Howell v. Liberty Life Assurance Company of Boston
Filing
45
ORDER granting in part and denying in part 27 Motion for Order. Plaintiff is GRANTED leave to take the deposition of Detective Ferrucci and of the claim adjuster, as limited herein, no later than July 17, 2018. By Magistrate Judge Nina Y. Wang on 6/26/2018. (nywlc1, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 17-cv-02976-CMA-NYW
WANIKA HOWELL,
Plaintiff,
v.
LIBERTY LIFE ASSURANCE COMPANY OF BOSTON,
Defendant.
ORDER ON MOTION REQUESTING DISCOVERY
Magistrate Judge Nina Y. Wang
This civil action comes before the court on Plaintiff Wanika Howell’s “Motion
Requesting Discovery and Objection to Submission of Administrative Record” (“Motion
for Discovery”), [#27, filed April 16, 2018]. The Motion for Discovery was referred to the
undersigned Magistrate Judge pursuant to the Order Referring Case dated January 29,
2018 [#17] and the memorandum dated April 17, 2018 [#28]. The court has reviewed
the Motion for Discovery, the associated briefing, the case file, and the applicable law,
and, for the reasons stated below, GRANTS IN PART and DENIES IN PART the
Motion.
BACKGROUND
On December 12, 2017, Plaintiff Wanika Howell (“Plaintiff” or “Ms. Howell”)
initiated this action pursuant to the Employee Retirement Income Security Act
(“ERISA”), 29 U.S.C. § 1001, et seq., seeking accidental death benefits related to the
death of her son, Joel McClain, Jr., who was killed when his motorcycle was struck by a
car attempting to make a left-hand turn at the intersection Mr. McClain was passing
through. See [#1 at 2]. Prior to the accident, Plaintiff had purchased an Accidental
Death and Dismemberment Policy (the “Policy”), through her employer, from Defendant
Liberty Life Assurance Company of Boston (“Defendant”). The Policy provided a death
benefit of $500,000 and identified Mr. McClain as the insured party and Plaintiff as the
beneficiary. Plaintiff submitted a claim for the $500,000 death benefit following the
death of her son. Defendant investigated the facts giving rise to the accident, which
included speaking with the officer who investigated the accident, Detective Ferrucci.
[#34 at 4]. Defendant subsequently denied the claim on the basis of an exclusion in the
Policy, which provides that no benefits are payable for a loss that is “contributed to or
caused by…committing or attempting to commit a felony or misdemeanor.” [Id. at 3
(citing #1-6)].1
In support of its application of the exclusion, Defendant stated that
Detective Ferrucci “verbally confirmed that if Mr. McClain had survived the collision, he
would have been charged with reckless driving…,” which, in the State of New York, is
classified as a misdemeanor. [Id. at 3]. Defendant further stated that it had:
determined that Mr. McClain subjectively expected serious injury or death
to occur as a result of driving at excessive speeds…our determination is
supported by the facts of this claim, mainly the investigating detectives
statement [sic] that he would have charged Mr. McClain with a
misdemeanor traffic violation of reckless driving had he survived the
crash…Based on these determinations, no accidental injury occurred and
the AD&D benefits are not payable.
[Id. at 3-4].
1
Defendant also cited portions of the Policy stating that coverage applied only to
“accidental injury,” or that which is not intended by the participant. By the filing of the
Motion for Discovery, however, the Parties agreed that this exclusion is no longer
considered a basis for the denial. [#27 at 4-5 (“Since the initiation of these proceedings,
counsel have agreed that there is no basis to contend that the intentional act exclusion
would apply in the context of this fatal left turn case.”)].
2
Plaintiff alleges in her Complaint that she “corresponded with the Defendant in an
effort to protest and appeal the company’s denial of benefits,” but that Defendant upheld
its denial of the Policy benefit, “again stating that the investigating officer would have
charged Mr. McClain with reckless driving had he survived, and that ‘no additional
information was submitted on appeal to suggest that Mr. McClain would not have been
charged. In the State of New York, reckless driving is a misdemeanor.’” [#1 at 5 (citing
#1-2)]. Plaintiff asserts one claim for breach of contract under ERISA section 502(a), 29
U.S.C. § 1132(a)(1)(B).
Defendant filed an Answer on January 23, 2018, and an Amended Answer on
January 25, 2018. [#10; #14]. On February 2, 2018, this court entered a Scheduling
Order setting certain pretrial dates and deadlines, including a deadline of April 15, 2018
by which to file the Administrative Record, and a deadline of August 1, 2018 by which to
file Opening Briefs. [#22]. Defendant thereafter filed the Administrative Record. [#26].
On April 16, 2018, Plaintiff filed the Motion for Discovery, in which she asserts
that her counsel spoke with Detective Ferrucci, who stated that it was only a possibility
that he would have charged Mr. McClain with reckless driving had Mr. McClain survived
the accident, and that he “would need more information to address that type of
decision.” [#27 at 4]. Plaintiff asserts that Detective Ferrucci also represented that in
his prior communication with Defendant, he had “stated that charging Mr. McClain with
reckless driving was only a possibility had he survived” [id.], and agreed “that a
confirming letter could be sent to the effect that he would need more information to
make a charging decision,” which information Plaintiff’s counsel relayed to counsel for
Defendant in a letter dated April 13, 2018. [Id. (citing #27-4)]. Plaintiff asks the court to
3
permit discovery to allow the deposition of Detective Ferrucci and of “a company
representative to address bias and prejudice as it may affect the standard of review.”
[Id. at 10]. Plaintiff also argues that this discovery is permissible because the court
should engage in a de novo review. [#27 at 9 (citing Colo. Rev. Stat. § 10-3-1115)].
On May 14, 2018, Defendant filed a Response to the Motion, arguing that an
arbitrary and capricious standard of review applies to the plan administrator’s decision,
ERISA preempts any state statutory authority to the contrary, and evidence in ERISA
cases is typically limited to the administrative record. [#34 at 2]. Defendant further
argues that “Plaintiff was afforded a full and fair opportunity to appeal the initial claim
determination, during which she had the opportunity and obligation to submit for
Liberty’s consideration and review the precise evidence she now seeks in discovery.”
[Id.] And that, in appealing the denial of benefits, while Plaintiff disagreed with the
witnesses at the scene of the accident and argued that “it was never proven beyond a
reasonable doubt” that her son “was involved in reckless driving causing the accident,”
she did not disagree with Defendant’s recitation of Detective Ferrucci’s comments or
describe her difficulty in contacting Detective Ferrucci.
[#34 at 5].
Additionally,
Defendant contends, Plaintiff did not provide contradictory comments or information
from Detective Ferrucci or ask for additional time to complete her appeal, nor did she
ask Defendant to speak again with Detective Ferrucci. [Id.]
In her Reply, Plaintiff asserts that because “Defendant did not obtain any type of
independent accident assessment or even address the facts of the accident itself, but
based
its
decision
on
a
Police
Officer’s
potential
charging
decision,”
the
“circumstances…involve an insurer with an inherent conflict of interest, which must be
4
scrutinized given the direct financial interest of the administrator/insurer.” [#40 at 5].
Defendant thereafter sought and received leave to file a Surreply, [#41; #43; #44], in
which it contends that Plaintiff misapplies case law in her efforts to secure a de novo
review, and that “[w]hen an ERISA policy grants discretion to the administrator to
determine eligibility for benefits or construe the policy terms (as it does here), any
conflict of interest ‘should be weighed as a factor in determining whether there is an
abuse of discretion.’” [#44 at 1 (citing Metropolitan Life Ins. Co. v. Glenn, 554 U.S. 105,
115 (2008))].
Defendant also contends that Plaintiff’s disagreement with the claim
determination “is not a basis to conduct discovery outside the administrative record –
especially where Plaintiff failed to argue that the information she seeks in discovery
could not have been provided to Liberty as part of the administrative process.” [Id. at 3].
ANALYSIS
Plaintiff’s chief contention is that Detective Ferrucci’s comments, regarding
whether he would have charged Mr. McClain with reckless driving had Mr. McClain
survived the accident, are misrepresented in the Administrative Record, and thus give
rise to a factual “disparity between what is recorded by the claims adjuster,” and what
Detective Ferrucci determined following his investigation. [#27 at 5]. Plaintiff therefore
wishes to depose both Detective Ferrucci, regarding his charging determination, and a
representative of Defendant, regarding how the claims adjustor may have been biased
and/or prejudiced, and to amend the Administrative Record by adding such testimony.
Defendant asserts that the court should utilize an arbitrary and capricious standard of
review of the administrator’s decision and deny Plaintiff’s request to take what it
5
contends is merits-based discovery.
This court addresses first the Parties’ dispute
regarding which standard of review is appropriate.
I.
Standard of Review
In support of her position that a de novo review is appropriate, Plaintiff cites Colo.
Rev. Stat. 10-3-1115. [#27 at 9]. Defendant argues in response that section 10-3-1115
does not provide a basis for applying a de novo review, and that to the extent Plaintiff
means to rely on Colo. Rev. Stat. § 10-3-1116(3), “any alleged statutory right to de novo
review or a jury trial,” provided under that statute is preempted by ERISA. [#34 at 2].
Defendant states simply that “Plaintiff’s argument ignores District of Colorado precedent
clearly holding that ‘the part of Colo. Rev. Stat. § 10–3–1116(3) providing for a jury trial
conflicts with ERISA’s remedial structure by altering the judiciary’s role. Thus…ERISA
preempts, in its entirety, Colo. Rev. Stat. § 10–3–1116(3).’” [#44 at 4].
Subsection 10-3-1116(3) provides that:
[a]n insurance policy, insurance contract, or plan that is issued in this state
shall provide that a person who claims health, life, or disability benefits,
whose claim has been denied in whole or in part, and who has exhausted
his or her administrative remedies shall be entitled to have his or her claim
reviewed de novo in any court with jurisdiction and to a trial by jury.
Colo. Rev. Stat. § 10-3-111(6). Defendant relies on Shafer v. Metro. Life Ins. Co., 80 F.
Supp. 3d 1244, 1256-57 (D. Colo. 2015), which reaches the conclusion that ERISA
preempts subsection 10-3-1116(3). Id. (noting that the de novo standard of review
contained in the subsection does not conflict with the remedial scheme of ERISA, but
concluding that the jury trial provision conflicts with the equitable nature of an action
under section 1132(a), and that the court was not authorized to sever a portion of a
subsection). However, Defendant curiously omits discussion of Kohut v. Hartford Life
6
and Accident Ins. Co., 710 F. Supp. 2d 1139 (D. Colo. 2008), the published opinion
issued by the presiding judge in this matter, the Honorable Christine M. Arguello, in
which the court found that subsection 1116(3) is not preempted by ERISA.2 Id. at 114849 (“the Court finds that section 10–3–1116 is a law ‘regulat[ing] insurance’ within the
meaning of section 1144(b)(2)(A), and that it therefore is saved from preemption by
ERISA.”). See Flowers v. Life Ins. Co. of North America, 781 F. Supp. 2d 1127, 1132
(D. Colo. 2011) (specifying that Kohut applied to subsections 1116(2) and (3)). Cf.
Shafer, 80 F. Supp. 3d at 1257 (noting that it “does not find [Kohut] on point as in that
case there was no discussion as to whether conflict preemption principles applied,
specifically whether the right to a jury trial conflicts with ERISA's remedial structure.”).
The Tenth Circuit has not yet weighed in on this particular question of
preemption, although it has concluded “that the Seventh Amendment guarantees no
right to a jury trial in a § 1132(a)(1)(B) action for benefits.” Graham v. Hartford Life &
Accident Ins. Co., 589 F.3d 1345, 1355 (10th Cir. 2009). Cf. Meardon v. Freedom Life
Ins. Co. of America, 417 P.3d 929, 936 (Colo. App. 2018) (Bernard, J., dissenting)
(noting that whether ERISA preempts subsection 1116(3)’s jury trial right is an “open
question,” and opining that subsection 1116(3) “was designed to avoid the federal
prohibition of jury trials,” and gives “an insured a right to a jury trial in state court when
he or she filed a claim under subsection 1116(1))”) (citation omitted) (emphasis added).
As discussed below, the applicable standard of review affects the factors to be
2
This court notes that Defendant cites Kohut in its Response, but for the proposition
that “[t]he Supreme Court and Tenth Circuit have held that the standard of review
remains ‘abuse of discretion’ regardless of the existence of or weight given to the
alleged conflict.” [#34 at 7].
7
considered by the court in evaluating whether extra-record discovery should be
permitted.
II.
Scope of Permissible Discovery
A.
Arbitrary and Capricious Review
It is unisputed that Defendant both insured and administered the plan under
which Plaintiff’s Policy was issued, and also investigated Plaintiff’s claim. See, e.g., [#11; #34 at 6-7; #40 at 4]. Accordingly, Defendant engaged in a dual role. The Supreme
Court observed in Metropolitan Life Insurance Co. v. Glenn, that a dual role in which an
insurer “both determines whether an employee is eligible for benefits and pays benefits
out of its own pocket...creates a conflict of interest.” 554 U.S. 105, 128 S.Ct. 2343,
2346 (2008). This court thus recognizes the potential that Defendant has a dual role
conflict of interest. Placing aside the preemption issue, the Tenth Circuit holds that
where the plan “gives the administrator or fiduciary discretionary authority to determine
eligibility for benefits or to construe the terms of the plan,” the court reviews the
administrator’s decision for an abuse of discretion. Murphy, 619 F.3d at 1157 (citations
omitted); see Weber v. GE Group Life Assurance Co., 541 F.3d 1002, 1011 (10th Cir.
2008) (describing terms “arbitrary and capricious” and “abuse of discretion” as
interchangeable in this context).
And, in Glenn, the Supreme Court held that the
presence of a dual role conflict does not alter the level of deference accorded to an
administrator’s decision. Id. at 2350-52. But for the issue regarding preemption, this
court utilizes an arbitrary and capricious standard of review. See id.
Generally, “in reviewing a plan administrator’s decision under the arbitrary and
capricious standard, the federal courts are limited to the administrative record.” Murphy,
8
619 F.3d at 1157 (citations omitted).
And Rule 26 of the Federal Rules of Civil
Procedure applies to define the scope of permissible discovery in ERISA matters. Rule
26 permits discovery into “any nonprivileged matter that is relevant to any party’s claim
or defense and proportional to the needs of the case.” Fed. R. Civ. P. 26(b)(1). See
Rule 26 Advisory Committee Notes (2015) (noting that the former provision authorizing
“discovery of relevant but inadmissible information that appears ‘reasonably calculated
to lead to the discovery of admissible evidence’” was deleted due to misinterpretation by
parties and courts alike, and instructing that “discovery of nonprivileged information not
admissible in evidence remains available so long as it is otherwise within the scope of
discovery.”).
Considering its directive limiting courts to the administrative record in
ERISA cases, and the general scope of discovery as articulated in Rule 26, the Tenth
Circuit has explained that in ERISA matters, “extra-record discovery would generally
seem inappropriate.” Murphy, 619 F.3d at 1157.
That extra-record discovery is improper is especially true where the plaintiff
seeks to supplement the administrative record with substantive evidence regarding the
administrator’s decision concerning the disbursement of benefits. Murphy, 619 F.3d at
1158-59 (citing Woolsey v. Marion Laboratories, 934 F.2d 1452, 1460 (10th Cir. 1991)
(“[i]n determining whether the decision was supported by substantial evidence, we
consider only the facts before the Administrators at the time of their decision”)). In such
a situation, “a general prohibition on extra-record supplementation makes sense,”
because “[b]oth a plan participant and an administrator have a fair opportunity to include
in the record materials related to the participant's eligibility for benefits.” Id. at 1159
(citing Sandoval v. Aetna Life & Casualty Insurance Co., 967 F.2d 377, 380–81 (10th
9
Cir. 1992) (“If a plan participant fails to bring evidence to the attention of the
administrator, the participant cannot complain of the administrator's failure to consider
this evidence.”).
Indeed, given the policy considerations underlying ERISA, i.e., to
provide a method for workers and beneficiaries to resolve disputes over benefits
inexpensively and expeditiously, Sandoval, 967 F.2d at 380 (citation omitted), the courts
would both “prolong the decision making process and inject greater uncertainty” into
that process were they allowed to reach beyond the limited scope of review and
routinely consider materials outside of the record. Murphy, 619 F.3d at 1159.
However, under the guidance of the Supreme Court’s ruling in Metropolitan Life
Insurance Co. v. Glenn, instructing that the district court must weigh a conflict of interest
in the abuse of discretion analysis and allocate the conflict more or less weight
depending on the circumstances, it is possible that “without discovery, a claimant may
not have access to the information necessary to establish the seriousness of the
conflict.” Murphy, 619 F.3d at 1157-58. And thus, the Tenth Circuit has recognized that
a district court “may permit extra-record discovery related to a dual role conflict of
interest.” Id. at 1160 (citing Wolberg v. AT & T Broadband Pension Plan, 123 F. App’x
840 (10th Cir. 2005)). See Paul v. Hartford Life and Accident Ins. Co., No. 08–cv–
00890, 2008 WL 2945607, *2 (D. Colo. July 28, 2008) (concluding that “while it would
not be proper to allow Plaintiff to conduct discovery directed to the factual merits of his
claim,” the court would permit “limited discovery related to the alleged conflict of interest
in this case and to the policies and procedures used by [the administrator] to make its
decision”); Kohut, 710 F. Supp. 2d at 1150–53 (interpreting Tenth Circuit law pre-Glenn
to permit discovery related to the seriousness of a conflict of interest); Bottoms v.
10
Liberty Life Assurance Co. of Boston, No. 11–cv–01606–PAB–CBS, 2011 WL 6181423,
*8 (D. Colo. Dec. 13, 2011) (permitting plaintiff “with appropriate limitations, to conduct
discovery directed to the procedures employed by [defendant] in compiling the
administrative record and reaching its decision to end Plaintiff's LTD benefits,” and
“permit[ting] Plaintiff to serve discovery requests directed to the dual role conflict of
interest confronting [defendant] and its employees.”) (emphasis in original); Baty v.
Metropolitan Life Ins. Co., Case No. 17-1200-EFM-GEB, 2017 WL 4516825, *4 (D. Kan.
Oct. 10, 2017) (allowing limited extra-record discovery for plaintiff “to demonstrate the
alleged seriousness of the conflict between Defendant's role as the insurer and its role
as the administrator of the Plan.”).
B.
De Novo Review
The court applies a de novo standard of review to decisions made under benefit
plans that do not expressly provide the administrator discretionary authority to
determine eligibility for benefits or to construe the plan's terms. Firestone Tire and
Rubber Co v. Bruch, 489 U.S. 101, 109 S. Ct. 948 (1989). The inquiry into whether
extra-record evidence is appropriate under a de novo standard of review is slightly
different because there is typically little to no concern regarding a potential conflict of
interest.
Where the company that funds the plan employs a separate company to
evaluate claims, “any conflict of interest is more attenuated than in other ERISA cases,
and the rationale for considering extra-record evidence of bias…is diminished.”
Williams v. Metropolitan Life Ins. Co., 459 F. App’x 719 (10th Cir. 2012).
But
see Glenn, 554 U.S. at 112, 114, 128 S.Ct. 2343 (noting the conflict may persist even
when the employer delegates duties for claims administration). A court evaluating
11
whether to permit discovery where a de novo standard of review applies typically must
satisfy itself as to a four-part test: (1) is the evidence “necessary to the district court’s
review”; (2) was the plaintiff unable to present the evidence during the administrative
process; (3) is the evidence cumulative and repetitive; and (4) is the newly offered
evidence “simply better evidence.” Jewell v. Life Ins. Co. of N. Am., 508 F.3d 1303,
1309, 1311-1315 (10th Cir. 2007) (quoting Hall v. UNUM Life Insurance Co. of
America, 300 F.3d 1197, 1203 (10th Cir. 2002)). This court notes that neither Party
addressed the Hall factors articulated in Jewel, despite the fact that Plaintiff advocates
for a de novo standard of review.
C.
Applicable Standard of Review and Resulting Discovery
Based on the record before it, this court finds that Plaintiff has identified a
potential conflict of interest that may have materially affected Defendant’s adjudication
of Plaintiff’s claim for benefits. While this court notes that it is solely within Judge
Arguello’s province to determine whether to apply a de novo or arbitrary and capricious
standard of review to the plan administrator’s decision,3 this court finds that limited
discovery is appropriate to allow Plaintiff to seek evidence with respect to the issue of
whether the existence of a conflict of interest jeopardized Defendant’s decision-making
process. Such limited discovery preserves the issue of the appropriate standard of
review for Judge Arguello and also facilitates progress on this case without further
3
This court also notes that the Parties’ briefing on the matter of preemption is far from
robust, and it is not the court's role to supply legal support for either Party's position.
See, e.g., O’Dowd v. Anthem, Inc., No. 14–cv–02787–KLM, 2016 WL 9735772, *5 (D.
Colo. Sept. 23, 2016) (“the Court will not supply arguments for the parties, particularly
on a preemption analysis”) (citing David P. Coldesina, D.D.S. v. Estate of Simper, 407
F.3d 1126, 1135 (10th Cir. 2005) (“[A]ny court forced to enter the ERISA preemption
thicket sets out on a treacherous path[.]”).
12
delay.4
See Murphy, 619 F.3d at 1159 n.4 (remarking that even on a de novo review,
extra-record evidence may be appropriate “to enable the court to understand and
evaluate the decision under review”) (citing Jewell v. Life Ins. Co. of N. Am., 508 F.3d
1303, 1309 (10th Cir. 2007). But as discussed in detail below, this court does not agree
that an open-ended deposition of Detective Ferrucci and Defendant’s adjuster is
appropriate.
III.
The Nature of the Dual Role Conflict of Interest
Plaintiff takes issue with the claim adjuster’s reliance on Detective Ferrucci’s
comments that he would have charged Mr. McClain with reckless driving. In a letter
dated June 1, 2017, Defendant denied Plaintiff’s claim, citing in relevant part the
comments of Detective Ferrucci that “had Mr. McClain survived the crash…he would
have been charged with reckless driving.” [#27-6 at 2]. On July 26, 2017, Plaintiff
responded to Defendant’s letter, essentially initiating the appeals process, [#27-1], and
on September 5, 2017, Defendant upheld the denial, stating in relevant part that “[n]o
additional information was submitted on appeal to suggest that Mr. McClain would not
have been charged [with reckless driving].” [#27-2 at 3]. On October 23, 2017, counsel
for Plaintiff contacted Detective Ferrucci asking to speak with him about the “potential
charges…Mr. McClain would have faced had he survived…”
4
[#27-3].
Counsel for
This court notes that in support of her position that a de novo standard of review
applies, Plaintiff also asserts that Defendant essentially rendered a legal determination
in “applying a charging decision as the basis to deny an insurance claim.” [#40 at 8].
Plaintiff relies on a lone case, from the Fifth Circuit, Penn v. Howe-Baker Engineers,
Inc., 898 F.2d 1096 (5th Cir. 1990), which Defendant in its Surreply asserts was
subsequently rejected by Ariana M. v. Humana Health Plan of Texas, Inc., 884 F.3d
246, 247 (5th Cir. 2018). [#44 at 3]. For the same reasons expressed with its
discussion of the preemption issue, this court declines at this time to conclude which
standard of review is appropriate here.
13
Plaintiff represents that despite attempts to contact Detective Ferrucci, he was unable to
speak with him until April 13, 2018. See [#27-4 at 1]. In a letter dated the same day,
counsel for Plaintiff wrote counsel for Defendant and described his conversation with
Detective Ferrucci as follows:
According to the detective, he never did state that Mr. McClain would have
been charged with reckless driving under these circumstances. He
indicated that, apparently, there was a discussion with the insurance
adjustor on this topic, although he actually told the adjuster that charging
Mr. McClain with reckless driving was a possibility, and he would not
definitively state that Mr. McCLain would have been charged under the
circumstances. He agreed that further information would be necessary to
make that type of decision…The detective stated that he was clear in
stating to the adjuster that charges for reckless driving were only a
possibility here, and that the police department would not, as a general
rule, issue charges against someone without at least talking to them first,
and getting that person’s side of the circumstances.
[#27-4 at 1]. Although Plaintiff’s counsel did not submit Detective Ferrucci’s declaration
or affidavit, the court accepts counsel’s statements in the April 13, 2018 letter and within
the Motion for Discovery as representations of an officer of the court.5 The court finds
that the discrepancy between the claim adjuster’s representation of Detective Ferrucci’s
statements and Detective Ferrucci’s recollection of those same statements is sufficient
to permit Plaintiff to take limited discovery into the scope of the dual role conflict of
interest, particularly in light of the fact that the charge of reckless driving is the sole
basis on which Defendant denied Plaintiff’s claim.6
Indeed, Plaintiff argues in her
5
To the extent Plaintiff’s counsel has misrepresented Detective Ferrucci’s remarks in an
effort to obtain the requested depositions, this court is confident that Defendant will
raise any such issue with the court, if appropriate.
6
Defendant asserts that in denying the claim it relied not only on Detective Ferrucci’s
comments but also on the Death Certificate, the Police Accident Report, authored by a
different officer, “the Autopsy Report, witness statements, New York Traffic Code, the
Policy language, and applicable ERISA law.” [#34 at 13]. However, it is undisputed that
the exclusion regarding a misdemeanor or felony is the sole exclusion on which the
14
Motion that the process Defendant followed in evaluating the claim essentially allowed
Defendant to “define the facts by making its own adjusters witnesses,” which “unfairly
favors the carrier, under circumstances where the insured cannot compel testimony of
the very witnesses the insurance company quotes from.” [#27 at 6].
Under an arbitrary and capricious standard of review, Plaintiff bears the burden
of proof to prove that Defendant failed to act on a reasoned basis. In other words, and
relevant to the case at hand, if the court employs an arbitrary and capricious standard of
review, Plaintiff bears the burden of proof to show the existence of a conflict, and that
any such conflict jeopardized the administrator's impartiality. See Adamson v. Unum
Life Insurance Co. of America, 455 F.3d 1209, 1212 (10th Cir. 2006) (citations omitted).
Indeed, under an arbitrary and capricious standard of review, the weight of a conflict of
interest as a factor depends on the seriousness of the conflict. The conflict proves less
important, “(perhaps to the vanishing point) where the administrator 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, or by imposing
management checks that penalize inaccurate decision making irrespective of whom the
inaccuracy benefits.” Glenn, 128 S. Ct. at 2351. The conflict “is given great weight
where circumstances suggest a likelihood that it affected the benefits decision.”
McNeal v. Frontier AG, Inc., 998 F. Supp. 2d 1037, 1041 (D. Kan. 2014) (citing Foster v.
PPG Industries, Inc., 693 F.3d 1226, 1232 (10th Cir. 2012).
This court recognizes Defendant’s argument that in appealing the denial, Plaintiff
did not provide contradictory statements or information from Detective Ferrucci, request
denial is based, and the court finds that Plaintiff has appropriately raised the issue of
potential bias of the adjuster.
15
additional time to complete her appeal so as to provide information from Detective
Ferrucci, or ask that Defendant speak again with Detective Ferrucci, [#34 at 5, 11], and
that Plaintiff’s counsel contacted and spoke with Detective Ferrucci only after the appeal
process had concluded.7 However, Plaintiff clearly took issue with Defendant basing its
denial on a criminal charge that was only anticipated. See [#27-1]. And Defendant
asserts no argument that in light of Plaintiff’s correspondence and appeal of the denial,
“steps were taken to…promote accuracy,” such as holding a second conversation with
Detective Ferrucci. Additionally, for the reasons expressed herein, this court does not
find that Plaintiff is seeking discovery into the merits of her claim but into whether the
claim adjuster misrepresented Detective Ferrucci’s comments, and whether any such
misrepresentation was intentional. Cf. Kohut, 710 F. Supp. 2d at 1152 (“This Court
finds that, in the face of the Tenth Circuit's conflicted authority, the Court's apparent
prohibition on extra-record discovery must be read as applying only to that discovery
directed at uncovering additional evidence of a claimant's eligibility for benefits.”).
This court finds that the limited discovery it permits with this Order is included in
the extra-record discovery contemplated by the Tenth Circuit in Murphy. And the court
notes that while a plan administrator’s decision will be upheld under an arbitrary and
7
This court is not persuaded that Karanda v. Connecticut Gen. Life Ins. Co., 158 F.
Supp. 2d 192 (D. Conn. 2000), the case Defendant cites regarding Plaintiff’s failure to
question the accuracy of Detective Ferrucci’s statement during the appeal process, is
apposite. See [#34 at 11]. The Karanda court passed on the defendant’s motion for
summary judgment, not a motion seeking discovery, and determined that the disputed
issue as to whether the physician ever spoke with the defendant was immaterial, noting
that its review was limited to the administrative record and the record showed “ample
evidence” that plaintiff and her attorney “both knew that [defendant] claimed to have
spoken to [the physician] about her ability to return to work, and it is undisputed that
they failed to question the accuracy of that statement until well after [defendant] reached
its final decision.” Id. at 199 n.5.
16
capricious standard of review so long as it has a reasoned basis, Adamson, 455 F.3d at
1212, “[i]ndicia of arbitrary and capricious actions include a lack of substantial evidence,
a mistake of law, and bad faith.” Buchanan v. Reliance Standard Life Ins. Co., 5
F.Supp.2d 1172, 1180 (D. Kan. 1998) (citation omitted).8
IV.
Scope of Discovery
Plaintiff asks the court to open a forty-five day period of discovery to:
allow deposition or other processes necessary to determine the validity of
the Administrative Record as it presently applies to statements of the
investigating officer which are based upon the insurance companies
adjusters becoming witnesses [sic], and to further allow a deposition of a
company representative to address bias and prejudice as it may affect the
standard of review and for such other and further relief as the court and
just and proper respectfully submitted.
[#27 at 10]. Defendant argues that to the extent the court allows discovery, a deposition
of its “company representative” as “conflict discovery” is inappropriate, and that the
requested discovery is generally not proportionate. [#34 at 12-13].
This court agrees that the discovery contemplated by Plaintiff is too broad. As
this court understands the governing Tenth Circuit law, the dual role conflict of interest
arising from an administrator’s discretion to determine eligibility for benefits or construe
8
If Judge Arguello undertakes an arbitrary and capricious standard of review, she may
exercise her discretion to decline to consider the forthcoming discovery, or to give it only
nominal weight. However, were Plaintiff not permitted to take the limited discovery
discussed herein, there would be no record of the disparity between the claim adjuster’s
basis for denial and Detective Ferrucci’s comments, and thus no record from which the
court could consider or indeed weigh the conflict of interest in its abuse of discretion
analysis. See Murphy, 619 F.3d at 1158 (“If the administrative record does not
specifically address [the issues regarding conflict] and if we flatly prohibited the
consideration and discovery of information outside the administrative record, the district
court may not be able to make a fully informed analysis that properly weighs the conflict
of interest”). If Judge Arguello undertakes a de novo standard of review, she may
disregard the forthcoming evidence altogether if she finds that the evidence is not
appropriate in light of the Hall factors.
17
policy terms does not in and of itself justify discovery. See Adamson, 455 F.3d at 1212
(“The fact that [defendant] administered and insured the group term life insurance
portion of this plan does not on its own warrant a further reduction in deference.”).
Rather, the plaintiff must allege that the conflict of interest interfered with the claim
determination.
And Rule 26(b)(1) states that in determining what discovery is
proportional, the court must consider “the importance of the issues at stake in the
action, the amount in controversy, the parties' relative access to relevant information,
the parties' resources, the importance of the discovery in resolving the issues, and
whether the burden or expense of the proposed discovery outweighs its likely benefit.”
Fed. R. Civ. P. 26(b)(1). See Murphy, 619 F.3d at 1162-63 (applying Rule 26(b)(1) to
requests for discovery in ERISA matters).
I find that Plaintiff has set forth the necessary allegations of interference, but that
the issue presented by the Motion for Discovery is a narrow one: did an inherent conflict
of interest influence or cause the claim adjuster to misrepresent Detective Ferrucci’s
comments during the process of evaluating Plaintiff’s claim. Accordingly, Plaintiff is not
entitled to broad discovery regarding possible manifestations of conflicts of interest and
will not be allowed to depose a company representative. Instead, Plaintiff is limited to a
sixty minute deposition of Detective Ferrucci, and a sixty minute deposition of the claim
adjuster who evaluated and denied Plaintiff’s claim.9 The scope of the depositions is
limited to exploring Detective Ferrucci’s statements to Defendant about any possible
charges as to Mr. McClain had he survived the collision, if the adjuster accurately
reflected those statements, and how the adjuster accounted for Detective Ferrucci’s
9
The correspondence attached to the Motion for Discovery indicates that the claim
adjuster is David Macfadzen. See, e.g., [#27-6 at 4].
18
statements within the determination of the underlying claim, for the purpose of
determining if any bias existed. This court finds that limiting Plaintiff’s request in this
manner sufficiently addresses Defendant’s arguments regarding proportionality, taking
into particular consideration the Parties' relative access to the information, the Parties'
resources, and the relevance of the discovery in resolving the issues as presented, and
additionally acknowledges the potential burden on Defendant and the court in allowing
additional discovery and extending the briefing deadlines, if necessary.
The Parties shall complete the depositions of Detective Ferrucci and the claim
adjuster no later than July 17, 2018.
And the Parties shall adhere to the briefing
schedule set forth in the court’s Scheduling Order, see [#22]. Either Party may move to
supplement the Administrative Record on or before August 1, 2018, the deadline by
which the Parties must file their opening briefs. This court finds that in maintaining the
original deadlines set in this matter, it adequately safeguards the policy considerations
underlying the statute, contrary to Defendant’s concerns. See Murphy, 619 F.3d at
1164 (“[the trial court] must bear in the mind 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.”).
On the basis of the foregoing, IT IS ORDERED that:
(1)
The Motion Requesting Discovery and Objection to Submission of
Administrative Record [#27] is GRANTED IN PART and DENIED IN PART;
(2)
Plaintiff is GRANTED leave to take the deposition of Detective Ferrucci, to
last no longer than 60 minutes, and to take the deposition of the claim adjuster, to last
no longer than 60 minutes, and shall take both depositions no later than July 17, 2018,
19
the Motion is otherwise DENIED;
(3)
Any motion to supplement the Administrative Record shall be filed on or
before August 1, 2018; and
(4)
The previously set deadlines, see [#22] remain set.
DATED: June 26, 2018
BY THE COURT:
_____
_______
United States Magistrate Judge
20
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