Sturges, P.A., by William H. Sturges and L. Holms Eleazer, Jr., for defendant-appellant." ], "corrections": "", "head_matter": "WILLIAM O. OVERCASH, Executor of the Estate of PAULINE RILEY OVERCASH, Deceased v. BLUE CROSS AND BLUE SHIELD OF NORTH CAROLINA\nNo. 8819SC1047\n(Filed 18 July 1989)\n1. Courts \u00a7 20.3\u2014 ERISA \u2014 claim for benefits due \u2014 jurisdiction in state court\nThe state trial court properly exercised jurisdiction over plaintiff\u2019s claim for breach of an insurance contract where plaintiff was seeking benefits under a health insurance plan maintained by plaintiff to provide insurance for employees of businesses he owned. The plan is subject to ERISA, the Employee Retirement Insurance Security Act, which vests exclusive jurisdiction in the federal courts with an exception including claims for benefits due. 29 U.S.C. 1132(a)(1)(B).\n2. Courts \u00a7 20.3\u2014 ERISA \u2014 claim for benefits due \u2014de novo review\nIn an action in which plaintiff was claiming benefits under a health insurance plan within the scope of ERISA, defendant insurer\u2019s denial of benefits was subject to de novo review because a policy provision that benefits are payable \u201cfor medically necessary reasonable and customary charges as determined by [defendant]\u201d did not clearly vest defendant with discretion to determine eligibility for benefits. The denial of benefits under ERISA is subject to de novo review unless the benefit plan gives the administrator discretionary authority to determine eligibility for the benefits or to construe the plan\u2019s terms.\n3. Courts \u00a7 20.3\u2014 ERISA \u2014claim for benefits due \u2014 plaintiff not entitled to summary judgment\nPlaintiff was not entitled to summary judgment on a claim for benefits due under a health insurance policy on the grounds that defendant\u2019s denial of benefits was based upon an allegedly erroneous interpretation of the contract where defendant\u2019s interpretation was supported by the plain meaning of the contract provisions.\n4. Courts \u00a7 20.3\u2014 health insurance \u2014 benefits \u2014necessity for services \u2014 genuine issue of fact\nThere was a genuine issue of material fact which precluded summary judgment in an action to collect benefits under a health insurance policy where private duty nursing [PDN] was required to be medically necessary within the meaning of the contract and there was a clear difference of opinion between plaintiff\u2019s expert and defendant\u2019s experts as to the necessity for the services in question.\n5. Courts \u00a7 20.3; Evidence \u00a7 34\u2014 ERISA \u2014 answer to interrogatory-necessity of treatment \u2014 not an admission\nIn an action to collect health insurance benefits under a policy which covered private duty nursing [PDN] only if it was medically necessary, defendant\u2019s answer to an interrogatory that the services were necessary after plaintiff\u2019s decedent was hospitalized was not an admission that PDN was necessary earlier. Although many of the services rendered in the hospital were the same as those rendered earlier, two of the services rendered in the hospital were the type of invasive procedures which ordinarily require skilled care and one of defendant\u2019s consultants testified that decedent\u2019s condition had significantly deteriorated at that time.\n6. Courts \u00a7 20.3\u2014 ERISA \u2014 action to collect benefits \u2014 jury trial\nPlaintiff was entitled to a jury trial in an action to collect benefits under a health insurance plan despite the federal view that ERISA is equitable in nature and no jury trial is available. State rules governing jury trials generally control actions under federal law brought in state courts, although federal law must control where the right to a jury trial is a substantial part of the rights accorded by federal statute. The right to a jury trial under the law of North Carolina does not conflict with . any of the substantive provisions of ERISA and, even if the federal courts\u2019 characterization of the action as equitable is accepted, the N.C. Supreme Court has held that issues of fact must be tried by a jury regardless of the equitable nature of the action. Art. I, \u00a7 25 of the North Carolina Constitution.\n7. Courts \u00a7 20.3; Attorneys at Law \u00a7 7\u2014 ERISA \u2014 attorney\u2019s fees \u2014 test for awarding\nThe five-factor test for awarding attorney\u2019s fees in ERISA actions, which is almost unanimously accepted by the federal courts, is adopted for ERISA actions brought in the courts of this state. Both the decision to award fees and the amount of the award are matters within the trial court\u2019s discretion and, if supported by proper findings, an award will not be disturbed absent an abuse of discretion.\n8. Attorneys at Law \u00a7 7.7; Rules of Civil Procedure \u00a711 \u2014 ERISA \u2014 Rule 11 sanctions \u2014 vacated\nAn award of attorney\u2019s fees to plaintiff in an ERISA action as a sanction under N.C.G.S. \u00a7 1A-1, Rule 11 was vacated and remanded for reconsideration where the fee was awarded for expenses in defending defendant\u2019s post-trial motion for attorney\u2019s fees under ERISA and Rule 11. Defendant had appealed from the earlier denial of its claim for attorney\u2019s fees under ERISA, its post-trial motion was based upon the ERISA action, and any award of attorney\u2019s fees would be governed by 29 U.S.C. 1132(g). Since the substantive basis of defendant\u2019s motion had been adjudicated in the earlier order, defendant\u2019s appeal therefrom divested the trial court of its jurisdiction to entertain the post-trial motion; nevertheless, defendant\u2019s motion did not warrant sanctions under Rule 11 because defendant\u2019s contention that plaintiff\u2019s claims were baseless was not without merit.\nAPPEAL by defendant from Collier (Robert A., Jr.), Judge, Davis (James CJ, Judge, and Rousseau (Julius A., Jr.), Judge. Judgment entered 19 April 1988 and orders entered 24 May 1988 and 15 August 1988 in Superior Court, CABARRUS County. Heard in the Court of Appeals 14 April 1989.\nFaison & Brown, by Charles Gordon Brown and M. LeAnn Nease, for plaintiff-appellee.\nWeinstein & Sturges, P.A., by William H. Sturges and L. Holms Eleazer, Jr., for defendant-appellant." }, "file_name": "0602-01", "first_page_order": 632, "last_page_order": 649 }