Discovery under the Employee Retirement Income Security Act (“ERISA”) is distinctly different from normal litigation. Since one of the goals of ERISA is to resolve disputes inexpensively and expeditiously, discovery is typically limited to the administrative record. Boyd v. Bert Bell/Pete Rozelle NFL Players Ret. Plan, 410 F.3d 1173, 1178 (9th Cir. 2005). However, the Supreme Court in Metropolitan Life Insurance Co. v. Glenn, 554 U.S. 105 (2008) instructed the district courts to consider the structural conflict of interest when deciding whether the plan administrator had abused its discretion.
Therefore, it has become universally accepted that the courts may consider evidence outside the administrative record to decide the nature, extent and effect of any conflict of interest on the decision-making process. Although Glenn allowed the consideration of extrinsic evidence, it did not provide any guidance on the scope and breadth of the discovery to be allowed in each case. As a result, in the two years since Glenn was decided, the district courts have struggled to provide a consistent framework for the types of evidence that would or would not be allowed. Here in the Ninth Circuit, a general pattern has begun to emerge. While this is far from universally accepted, there are certain recognized areas of discovery that are considered appropriate for ERISA cases. Statistics The courts have generally allowed plaintiffs to seek discovery on a variety of statistics, including the total number of claims, the number claimants seeking benefits, the number of claims approved, denied, or submitted to an outside referral agency.
A key advantage in providing these statistics is that information can be provided in a summary format without identifying the third-party claimants or disclosing identifying information. In an extremely detailed decision, the court in Santos v. Quebecor World Long Term Disability Plan, 254 F.R.D. 643, 649 (E.D. Cal. 2009) allowed the plaintiff to discover statistical information regarding the number of claimants seeking long term disability benefits with certain diagnoses, the approval rate of such claims, and claims granting history related to those with a familial relationship with the insurer. Other cases discussing the statistics allowed under ERISA include: Dilley v. Metropolitan Life Ins. Co., 256 F.R.D. 643 (N.D. Cal. 2009)(allowing statistics on the number of claims granted or denied based in any way upon medical reviews by that company.) Zewdu v. Citigroup Long Term Disability Plan, 264 F.R.D. 622 (N.D. Cal 2010)( Number of disability claims reviewed, granted, and denied by independent peer review company.).
Walker v. Metro. Life Ins. Co., 585 F. Supp. 2d 1167, 1176 (D. Cal. 2008)( The number of claims insurer has accepted or granted and rejected or denied after a review by a physician retained through NMR from 2005 through 2007). Relationship with Third Party Review Company It is not unusual for an insurer to engage the services of a third party medical review company to assist in making a claims decision. A third party medical review company has the effect of helping to isolate part of the decision making process from the insurer who may have a vested interest in the outcome. While the use of a third party may reduce the potential conflict of interest, a close financial relationship between the two entities may also counteract that effect. As a consequence, information pertaining to the relationship between the insurer and the third party review company is typically discoverable in the post-Glenn environment. For example, in Dilley v. Metropolitan Life Ins. Co., 256 F.R.D. 643 (N.D. Cal. 2009), the court permitted the discovery of all documents, employment agreements, invoices and amounts paid by the insurer to the third party medical review company. Similarly, discovery regarding compensation agreements were also allowed in Zewdu v. Citigroup Long Term Disability Plan, 264 F.R.D. 622 (N.D. Cal 2010) and Santos v. Quebecor World Long Term Disability Plan, 254 F.R.D. 643, 650 (E.D. Cal. 2009)(allowing discovery of every communication between the insurer, the third party review company and the doctors involved in reviewing plaintiff’s claim.). Keep in mind that normal discovery rules still able. The requests must still be limited in time and scope and can be opposed by the producing party on the grounds that the requests are overly burdensome. Policies, Procedures, and Training Insurance companies typically have multiple policies, procedures, and training documents which outline how claims are to be handled.
These documents often contain sensitive and proprietary information on internal company procedures. Nevertheless, some courts have ordered insurers to produce documents which address the handling of disability claims. Recently, the court in Zewdu v. Citigroup Long Term Disability Plan, 264 F.R.D. 622 (N.D. Cal 2010) allowed the plaintiff to discovery training documents and claims manuals in effect during the processing of his claim. Similarly, in Sheakalee v. Fortis Benefits Ins. Co., 2008 U.S. Dist. LEXIS 116519 (D. Cal. 2008), the court allowed discovery into the insurer’s policies regarding the use of IME. Additional cases include: Dilley v. Metropolitan Life Ins. Co., 256 F.R.D. 643 (N.D. Cal. 2009) (Allowed discovery of training documents regarding the handling of disability claims.) Santos v. Quebecor World Long Term Disability Plan, 254 F.R.D. 643, 649 (E.D. Cal. 2009) (Allowed discovery of the policies and procedures of insurer related to Social Security Administration determinations. Also, allowed discovery of documents relating to the procedures used in determining plaintiff’s claim, including the criteria used in making decisions.) McCurdy, 2007 U.S. Dist. LEXIS 25917, 2007 WL 915177 (Court allowed discovery of claims manuals and procedures during the relevant time period.) Compensation and Performance Evaluations Compensation paid to individuals involved in making a claims decision is scrutinized to see if there are any incentives for denying claims. Since this potential danger exists, the courts have allowed plaintiffs to discovery information regarding the compensation, bonuses, raises, promotions and evaluations of the personnel involved in the claims decision.
On the other hand, the court is more sensitive when the discovery seeks an individual’s performance review records. In fact, most circuits have drawn a line when it comes to individual reviews and typically allow discovery only into the procedures and policies regarding those reviews. However, the Ninth Circuit is different in this regard as more recent cases seem to allow discovery of performance evaluations for the individuals involved in the claims decision. For example, the court in Sullivan v. Deutsche Bank Ams. Holding Corp., 2010 U.S. Dist. LEXIS 8414 (D. Cal. 2010) felt that requests for performance evaluations were reasonably calculated to lead to the discovery of admissible evidence. Additional cases discussing the discovery of performance review or compensation documents include: Zewdu v. Citigroup Long Term Disability Plan, 264 F.R.D. 622 (N.D. Cal 2010) ( Allowed discovery of the performance evaluations of medical professions involved in handling the claim.) Knopp v. Life Ins. Co. of N. Am., 2009 U.S. Dist. LEXIS 120267, 2009 WL 5215395 at *4 (N.D. Cal. Dec. 28, 2009) ( Discovery request for performance evaluations for the medical consultants or companies allowed.) Santos v. Quebecor World Long Term Disability Plan, 254 F.R.D. 643, 650 (E.D. Cal. 2009) ( Information regarding compensation, bonuses, raises, evaluations, promotions, promotional opportunities and any other incentive is deemed discoverable.) Sullivan v. Deutsche Bank Ams. Holding Corp., 2010 U.S. Dist. LEXIS 8414 (D. Cal. 2010) ( Court held that plaintiff’s request for the performance evaluations is reasonably calculated to lead to the discovery of admissible evidence.) Santos v. Quebecor World Long Term Disability Plan, 254 F.R.D. 643, 650 (E.D. Cal. 2009) (Information regarding compensation, bonuses, raises, evaluations, promotions, promotional opportunities and any other incentive.) Sheakalee v. Fortis Benefits Ins. Co., 2008 U.S. Dist. LEXIS 116519 (D. Cal. 2008) (Information regarding the compensation paid to IME physicians by insurer.) Depositions There is a split among circuits regarding whether depositions should be allowed.
Even within the Ninth Circuit itself, there are opinions that go both ways. For example, in Fowler v. Aetna Life Ins. Co., 615 F. Supp. 2d 1130, 1136 (D. Cal. 2009), the court allowed depositions of the insurer, the vocational consultant involved, and the physician peer reviewer. The court reasoned that as long as the deposition sought information pertaining to the conflict of interest, then such depositions were appropriate. However, in Sheakalee v. Fortis Benefits Ins. Co., 2008 U.S. Dist. LEXIS 116519 (D. Cal. 2008), the court rejected attempts by the plaintiff to depose the person most knowledgeable from the insurer regarding the handling of the claim. Although the court acknowledged that a deposition may reveal some information regarding the conflict of interest, the plaintiff’s deposition requests were too broad and sought information that could be more readily obtained through interrogatories. Additional cases on this issue include: Santos v. Quebecor World Long Term Disability Plan, 254 F.R.D. 643, 651 (E.D. Cal. 2009) ( Court denies requests to depose third party review company. Additional depositions denied because plaintiff failed to demonstrate the necessity of those depositions.) Alvis v. AT&T Integrated Disability Serv. Ctr., 2009 U.S. Dist. LEXIS 31565 (E.D. Cal. Apr. 14, 2009) (Leave to conduct additional depositions denied.) Sheakalee v. Fortis Benefits Ins. Co., 2008 U.S. Dist. LEXIS 116519 (D. Cal. 2008) (Denied request to depose person most knowledgeable from insurer regarding the handling of his claim.)
Discovery Prohibited There is greater diversity in the types of information that the courts have not allowed. Luckily, the justification for rejecting the discovery requests is based in one of three principles. The first and most common objection is that the discovery request does not pertain to the conflict of interest. This is because Glenn did not open the door on all discovery. No matter how relevant such evidence might be, discovery into the underlying rational of a claims decision is not allowed. This is because the question before the court is not whether the claims decision was correct, but whether or not the claims administrator abused its discretion when they made that decision. For example, in Santos v. Quebecor World Long Term Disability Plan, 254 F.R.D. 643, 648-51 (E.D. Cal. 2009), plaintiff sought information regarding the names of persons who participated in the decision to terminate Plaintiff’s benefits, the chronological order of each and every action taken by each and every person in deciding to terminate Plaintiff’s benefits, and documents reviewed by the person or persons who decided to terminate Plaintiff’s benefits.
This was considered by the court to address the merits of the claims decision and not the conflict of interest. The second key objection is that the requested discovery is not narrowly tailored. Since ERISA discovery is limited to the conflict of interest, that discovery must be tailored to reveal the nature and extent of the conflict of interest. This includes narrowly tailoring the request in terms of time. Sheakalee v. Fortis Benefits Ins. Co., 2008 U.S. Dist. LEXIS 116519 (D. Cal. 2008) stands for the proposition that plaintiffs are not entitled to discovery prior to the issuance of the policy. Arguably, this holding could also be extended to including the time period after benefits were denied. This is in-line with Groom v. Standard Ins. Co., 492 F.Supp.2d 1202, 1205 (C.D. Cal. 2007) which is often cited for the proposition that discovery “must not be a fishing expedition.” The third objection against proposed ERISA discovery is that burden or expense outweighs its likely benefit. Of course, this is a common objection to virtually all discovery, not just under ERISA. However, it is even more applicable in this context because of the limited use of this evidence and the fact that conflict of interest is but one factor among several when determining whether a claims administrator has abused its discretion. Dilley, 256 F.R.D. at 644. In addition, it is this costs balancing that has led some courts to prohibit expensive depositions and yet allow interrogatories on the same issue.
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Therefore, it has become universally accepted that the courts may consider evidence outside the administrative record to decide the nature, extent and effect of any conflict of interest on the decision-making process. Although Glenn allowed the consideration of extrinsic evidence, it did not provide any guidance on the scope and breadth of the discovery to be allowed in each case. As a result, in the two years since Glenn was decided, the district courts have struggled to provide a consistent framework for the types of evidence that would or would not be allowed. Here in the Ninth Circuit, a general pattern has begun to emerge. While this is far from universally accepted, there are certain recognized areas of discovery that are considered appropriate for ERISA cases. Statistics The courts have generally allowed plaintiffs to seek discovery on a variety of statistics, including the total number of claims, the number claimants seeking benefits, the number of claims approved, denied, or submitted to an outside referral agency.
A key advantage in providing these statistics is that information can be provided in a summary format without identifying the third-party claimants or disclosing identifying information. In an extremely detailed decision, the court in Santos v. Quebecor World Long Term Disability Plan, 254 F.R.D. 643, 649 (E.D. Cal. 2009) allowed the plaintiff to discover statistical information regarding the number of claimants seeking long term disability benefits with certain diagnoses, the approval rate of such claims, and claims granting history related to those with a familial relationship with the insurer. Other cases discussing the statistics allowed under ERISA include: Dilley v. Metropolitan Life Ins. Co., 256 F.R.D. 643 (N.D. Cal. 2009)(allowing statistics on the number of claims granted or denied based in any way upon medical reviews by that company.) Zewdu v. Citigroup Long Term Disability Plan, 264 F.R.D. 622 (N.D. Cal 2010)( Number of disability claims reviewed, granted, and denied by independent peer review company.).
Walker v. Metro. Life Ins. Co., 585 F. Supp. 2d 1167, 1176 (D. Cal. 2008)( The number of claims insurer has accepted or granted and rejected or denied after a review by a physician retained through NMR from 2005 through 2007). Relationship with Third Party Review Company It is not unusual for an insurer to engage the services of a third party medical review company to assist in making a claims decision. A third party medical review company has the effect of helping to isolate part of the decision making process from the insurer who may have a vested interest in the outcome. While the use of a third party may reduce the potential conflict of interest, a close financial relationship between the two entities may also counteract that effect. As a consequence, information pertaining to the relationship between the insurer and the third party review company is typically discoverable in the post-Glenn environment. For example, in Dilley v. Metropolitan Life Ins. Co., 256 F.R.D. 643 (N.D. Cal. 2009), the court permitted the discovery of all documents, employment agreements, invoices and amounts paid by the insurer to the third party medical review company. Similarly, discovery regarding compensation agreements were also allowed in Zewdu v. Citigroup Long Term Disability Plan, 264 F.R.D. 622 (N.D. Cal 2010) and Santos v. Quebecor World Long Term Disability Plan, 254 F.R.D. 643, 650 (E.D. Cal. 2009)(allowing discovery of every communication between the insurer, the third party review company and the doctors involved in reviewing plaintiff’s claim.). Keep in mind that normal discovery rules still able. The requests must still be limited in time and scope and can be opposed by the producing party on the grounds that the requests are overly burdensome. Policies, Procedures, and Training Insurance companies typically have multiple policies, procedures, and training documents which outline how claims are to be handled.
These documents often contain sensitive and proprietary information on internal company procedures. Nevertheless, some courts have ordered insurers to produce documents which address the handling of disability claims. Recently, the court in Zewdu v. Citigroup Long Term Disability Plan, 264 F.R.D. 622 (N.D. Cal 2010) allowed the plaintiff to discovery training documents and claims manuals in effect during the processing of his claim. Similarly, in Sheakalee v. Fortis Benefits Ins. Co., 2008 U.S. Dist. LEXIS 116519 (D. Cal. 2008), the court allowed discovery into the insurer’s policies regarding the use of IME. Additional cases include: Dilley v. Metropolitan Life Ins. Co., 256 F.R.D. 643 (N.D. Cal. 2009) (Allowed discovery of training documents regarding the handling of disability claims.) Santos v. Quebecor World Long Term Disability Plan, 254 F.R.D. 643, 649 (E.D. Cal. 2009) (Allowed discovery of the policies and procedures of insurer related to Social Security Administration determinations. Also, allowed discovery of documents relating to the procedures used in determining plaintiff’s claim, including the criteria used in making decisions.) McCurdy, 2007 U.S. Dist. LEXIS 25917, 2007 WL 915177 (Court allowed discovery of claims manuals and procedures during the relevant time period.) Compensation and Performance Evaluations Compensation paid to individuals involved in making a claims decision is scrutinized to see if there are any incentives for denying claims. Since this potential danger exists, the courts have allowed plaintiffs to discovery information regarding the compensation, bonuses, raises, promotions and evaluations of the personnel involved in the claims decision.
On the other hand, the court is more sensitive when the discovery seeks an individual’s performance review records. In fact, most circuits have drawn a line when it comes to individual reviews and typically allow discovery only into the procedures and policies regarding those reviews. However, the Ninth Circuit is different in this regard as more recent cases seem to allow discovery of performance evaluations for the individuals involved in the claims decision. For example, the court in Sullivan v. Deutsche Bank Ams. Holding Corp., 2010 U.S. Dist. LEXIS 8414 (D. Cal. 2010) felt that requests for performance evaluations were reasonably calculated to lead to the discovery of admissible evidence. Additional cases discussing the discovery of performance review or compensation documents include: Zewdu v. Citigroup Long Term Disability Plan, 264 F.R.D. 622 (N.D. Cal 2010) ( Allowed discovery of the performance evaluations of medical professions involved in handling the claim.) Knopp v. Life Ins. Co. of N. Am., 2009 U.S. Dist. LEXIS 120267, 2009 WL 5215395 at *4 (N.D. Cal. Dec. 28, 2009) ( Discovery request for performance evaluations for the medical consultants or companies allowed.) Santos v. Quebecor World Long Term Disability Plan, 254 F.R.D. 643, 650 (E.D. Cal. 2009) ( Information regarding compensation, bonuses, raises, evaluations, promotions, promotional opportunities and any other incentive is deemed discoverable.) Sullivan v. Deutsche Bank Ams. Holding Corp., 2010 U.S. Dist. LEXIS 8414 (D. Cal. 2010) ( Court held that plaintiff’s request for the performance evaluations is reasonably calculated to lead to the discovery of admissible evidence.) Santos v. Quebecor World Long Term Disability Plan, 254 F.R.D. 643, 650 (E.D. Cal. 2009) (Information regarding compensation, bonuses, raises, evaluations, promotions, promotional opportunities and any other incentive.) Sheakalee v. Fortis Benefits Ins. Co., 2008 U.S. Dist. LEXIS 116519 (D. Cal. 2008) (Information regarding the compensation paid to IME physicians by insurer.) Depositions There is a split among circuits regarding whether depositions should be allowed.
Even within the Ninth Circuit itself, there are opinions that go both ways. For example, in Fowler v. Aetna Life Ins. Co., 615 F. Supp. 2d 1130, 1136 (D. Cal. 2009), the court allowed depositions of the insurer, the vocational consultant involved, and the physician peer reviewer. The court reasoned that as long as the deposition sought information pertaining to the conflict of interest, then such depositions were appropriate. However, in Sheakalee v. Fortis Benefits Ins. Co., 2008 U.S. Dist. LEXIS 116519 (D. Cal. 2008), the court rejected attempts by the plaintiff to depose the person most knowledgeable from the insurer regarding the handling of the claim. Although the court acknowledged that a deposition may reveal some information regarding the conflict of interest, the plaintiff’s deposition requests were too broad and sought information that could be more readily obtained through interrogatories. Additional cases on this issue include: Santos v. Quebecor World Long Term Disability Plan, 254 F.R.D. 643, 651 (E.D. Cal. 2009) ( Court denies requests to depose third party review company. Additional depositions denied because plaintiff failed to demonstrate the necessity of those depositions.) Alvis v. AT&T Integrated Disability Serv. Ctr., 2009 U.S. Dist. LEXIS 31565 (E.D. Cal. Apr. 14, 2009) (Leave to conduct additional depositions denied.) Sheakalee v. Fortis Benefits Ins. Co., 2008 U.S. Dist. LEXIS 116519 (D. Cal. 2008) (Denied request to depose person most knowledgeable from insurer regarding the handling of his claim.)
Discovery Prohibited There is greater diversity in the types of information that the courts have not allowed. Luckily, the justification for rejecting the discovery requests is based in one of three principles. The first and most common objection is that the discovery request does not pertain to the conflict of interest. This is because Glenn did not open the door on all discovery. No matter how relevant such evidence might be, discovery into the underlying rational of a claims decision is not allowed. This is because the question before the court is not whether the claims decision was correct, but whether or not the claims administrator abused its discretion when they made that decision. For example, in Santos v. Quebecor World Long Term Disability Plan, 254 F.R.D. 643, 648-51 (E.D. Cal. 2009), plaintiff sought information regarding the names of persons who participated in the decision to terminate Plaintiff’s benefits, the chronological order of each and every action taken by each and every person in deciding to terminate Plaintiff’s benefits, and documents reviewed by the person or persons who decided to terminate Plaintiff’s benefits.
This was considered by the court to address the merits of the claims decision and not the conflict of interest. The second key objection is that the requested discovery is not narrowly tailored. Since ERISA discovery is limited to the conflict of interest, that discovery must be tailored to reveal the nature and extent of the conflict of interest. This includes narrowly tailoring the request in terms of time. Sheakalee v. Fortis Benefits Ins. Co., 2008 U.S. Dist. LEXIS 116519 (D. Cal. 2008) stands for the proposition that plaintiffs are not entitled to discovery prior to the issuance of the policy. Arguably, this holding could also be extended to including the time period after benefits were denied. This is in-line with Groom v. Standard Ins. Co., 492 F.Supp.2d 1202, 1205 (C.D. Cal. 2007) which is often cited for the proposition that discovery “must not be a fishing expedition.” The third objection against proposed ERISA discovery is that burden or expense outweighs its likely benefit. Of course, this is a common objection to virtually all discovery, not just under ERISA. However, it is even more applicable in this context because of the limited use of this evidence and the fact that conflict of interest is but one factor among several when determining whether a claims administrator has abused its discretion. Dilley, 256 F.R.D. at 644. In addition, it is this costs balancing that has led some courts to prohibit expensive depositions and yet allow interrogatories on the same issue.
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