:: Discovery Permitted To Determine Scope Of Administrative Record

In the present case, the plaintiff asserts its procedural challenge on the grounds that, given the different versions of the administrative record produced during discovery, many of which lacked important medical records initially provided by the plaintiff, it is impossible to determine what comprises the full administrative record on which the defendants relied when denying the plaintiff’s claim. The Court concludes that this claim justifies discovery beyond the administrative record. The plaintiff’s allegation that the defendants may have failed to consider significant portions of the record may give rise to a procedural challenge of the kind discussed in Killian and may also give rise to an inference of a structural conflict of interest.

Pediatric Special Care, Inc. v. United Med. Res. (UMR), 2011 U.S. Dist. LEXIS 3795 ( E.D. Mich. Jan. 14, 2011)

In review of benefit denials, the federal judiciary treats the plan administrator’s determination as it would that of a administrative agency. Never mind that ERISA does not require or even mention this sort of deference. In any event, it follows on this train of thought that evidence considered in judicial review should be limited to the “administrative record”, i.e., the evidence before the plan administrator.

Nonetheless, discovery may be available in the case of procedural irregularities, as indicated above, or into possible conflicts of interest. Typically, some sort of evidentiary showing is required as a predicate.

For example, as noted in the Michigan case cited above, “in the context of a procedural challenge to an administrator’s decision, some discovery of evidence not contained in the administrative record is permissible.” In short,

The district court may consider evidence outside of the administrative record only if that evidence is offered in support of a procedural challenge to the administrator’s decision, such as an alleged lack of due process afforded by the administrator or alleged bias on its part. This also means that any prehearing discovery at the district court level should be limited to such procedural challenges.

This exception stems from a form of due process:

The Sixth Circuit has held in the procedural challenge context that due process is denied when the administrator fails to provide the insured with proper notice under the plan’s hearing procedures, VanderKlok v. Provident Life & Accident Ins. Co., 956 F.2d 610, 617 (6th Cir. 1992), and when the administrator refuses to consider evidence favorable to the insured while actively seeking out and considering evidence unfavorable to the insured, Killian v. Healthsource Provident Adm’rs, Inc., 152 F.3d 514, 522 (6th Cir. 1998).

Of course, the “due process” consists of the full and fair review requirements of ERISA, not constitutional due process. (I do not believe there is sufficient state action involved to invoke constitutional due process, at least prior to the PPACA.)

Another recent case to this effect is Dandridge v. Raytheon Co., 2010 U.S. Dist. LEXIS 5854 (D.N.J. 2010)

Aside from this category, some courts have permitted discovery of “documents about employee compensation criteria or standards . . . for employees involved in that claim.” Hughes v. CUNA Mut. Grp., 257 F.R.D. 176, 180-81 (S.D. Ind. 2009); see also, e.g., Santos v. Quebecor World Long Term Disability Plan, 254 F.R.D. 643, 650 (E.D. Cal. 2009); Myers v. Prudential Ins. Co. of Am., 581 F. Supp. 2d 904, 914 (E.D. Tenn. 2008).

See also, Denmark v. Liberty Life Ins. Co., 566 F.3d 1, 10 (1st Cir. 2009) (”The majority opinion in Glenn fairly can be read as contemplating some discovery on the issue of whether a structural conflict has morphed into an actual conflict.”); Kalp v. Life Ins. Co. of N. Am., No. 08-1005, 2009 WL 261189 (W.D. Pa. Feb. 4, 2009) and McGahey v. Harvard University Flexible Benefits Plan, Civil Action No. 08-10435-RGS September 14, 2009.

Note: The PPACA does not directly alter ERISA jurisprudence in this area but the possibility of external review process may indirectly affect the scope of the administrative record.