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O'Sullivan v. Hartford Life and Accident Insurance Co.

United States District Court, D. Kansas

May 22, 2019



          Gwynne E. Birzer, United States Magistrate Judge.

         This matter comes before the Court on Plaintiff's Motion to Compel Discovery Responses. On May 7, 2019, the Court conducted a hearing on the motion. Plaintiff Rebecca O'Sullivan appeared through counsel, Donald Peterson, II and Sean McGivern. Defendant Hartford Life and Accident Insurance Company appeared through counsel, Steven Davidson. After consideration of Plaintiff's motion (ECF No. 21), Defendant's Memorandum in Opposition (ECF No. 30), and Plaintiff's Reply (ECF No. 31), along with additional argument from counsel, Plaintiff's Motion to Compel was GRANTED in part and DENIED in part by oral rulings during the hearing. This written opinion memorializes those rulings.

         I. Background[1]

         Plaintiff Rebecca A. O'Sullivan initially filed this case in the Sedgwick County District Court[2] against defendant Hartford Life and Accident Insurance Company (“Hartford”), the issuer and administrator of a long-term disability plan (“Plan”) for Plaintiff's former employer, Spirit Aerosystems Holdings, Inc. (“Spirit”). Plaintiff worked for Spirit from approximately 2006 through August 5, 2014. In late 2012 and 2013, Plaintiff suffered from medical issues, including West Nile virus and Grave's disease. In 2013, Plaintiff's thyroid was surgically removed, leaving her with lingering physical difficulties. Plaintiff's last day of work was August 5, 2014, and she was initially placed on leave, but Spirit ultimately terminated her employment in October 2015.

         Plaintiff applied for long-term disability (“LTD”) benefits, and Defendant denied her claim, with Defendant's final letter denying her appeals dated October 6, 2017. She claims Defendant's decision to deny her benefits was arbitrary, capricious, and not supported by substantial evidence. Defendant hired two physicians to review her case, and Plaintiff alleges those physicians used inaccurate and unreasonable review procedures. For example, Plaintiff claims one of the physicians was a psychiatrist, who never examined Plaintiff, despite the American Psychiatric Association's ethical rules prohibiting psychiatrists from offering a professional opinion without an examination. Plaintiff brought this case to recover LTD benefits under the employee benefit plan pursuant to the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1132(a)(1)(B).

         Defendant removed the case to this federal court on September 4, 2018. During the Scheduling Conference held on December 3, 2018, the parties discussed potential discovery issues. The parties disagreed on the appropriateness of discovery outside the administrative record reviewed by Defendant when determining Plaintiff's eligibility for LTD benefits. (See Scheduling Order, ECF No. 9 at 5 ¶ 2.e.) In light of the discussions during the scheduling conference, the Court ordered the parties to continue to confer regarding the potential of extra-record discovery. Additionally, the Scheduling Order required Defendant to produce the administrative record by December 21, 2018, and Plaintiff was to notify Defendant of any objections to the content of the record by January 11, 2019. (Scheduling Order, ECF No. 9 at 3.)

         After the parties' efforts to confer failed, Plaintiff filed her Motion to Compel on March 22, 2019. (ECF No. 21.) During an April 5, 2019 status conference, all deadlines were stayed pending resolution of the motion to compel. (Order, ECF No. 27.) Upon completion of the parties' written briefing, the Court convened the May 7, 2019 conference to further discuss the issue.

         II. Legal Standard

         When deciding whether discovery is appropriate in an ERISA denial-of-benefits case, the Court must first acknowledge the standard by which it reviews the claims administrator's decision. The Supreme Court determined “a denial of benefits challenged under §1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan.”[3] If the benefits plan gives the administrator discretionary authority, the Court applies an arbitrary and capricious standard of review.[4]The parties' briefs each suggest the Plan granted Defendant, as claim fiduciary, discretionary authority to interpret the Plan. Therefore, the Court will ultimately review this case under the arbitrary and capricious standard of review.

         When utilizing the arbitrary and capricious standard to review the administrator's decision, “the district court generally may consider only the arguments and evidence before the administrator at the time it made that decision.”[5] Therefore, the court's review is usually “limited to the administrative record-the materials compiled by the administrator in the course of making his decision, ”[6] and it “is the unusual case in which the district court should permit supplementation of the record.”[7] “The party moving to supplement the record or engage in extra-record discovery bears the burden of showing its propriety.”[8]Courts do not look favorably on attempts to discover or present additional substantive evidence regarding the applicant's disability.[9] But courts have permitted discovery, outside the administrative record, under such “exceptional circumstances” as when a conflict of interest exists or “when there is evidence that a claimant could not have presented in the administrative process.”[10]

         An inherent conflict of interest arises when a claims administrator acts in a dual role as both administrator/evaluator and insurer/payor of a claim.[11] The court reviewing a denial of benefits considers the conflict of interest as a factor in its abuse of discretion analysis, weighing it “more or less heavily depending on the seriousness of the conflict.”[12]Courts generally view the conflict as more important “where circumstances suggest a higher likelihood that it affected the benefits decision” and as less important “where the administrator has taken active steps to reduce potential bias and to promote accuracy.”[13]

         Courts in this District and the Tenth Circuit apply the scope of discovery standard of Fed.R.Civ.P. 26(b) to requests for extra-record discovery related to a dual-role conflict of interest.[14] Under this standard, parties are entitled to discovery regarding matters that are both “relevant to any party's claim or defense and proportional to the needs of the case.”[15] But “neither a claimant nor an administrator should be allowed to use discovery to engage in unnecessarily broad discovery that slows the efficient resolution of an ERISA claim.”[16] The district court must balance its “substantial discretion in handling discovery requests under Rule 26(b), ”[17] with “both the need for a fair and informed resolution of the claim and the need for a speedy, inexpensive, and efficient resolution of the claim.”[18]

         Without additional discovery, “a claimant may not have access to the information necessary to establish the seriousness of the conflict. Similarly, the administrator may not be fully able to rebut a claim of conflict by showing that it ‘has taken active steps to reduce potential bias and to promote accuracy, for example, by walling off claims administrators from those interested in firm finances.'”[19] Again, though, the benefit of discovery must be weighed against the burdens and costs.

         When determining the necessity of additional discovery, the thoroughness and content of the administrative record can be an important tool.[20] For example, a party seeking conflict discovery might satisfy their burden by pointing to red flags in the administrative record about which “some limited extra-record discovery may reveal additional insight.”[21] Even then, when a need is demonstrated for additional discovery, claimants should narrowly tailor any extra-record requests, [22] keeping in mind the goal of efficient resolution of an ERISA claim.

         III. Discussion

         A. Duty to Confer

         During prior conferences, and throughout the briefing, the parties demonstrated their attempts to resolve their differences through both written correspondence and discussion. Therefore, the Court is satisfied they have sufficiently conferred as required by D. Kan. Rule 37.2 and Fed.R.Civ.P. 37(a)(1).

         B. Plaintiff's Motion to Compel (ECF No. 21)

         The parties agree Defendant acted in a dual role regarding the LTD Plan: first, as the insurer (the entity that would pay out benefits); and second, as the administrator (the evaluator making the decision whether benefits are payable); therefore, a conflict exists in this case. Plaintiff contends discovery outside the administrative record is appropriate because Defendant has a history of biased claims administration. Plaintiff claims Defendant used file review companies with known financial biases in favor of the insurance industry, with no system in place to ensure these review companies control their own financial biases. Additionally, Plaintiff argues the administrative record indicates Defendant's financial conflict of interest tainted its decision, because Defendant relied on what Plaintiff perceives as an unethical, impersonal psychiatric review to support its denial of benefits. Plaintiff claims another file review relied upon by Defendant is implausible on its face.

         Defendant argues Plaintiff's requests are not narrow or targeted, but contain more than 40 separate requests regarding a wide range of topics. Generally, Defendant objects to Plaintiff's discovery requests as unnecessarily overbroad and burdensome. Most requests seek information over a seven-year span, rather than the three-year time frame (August 2014 to October 2017) during which Defendant considered Plaintiff's claim. Many requests also use broad phrasing, such as “any and all communications” or “any and all documents.” Rather than this being an efficient ERISA matter, Defendant contends Plaintiff has served discovery as if this is the typical civil litigation. Furthermore, Defendant argues Plaintiff did not object to the administrative record as required in the Scheduling Order, and has not met her burden to show the administrative record itself to be inadequate.

         Although the Court understands Defendant's argument regarding Plaintiff's failure to object to the administrative record as produced, the discussion at the motion conference illuminated Plaintiff's concerns. The information Plaintiff currently seeks is that which would not typically be produced as part of the administrative record considered by Hartford. Plaintiff seeks extra-record information, generally, about Defendant's own processes. Therefore, although the Court takes note of Defendant's concern, it chooses to review Plaintiff's separate requests on the merits rather than overruling them on the basis of any untimely objection.

         Plaintiff's motion to compel includes six categories of information, encompassing 15 separate discovery requests. Each group of requests will be addressed in turn.

         1. Governing Plan Documents

         The first topic addresses a single Request for Production (“RFP”), RFP No. 4. This request seeks, “Copies of all agreements, contracts, communications, memoranda, or other written materials regarding this policy, the subject long-term disability plan, Policy No. GL/GLT-696984.” (ECF No. 21-1 at 4.)

         On review of the briefing, and after discussion with the parties, it appears the dispute regarding this RFP is resolved. Plaintiff's motion modified her prior request for “all . . . written materials regarding this . . . policy, ” to seek only Defendant's “master” insurance policy, as well as “similar plan-level governing documents” in Defendant's control. (ECF No. 21.) Defendant produced as part of the administrative record the “Certificate of Insurance, ” which contains the relevant coverage terms and conditions applicable to Plaintiff's benefit claim. Defendant also agrees to produce the master policy in force between Defendant and Plaintiff's employer during the time period Plaintiff's claim was pending. Because Plaintiff's Reply and representation during the conference indicated she will accept the master policy as responsive to RFP No. 4, Plaintiff's motion is DENIED AS MOOT regarding Plaintiff's RFP No. 4. Defendant is expected to produce the master policy forthwith.

         2. Claim File Documents

         The second disputed category of Plaintiff's requests include the following:

RFP No. 1: any and all correspondence, interoffice memoranda, notes or emails to anyone or received from anyone regarding the plaintiff's long-term disability claim at any time.
RFP No. 5: any and all correspondence or communication with any person or entity who reviewed the medical records of plaintiff.
RFP No. 20: all documents, records, and information that demonstrates compliance with the administrative processes and safeguards required pursuant to paragraph (b)(5) of 29 C.F.R. 2560.503-1, with respect to the benefit determinations at issue in this lawsuit.

(ECF No. 21-1 at 1, 6, 34-38.) Plaintiff's motion states she has now limited these three requests to seek “all documents and correspondence generated in the course of Hartford's consideration of O'Sullivan's claims.” (ECF No. 21 at 3.) Defendant objects to the Requests as overly broad and unduly burdensome, as well as seeking potentially privileged documents, without any restriction or temporal limitation. Defendant contends all responsive, non-privileged communications are contained within the administrative record previously produced, and therefore it has fully complied. (ECF No. 30 at 11.) Plaintiff's Reply notes she “accepts Hartford's representation that it has produced the full and complete claim file, ” which resolves RFP Nos. 1 and 5. (ECF No. 31 at 7.) However, Plaintiff still believes Defendant failed to respond to RFP No. 20.

         Plaintiff's Reply, for the first time, narrows the universe of documents sought by RFP No. 20 to those “during the 2014-15 timeframe.” (Id.) She contends although she may have the complete administrative record, there is nothing included in the record to demonstrate how Defendant complied with the safeguards required by 29 C.F.R. 2560.503-1(b)(5). This ERISA regulation requires an employee benefit plan to “establish and maintain reasonable claims procedures” including processes and safeguards designed to ensure the plan's claims decisions are made in accordance with governing plan documents and the plan is applied consistently.[23] Plaintiff argues Defendant has a “preexisting legal duty to provide the requested” information to Plan participants such as Plaintiff (ECF No. 21 at 4) and the information is deemed relevant under the ERISA claim procedure regulation (ECF No. 31 at 7).

         Defendant contends it has no documents specifically responsive to this request; rather, it claims its compliance processes are unwritten. In its four-page written response to RFP No. 20, it outlines the steps it has taken “to reduce the potential bias stemming from its purported conflict of interest and promote the accuracy of its claim determinations.” (ECF No. 21-1 at 35-38.) In her motion, Plaintiff contends she should not have to accept this “unsworn statement” (ECF No. 21), but Defendant later supports its response with sworn affidavits, attached to its brief. (ECF No. 30, Exs. 2-4.) In Plaintiff's Reply, she appears to accept Defendant's affidavits, but still contends Defendant “ought to be able to produce documents reflective of its stated policies.” (ECF No. 31 at 9.)

         Defendant produced the entire administrative record, affirmatively stated it possesses no responsive documents, and provided a narrative response to RFP No. 20. Regardless of whether Defendant's unsworn narrative statement is an appropriate method of response to a Rule 34 document request, [24] the Court accepts Defendant's later affidavits and its statement it has no responsive documents. It is not clear in Plaintiff's briefing what else she is looking for. The Court finds Plaintiff fails to meet her burden to demonstrate why the administrative record and other information provided by Defendant is insufficient.

         As set forth above, Plaintiff's motion is DENIED as moot as to RFP Nos. 1 and 5, and DENIED as to RFP No. 20.

         3. File Review Companies and Compensation

         In the next category of requests, Plaintiff asks Defendant to produce information about two outside vendors (MES Peer Review Services (“MES”) and Professional Disability Associations (“PDA”)) hired by Defendant, and two physicians. Defendant retained the vendors to engage the physicians to complete ...

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