5th Cir. 1999). See FED. R. CIV. P. 52(a). “‘A finding is ‘clearly erroneous’ when… v. Sealed

*Pursuant to 5th Cir. R. 47.5, the court has determined that this opinion should not be published and
is not precedent except under the limited circumstances set forth in 5th Cir. R. 47.5.4.
-1-
United States Court of Appeals
Fifth Circuit
F I L E D
March 22, 2006
Charles R. Fulbruge III
Clerk
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
__________________________
No. 04-30781
__________________________
ANNIE MAE WILLIAMS,
Plaintiff-Appellant,
versus
TRUSTMARK INSURANCE CO., ET AL.,
Defendants,
TRUSTMARK INSURANCE CO.,
Defendant-Appellee.
___________________________________________________
Appeal from the United States District Court
for the Eastern District of Louisiana
No. 2:03-CV-1330
___________________________________________________
Before BARKSDALE, STEWART, and CLEMENT, Circuit Judges.
EDITH BROWN CLEMENT, Circuit Judge:*
This case requires us to interpret a Louisiana state law that awards penalties to insurance
beneficiaries whose claims were wrongly denied. We affirm in part and reverse in part.
I. FACTS AND PROCEEDINGS
Annie Mae Williams began participating in the Terrebonne Parish School Board’s health

-- 1 of 8 --

1The records showed an additional $71,333.90 in paid benefits from July 1, 1995, to June 30, 1996,
and $7,216.30 in paid benefits for prescription drugs. However, these aggregate subtotals were not
substantiated by itemized expenses.
-2-
insurance plan in 1990. Her policy allowed a lifetime maximum benefit of one million dollars.
Additionally, the policycontained an annualrestoration provision (or “add-back” provision), by which
the lesser of two thousand dollars or the actual benefits paid in a given year would be restored to the
lifetime maximum benefit. In 1998, Trustmark Insurance Co. (“Trustmark”) acquired the School
Board’s insurance plan from its previous provider. Trustmark retained the services of the plan
administrator, Gilsbar, Inc., that had serviced Williams’s plan since its inception. Trustmark did not
alter the plan’s lifetime maximum benefit or add-back provision.
Beginning in May 2002, Trustmark denied Williams’s incoming claims, explaining that
Williams had reached her policy’s lifetime maximum benefit. Williams believed that she had not
reached the lifetime maximum benefit, though she had no documentation to confirm her belief.
Williams submitted a complaint against Trustmark and Gilsbar to the Louisiana Department of
Insurance (“DOI”). DOI requested Trustmark itemize the paid benefits. Trustmark sent two
response letters in July, informing DOI that Gilsbar was assembling the requested information and
that Trustmark also was contacting the School Board to determine if it had any record of certain
claims. On July 31, Trustmark sent Gilsbar’s computer records of Williams’s benefit payments to
DOI. Though one record showed a total of one million dollars in paid benefits, Gilsbar’s records only
documented itemized expenses totaling $912,954.48.1
On August 6, DOI informed Trustmark that it would only accept itemized expenses as
substantiation that Williams’s lifetime maximum had been reached. Trustmark responded that it had
requested additional detailed reports from Gilsbar. On September 10, Trustmark admitted to DOI

-- 2 of 8 --

-3-
that Gilsbar was unable to provide detailed data on any claims prior to 1996, when Gilsbar had
replaced its computer system. Unsatisfied with Trustmark’s documentation, DOI required Trustmark
to count only itemized expenses toward Williams’s lifetime maximum. Subsequently, Trustmark
allowed payment for an additional $87,045.52 in claims that Williams had accrued between January
and September 2002. Additionally, conceding that it had neglected to follow the add-back provision
for the entirety of Williams’s policy coverage, Trustmark paid an additional $24,000 toward
Williams’s unpaid claims.
Louisiana law, however, provides a more substantial remedy than simply paying improperly
denied benefits. Under LA. REV. STAT. § 22:657, an insured may recover an additional penalty from
an insurer in the amount of the improperly denied claim when the insurer denied the claim without
“just and reasonable grounds.” Williams sued Trustmark in state court pursuant to the statute, and
Trustmark timely removed the case to federal court. The case was submitted to the district court
upon stipulated facts and oral argument. The district court denied additional statutory penalties for
the $87,045.52 in benefits because Trustmark reasonably relied on Gilsbar’s data and its relationship
with Gilsbar. However, the district court penalized Trustmark $12,000 for not applying the add-back
provision for the six years between 1997 and 2002; it did not require Trustmark to remit any add-
back money from 1990 to 1996 because, as Williams herself argued, Williams accrued no expenses
in those years and, therefore, no add-back was required. As previously noted, Trustmark had paid
$24,000 pursuant to DOI’s interpretation of the add-back provision; of this amount, based on the
district court’s judgment, Trustmark properly paid $12,000 in benefits pursuant to the add-back
provision, but overpaid $12,000. Since Trustmark already had mistakenly paid an extra $12,000 on
Williams’s behalf, though not directly to her, the district court credited Trustmark’s overpayment

-- 3 of 8 --

2Specifically, the district court stated: “The record indicates that although the terms of the policy
required Trustmark to pay Ms. Williams $12,000 in restoration benefits, Trustmark has already paid
Ms. Williams $24,000 in restoration benefits. Accordingly, Trustmark’s penalty interest obligation
to Ms. Williams has been satisfied.”
-4-
toward the $12,000 statutory penalty Trustmark owed Williams under LA. REV. STAT. § 22:657,
finding the penalty satisfied.2 Additionally, the district court ordered Trustmark to pay $4,000 in
attorney’s fees.
Williams timely appealed the district court’s decision refusing to penalize Trustmark for the
$87,045.52 in denied benefits and its finding that Trustmark already had satisfied the $12,000 penalty.
II. STANDARD OF REVIEW
In a suit for penalties under LA. REV. STAT. § 22:657, the district court’s finding of “just and
reasonable grounds” is a fact determination, which we will not disturb absent clear error. Nolan v.
Golden Rule Ins. Co., 171 F.3d 990, 993–94 (5th Cir. 1999). See FED. R. CIV. P. 52(a). “‘A finding
is ‘clearly erroneous’ when although there is evidence to support it, the reviewing court on the entire
evidence is left with the definite and firm conviction that a mistake has been committed.’” Cox v. City
of Dallas, Tex., 430 F.3d 734, 747 (5th Cir. 2005) (quoting Anderson v. City of Bessemer City, N.C.,
470 U.S. 564, 573 (1985)). “A factual finding is not clearly erroneous as long as it is plausible in the
light of the record as a whole.” Sealed Appellant v. Sealed Appellee, 394 F.3d 338, 342 (5th Cir.
2004) (internal quotation omitted). The district court’s interpretation of whether payments to third-
parties satisfy the penalty provisions of LA. REV. STAT. § 22:657 is a purely legal question, which we
review de novo. Salve Regina College v. Russell, 499 U.S. 225, 231 (1991); Vero Group v. ISS-Int’l
Serv. Sys., 971 F.2d 1178, 1181 (5th Cir. 1992).
III. DISCUSSION

-- 4 of 8 --

-5-
A. Louisiana Law
La. Rev. Stat. § 22:657 provides, in pertinent part:
All claims arising under the terms of health and accident contracts issued in this state
. . . shall be paid not more than thirty days from the date upon which written notice
and proof of claim, in the form required by the terms of the policy, are furnished to
the insurer unless just and reasonable grounds, such as would put a reasonable and
prudent businessman on his guard, exist. . . . Failure to comply with the provisions
of this Section shall subject the insurer to a penalty payable to the insured of double
the amount of the health and accident benefits due under the terms of the policy or
contract during the period of delay, together with attorney’s fees to be determined by
the court. . . .
LA. REV. STAT. § 22:657(A). The double damages penalty is inclusive of payment of the improperly
denied benefits. See Bischoff v. Old Southern Life Ins. Co., 502 So. 2d 181, 185 (La. Ct. App.
1987). Courts construe strictly the phrase “just and reasonable grounds,” levying penalties only if
the insurer’s refusal to pay was arbitrary and capricious. Nolan, 171 F.3d at 993 (citing Shrader v.
Life Gen. Sec. Ins. Co., 588 So. 2d 1309, 1317 (La. Ct. App. 1991)).
B. The $87,045.52 Penalty
With regard to the $87,045.52 in denied benefits, Williams argues that the district court erred
in interpreting and applying the “just and reasonable” standard, and in any event, the district court
should have ruled in her favor because Trustmark acted arbitrarily. Williams’s arguments are
unavailing.
In denying Williams’s request for penalties, the district court stated:
The record indicates that Gilsbar’s assurances were based on records that indicate that
Trustmark had made $1,000,000 in benefit payments. Gilsbar’s records did not
itemize Trustmark’s expenditures, and thus they ultimately proved inadequate to
eliminate Trustmark’s dutyto provide $87,045.52 in additional benefits. Nonetheless,
Trustmark’s decision was based on some objective evidence and made in good faith.
Its determination that Williams had reached her $1,000,000 maximum benefit was
therefore not arbitrary and capricious.

-- 5 of 8 --

3Trustmark stands by its position that it had already paid one million dollars in benefits for Williams
by May 2002. However, because DOI subsequently required more substantiation than Trustmark
could provide, Trustmark followed DOI’s command to pay the additional $87,045.52 in benefits.
-6-
The district court’s finding was plausible in light of the entire record and, therefore, was not clearly
erroneous. Gilsbar’s records, relied upon by Trustmark, were not precisely clear but were not so
devoid of information that it was unreasonable for Trustmark to conclude that Williams’s lifetime
maximum had been reached. Trustmark worked with Gilsbar and DOI to determine which available
number should control—the gross number showing one million dollars in paid benefits or the smaller
aggregate total of itemized expenses. Importantly, Williams never brought forth evidence, or even
alleged, that Louisiana law or DOI’s prior practice was to allow companies to substantiate denied
benefit claims only with itemized expenses rather than aggregate category totals. Once DOI decided
that the latter number should control, Trustmark promptly paid the claims.3 The district court did not
clearly err in finding that Trustmark relied on “just and reasonable grounds,” even though the denial
of benefits later was deemed improper. Accordingly, we affirm this portion of the district court’s
ruling.
C. The $12,000 Penalty
The district court found that Trustmark did not have “just and reasonable grounds” to deny
crediting Williams’s policy $12,000 pursuant to the add-back provision. Trustmark did not appeal
the district court’s ruling, so the only issue before this court is whether the district court properly
allowed Trustmark to offset the penalty against claims Trustmark had erroneously paid on Williams’s
behalf. Pursuant to DOI’s command, Trustmark had paid $24,000 in Williams’s medical claims
pursuant to the add-back provision; the district court found that Trustmark only properly should have
added back $12,000. The district court found that Trustmark had satisfied the debt, since Trustmark

-- 6 of 8 --

-7-
owed Williams $12,000 in penalties but had also overpaid $12,000 to her creditors on her behalf.
The district court’s solution is not supported by the statute’s plain language. The statute
states: “Failure to comply . . . shall subject the insurer to a penalty payable to the insured. . . .” LA.
REV. STAT. § 22:657 (emphasis added). Trustmark cites no caselaw in support of the offset.
Furthermore, Trustmark does not suggest the existence of any lien, subrogation, or creditor
intervention that would justify the district court in accepting the third-party payment in satisfaction
of the statutory penalty. Since the statute is clear as to whom the benefit should be paid, we reverse
the district court’s decision to allow Trustmark to offset the penalty against the overpaid amounts.
D. Attorney’s Fees
Because Williams partially prevails on appeal, she is entitled to attorney’s fees. See LA. REV.
STAT. § 22:657. See also P.T. Tugs, Inc. v. U.S. Fire Ins. Co., 796 F.2d 125, 128 (5th Cir. 1986)
(awarding attorney’s fees necessary to defend against an insurance company’s appeal of an adverse
district court judgment under LA. REV. STAT. § 22:658, a similar statute); Lanclos v. Guardian Life
Ins. Co. of Am., 607 So. 2d 1089, 1093 (La. Ct. App. 1992) (“[T]he trial judge correctly awarded
penalties and attorney’s fees . . . under . . . [LA. REV. STAT. §] 22:657. Additionally, plaintiff is
entitled to additional attorney’s fees for the appeal of this matter.”). On remand, the award of
attorney’s fees is to be recalculated to include Williams’s appellate fees for the claim on which she
here prevails.
IV. CONCLUSION
We AFFIRM the district court’s judgment that Trustmark acted with “just and reasonable
grounds” even though improperly denying the $87,045.52 in benefits. With regard to the $12,000
in denied benefits, we REVERSE AND REMAND the district court’s decision to allow offset against

-- 7 of 8 --

-8-
third-party payments. Additionally, on remand, the district court shall award attorney’s fees Williams
expended on her prevailing claim on appeal.

-- 8 of 8 --