Like Magistrate Judge Shaffer in Jeffryes, 2006 WL 1186493, *2, I am not persuaded that a â€œblanket prohibition on discovery in ERISA cases is appropriate or required by the case law.â€ While it would not be appropriate to permit Plaintiff to conduct discovery directed to the factual merits of her claim, the Court will permit limited discovery related to the alleged bias of Dr. Gerson and the policies and procedures by which Prudential made its decision. Hoyt v. The Prudential Ins. Co. of America, Slip Copy, 2008 WL 686922 (D.Colo.) (March 12, 2008)
Hoyt v. The Prudential offers a useful analysis of when discovery may be appropriate notwithstanding the application of the deferential standard of review required under Firestone v. Bruch. In this disability case, the plaintiff alleged that the defendant carrier considered information beyond the administrative record and operated under a conflict of interest.
The Standard Of Review
The district court observed that the grant of discretionary language in the disability policy required only that the carrier have a rational basis for its decision. This issue was not in dispute.
The Parties appear to agree that the Defendants’ denial of benefits to Plaintiff is subject to deferential review by the district court under an arbitrary and capricious standard. Under this standard of review, a plan administrator’s decision will be upheld so long as it has a reasoned basis. Adamson v. Unum Life Insurance Co. of America, 455 F.3d 1209, 1212 (10th Cir.2006). â€œIndicia of arbitrary and capricious actions include a lack of substantial evidence, a mistake of law, and bad faith.â€ Buchanan v. Reliance Standard Life Ins. Co., 5 F.Supp.2d 1172, 1180 (D.Kan.1998).
The Limited Scope Of Review
The standard of review applied has been interpreted by the federal judiciary to limit the subject matter considered on review. As summarized by the district court,
The Tenth Circuit, like a majority of other courts, has held that â€œ[i]n determining whether the plan administrator’s decision was arbitrary and capricious, the district court generally may consider only the arguments and evidence before the administrator at the time it made that decision.â€ Sandoval v. Aetna Life & Cas. Ins. Co., 967 F.2d 377, 380 (10th Cir.1992). See also Hall v. Unum Life Ins. Co. of Am., 300 F.3d 1197, 1201 (10th Cir.2002); Perlman v. Swiss Bank Corp. Comprehensive Disability Protection Plan, 195 F.3d 975, 981 (7th Cir.1999); Miller v. United Welfare Fund, 72 F.3d 1066, 1071 (2d Cir.1995).
Exception To The Rule
In this case, however, the plaintiff made adequate showing of important collateral issues that warranted a broader grant of discovery rights. In the first place, the plaintiff asserted that â€œthe administrator considered information beyond the record it chose to produce.â€
The gist of the argument can be found in the allegations of bias.
Plaintiff further asserts that this information includes bias on the part of Dr. Gerson, Prudential’s reviewing physician, and his application of the pre-existing condition limitation. Id. at 3. Plaintiff also argues that the Court should allow discovery outside of the administrative record because there is evidence of a conflict of interest. Specifically, Plaintiff alleges, inter alia, that Prudential’s reviewing physician, Dr. Gerson, reviews between 200 and 250 files annually for Prudential, Dr. Gerson is paid approximately $250,000.00 per year by Prudential for those reviews, Dr. Gerson’s livelihood may depend on the compensation received by Prudential, and that Dr. Gerson â€œcoach[ed] Prudential employees on how to best deny claimsâ€ and identified one of Plaintiff’s treating physicians as â€œuncooperative because of her refusal to violate federal laws.â€
While the question of bias will not always justify additional discovery, in this case, the allegations carried sufficient force to obtain this result. Noting that “courts have allowed some discovery in ERISA actions when the plaintiff challenges the procedures used to reach a benefits decision or asserts bias on the part of the plan administrator”, the district court granted the plaintiff’s motion for the additional discovery.
Note: The cases cited by the district court as authority for its decision were:
- Calvert v. Firstar Finance, Inc., 409 F.3d 286, 293 n. 2 (6th Cir.2005) (recognizing that bias on the part of the administrator may be grounds for allowing discovery);
- Orndorf v. Paul Revere Life Ins. Co., 404 F.3d 510, 520 (1st Cir.2005) (finding that â€œevidence outside the administrative record might be relevant to a claim of personal bias by a plan administratorâ€);
- Stern v. El Paso Corp., 2007 WL 1346597, *3 (D.Colo.2007) (recognizing that some discovery has been allowed in ERISA cases where plaintiff asserts bias or challenges procedures);
- Miller v. Cingular Wireless LLC, 2007 WL 14675, *4 (N.D.Okla., January 3, 2007) (affirming an order allowing limited discovery concerning the possible existence and extent of a conflict of interest by the plan administrator);
- Jeffryes v. Hartford Life and Acc. Ins. Co., 2006 WL 1186493, *2 (D.Colo. May 4, 2006) (allowing limited discovery into the procedure by which the administrator made its decision).
Additional Discovery Permitted – The court approved discovery along the following lines:
Plaintiff requests leave to serve eleven interrogatories and eight requests for production of documents as well as to conduct four depositions of the individuals listed in the Scheduling Order [Docket No. 9; filed January 9, 2008] at p. 11. Plaintiff argues that this limited discovery is necessary in order to â€œunderstand the manner in which [Plaintiff’s] benefit claim was administered to allow meaningful argument as to whether she was afforded a â€˜full and fair reviewâ€™ and whether Prudential’s decision was arbitrary and capricious.â€ Motion, pgs. 3-4. Plaintiff further argues that the information she seeks was â€œinformation that was before the administrator when it denied [Plaintiff’s] claim.â€ Reply, p. 2.
Shawn E. McDermott, Heather L. Petitmermet, Law Office of Shawn E. McDermott, LLC, Denver, CO represented the plaintiff.