Jete Crosby v. Louisiana Health Service


PUBLISHED OPINION FILED. [10-30043 Vacated and Remanded] Judge: HRD , Judge: FPB , Judge: JWE. Mandate pull date is 01/19/2011 [10-30043]

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Jete Crosby v. Louisiana e: 10-30043 Document: 00511334676 Cas Health Service Page: 1 Date Filed: 12/29/2010 Doc. 0 IN THE UNITED STATES COURT OF APPEALS United States Court of Appeals FOR THE FIFTH CIRCUIT Fifth Circuit FILED December 29, 2010 N o . 10-30043 Lyle W. Cayce Clerk J E T E CROSBY, P la in t iff - Appellant v. L O U I S I A N A HEALTH SERVICE AND INDEMNITY COMPANY, doing b u s in e s s as Blue Cross and Blue Shield of Louisiana, D e fe n d a n t - Appellee A p p e a l from the United States District Court for the Eastern District of Louisiana B e fo r e DEMOSS, BENAVIDES, and ELROD, Circuit Judges. H A R O L D R. DEMOSS, JR.: A p p e lla n t Jete Crosby appeals the district court's summary judgment on h e r Employee Retirement Income Security Act of 1974 (ERISA) claim to recover d e n ie d health care benefits and the magistrate judge's decision to limit d is c o v e r y . The challenges raised by Crosby require us to determine the scope of a d m is s ib le evidence and permissible discovery in an ERISA action to recover b e n e fits under 29 U.S.C. 1132(a)(1)(B). Because the court too narrowly defined t h e scope of discovery, we vacate the judgment and remand for further discovery. Case: 10-30043 Document: 00511334676 Page: 2 Date Filed: 12/29/2010 No. 10-30043 I. Crosby was insured in 2006 under the Blue$aver Group High-Deductible H e a lt h Benefit Plan (the Plan) issued by Louisiana Health Service and I n d e m n it y Company (Blue Cross). The Plan was an employee benefit plan g o v e r n e d by ERISA. In late 2006, Crosby's periodontists diagnosed her with s e v e r e idiopathic root resorption, which placed her at risk for losing her teeth. Her periodontists performed several procedures to prevent the loss of her ability t o chew, speak, and swallow. Crosby sought benefits under the Plan to cover the c o s t s of the procedures. B lu e Cross denied coverage, and Crosby internally appealed the adverse b e n e fit determination in accordance with the Plan. Crosby's first appeal was a s s ig n e d to Dr. Dwight Brower for review. Dr. Brower considered the appeal a n d upheld the adverse benefit determination. He found that the Plan's "Dental C a r e and Treatment" provision excluded from coverage the services performed b y the periodontists. Blue Cross informed Crosby of Dr. Brower's decision, and C r o s b y requested a second internal appeal. Crosby's second appeal was presented to an appeals committee that in c lu d e d Dr. Brower. The appeals committee arrived at the same result reached b y Dr. Brower. Crosby then filed suit against Blue Cross, seeking to recover wrongfully d e n ie d benefits. The parties exchanged their initial disclosures and Blue Cross s e n t Crosby a copy of the administrative record. Crosby later sought additional d is c o v e r y . Blue Cross objected to her discovery requests, asserting that the s c o p e of discovery was limited to the administrative record and moved for s u m m a r y judgment. Days later Crosby moved to compel discovery, and the d is t r ic t court set Crosby's motion for hearing before a magistrate judge. The magistrate conducted a hearing and indicated that she would compel s o m e discovery. However, in her written order, she denied all requested relief. 2 Case: 10-30043 Document: 00511334676 Page: 3 Date Filed: 12/29/2010 No. 10-30043 T h r e e days later the district court, interpreting Crosby's claim as a claim for b e n e fits under 29 U.S.C. 1132(a)(1)(B), granted summary judgment for Blue C ross. Thereafter, Crosby filed a motion asking the district court to reconsider a n d vacate its judgment. In her motion and at the hearing on the motion, C r o s b y complained about the lack of discovery she received and the magistrate's d e c is io n to deny discovery. She also argued that issues of fact remained and that s u m m a r y judgment should not have been granted. The district court denied her m o t io n , and Crosby appealed. II. O n appeal Crosby argues that the district court erred in granting s u m m a r y judgment in favor of Blue Cross because the evidence in the record in d ic a te s that Blue Cross violated ERISA's procedural requirements and abused it s discretion by denying Crosby's claim for benefits. She also argues that the m a g is tr a t e judge erred by refusing to compel Crosby's requested discovery. We w ill first consider Crosby's complaint that discovery was wrongfully denied. A court's decision to limit discovery is reviewed for abuse of discretion. Fielding v. Hubert Burda Media, Inc., 415 F.3d 419, 428 (5th Cir. 2005). Although a court is afforded broad discretion when deciding discovery matters, t h e court abuses its discretion when its decision is based on an erroneous view o f the law. See Paz v. Brush Engineered Materials, Inc., 555 F.3d 383, 387 (5th C ir . 2009); O'Malley v. U.S. Fid. & Guar. Co., 776 F.2d 494, 499 (5th Cir. 1985). Notwithstanding, we will only vacate a court's judgment if the court's abuse of d is c r e t io n affected the substantial rights of the appellant. Marathon Fin. Ins., I n c ., RRG v. Ford Motor Co., 591 F.3d 458, 469 (5th Cir. 2009). The appellant b e a r s the burden of proving abuse of discretion and prejudice. Id.; see Fielding, 4 1 5 F.3d at 428. 3 Case: 10-30043 Document: 00511334676 Page: 4 Date Filed: 12/29/2010 No. 10-30043 U n d e r this standard, we will review Crosby's complaint that the m a g is tr a t e judge wrongfully limited discovery.1 III. G e n e r a lly , the scope of discovery is broad and permits the discovery of " a n y nonprivileged matter that is relevant to any party's claim or defense." FED. R . CIV. P. 26(b)(1); see Wyatt v. Kaplan, 686 F.2d 276, 283 (5th Cir. 1982). A d is c o v e r y request is relevant when the request seeks admissible evidence or "is r e a s o n a b ly calculated to lead to the discovery of admissible evidence." Wiwa v. R o y a l Dutch Petroleum Co., 392 F.3d 812, 820 (5th Cir. 2004) (citation and in t e r n a l marks omitted). B e fo r e the district court, Crosby sought extensive discovery concerning the c o m p ila t io n of the administrative record, the proceedings at the administrative le v e l, and Blue Cross's past coverage determinations in situations that involved t h e jaw, teeth, and mouth. Blue Cross admitted that the information sought was lik e ly relevant. However, it refused to produce the requested information, e s s e n t ia lly arguing that although relevant, the information sought would be in a d m is s ib le . Relying on our opinion in Vega v. National Life Insurance S e r v ic e s , Inc.2 and its progeny, Estate of Bratton v. National Union Fire I n s u r a n c e Company,3 Blue Cross concluded that the only admissible evidence in a n ERISA action was 1) the administrative record; 2) evidence involving the Generally, this court is without jurisdiction to review a magistrate judge's decision to deny discovery because the decision is not a final order under 28 U.S.C. 1291. See Alpine View Co. v. Atlas Copco AB, 205 F.3d 208, 219-20 (5th Cir. 2000). However, because Crosby timely challenged the court's discovery denial in her motion for reconsideration and the district court denied the motion, we have jurisdiction to consider the magistrate's discovery denial. See id. at 220. 188 F.3d 287 (5th Cir. 1999) (en banc), abrogated on other grounds by Metro. Life Ins. Co. v. Glenn, 554 U.S. 105 (2008), as recognized in Holland v. Int'l Paper Co. Ret. Plan, 576 F.3d 240, 247 n.3 (5th Cir. 2009). 3 2 1 215 F.3d 516 (5th Cir. 2000). 4 Case: 10-30043 Document: 00511334676 Page: 5 Date Filed: 12/29/2010 No. 10-30043 in t e r p r e t a t io n of the Plan; and 3) evidence explaining medical terms and p roced u res. The magistrate judge agreed and found that Vega limited the scope of a d m is s ib le evidence and thus limited the scope of discovery to evidence of how t h e administrator interpreted the plan in other instances and expert opinions e x p la in in g medical terms. The court denied Crosby's motion to compel, c o n c lu d in g that it would be "difficult to conceive how permitting the requested r e s p o n s e s to [Crosby's] discovery requests would lead to the discovery of evidence a d m is s ib le within the restrictive boundaries identified in Vega, either because it interprets the plan or explains medical terms and procedures relating to the c la im ." We will first consider what limits Vega placed on the scope of admissible e v id e n c e in ERISA actions under 29 U.S.C. 1132(a)(1)(B). In Vega, the in s u r e d s sought coverage for Mrs. Vega's surgery. See Vega, 188 F.3d at 289. The insurer denied coverage on the basis that Mrs. Vega had notice of her need fo r surgery prior to the time she applied for plan membership and failed to d is c lo s e it. Id. at 290. The Vegas filed suit and sought to introduce evidence c o n t r a d ic t in g the plan administrator's determination that Mrs. Vega c o n t e m p la t e d surgery before applying for membership. Id. The district court g r a n t e d judgment in favor of the insurer, refusing to consider evidence that was n o t made available to the plan administrator. Id. On appeal, our en banc court considered whether the district court c o r r e c t ly refused to consider evidence that was not a part of the administrative r e c o r d when evaluating whether the plan administrator abused its discretion. See id. at 299-300. We reaffirmed our precedent holding that "with respect to m a t e r ia l factual determinations--those that resolve factual controversies related t o the merits of the claim--the court may not consider evidence that [was] not p a r t of the administrative record" unless the evidence relates to how the 5 Case: 10-30043 Document: 00511334676 Page: 6 Date Filed: 12/29/2010 No. 10-30043 a d m in is t r a t o r had interpreted the plan in the past or would assist the court in u n d e r s t a n d in g medical terms and procedures. Id. at 300. We arrived at this c o n c l u s io n after articulating our concern that a holding to the contrary would a llo w claimants to circumvent the administrative process by waiting until they file d suit to produce evidence that related to the merits of their claim for b e n e fits . Id. That was precisely what the Vegas sought to do. Id. at 290, 2993 0 0 . We found that the issue in dispute before the administrator was whether M r s . Vega had notice of her condition before she applied for plan membership. Id. at 299. The evidence the Vegas sought to introduce related to that dispute a n d the Vegas could have presented that evidence to the plan administrator. Id. a t 299-300. Accordingly, we affirmed the district court's refusal to admit the e v id e n c e . Id. at 300. We find that Vega prohibits the admission of evidence to resolve the merits o f the coverage determination--i.e. whether coverage should have been afforded u n d e r the plan--unless the evidence is in the administrative record, relates to h o w the administrator has interpreted the plan in the past, or would assist the c o u r t in understanding medical terms and procedures. See id. Vega does not, h o w e v e r , prohibit the admission of evidence to resolve other issues that may be r a is e d in an ERISA action. For example, in an ERISA action under 29 U.S.C. 1132(a)(1)(B), a claimant may question the completeness of the administrative r e c o r d ;4 whether the plan administrator complied with ERISA's procedural r e g u la tio n s ;5 and the existence and extent of a conflict of interest created by a p la n administrator's dual role in making benefits determinations and funding Estate of Bratton, 215 F.3d at 521 (indicating that a claimant may contest whether the identified administrative record is complete). Lafleur v. La. Health Serv. & Indem. Co., 563 F.3d 148, 150 (5th Cir. 2009) (remanding the case to the district court to further remand to the plan administrator because the plan administrator failed to comply with ERISA's procedural requirements). 5 4 6 Case: 10-30043 Document: 00511334676 Page: 7 Date Filed: 12/29/2010 No. 10-30043 t h e plan.6 These issues are distinct from the question of whether coverage s h o u ld have been afforded. We see no reason to limit the admissibility of e v id e n c e on these matters to that contained in the administrative record, in part, b e c a u s e we can envision situations where evidence resolving these disputes may n o t be contained in the administrative record. Accord Wildbur v. ARCO Chem. C o ., 974 F.2d 631, 638-39 (5th Cir. 1992). A discovery request for such in fo r m a t io n is relevant and thus, permissible under federal discovery rules. See W iw a , 392 F.3d at 820. H e r e , Crosby sought to discover evidence that would indicate whether the a d m in is t r a t iv e record was complete, whether Blue Cross complied with ERISA's p r o c e d u r a l requirements, and whether Blue Cross had previously afforded c o v e r a g e for claims related to the jaw, teeth, or mouth. Her discovery request w a s at least reasonably calculated to lead to the discovery of admissible e v id e n c e . The magistrate judge, however, denied Crosby's motion based on a e r r o n e o u s view of the scope of admissible and discoverable evidence in ERISA a c t io n s . That abuse of discretion prejudiced Crosby's ability to demonstrate that B lu e Cross failed to comply with ERISA's procedural requirements, that the a d m in is t r a t iv e record compiled by Blue Cross failed to contain all relevant in fo r m a t io n made available to Blue Cross prior to the filing of this suit, and that B lu e Cross had afforded coverage in similar situations. For these reasons, we vacate the judgment in this action and remand for fu r t h e r discovery. We decline to address at this time the question of whether B lu e Cross complied with ERISA's procedural requirements, whether Blue Cross a b u s e d its discretion, and whether the administrative record is complete. After Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 117 (2008) (defining conflict of interest as a factor for the court to consider when evaluating whether the plan administrator abused its discretion). 6 7 Case: 10-30043 Document: 00511334676 Page: 8 Date Filed: 12/29/2010 No. 10-30043 a d e q u a t e discovery consistent with this opinion has been conducted, the parties m a y raise these issues before the district court. VACATE and REMAND. 8

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