Kasko v. Aetna Life Insurance Company
MEMORANDUM OPINION & ORDER / PROTECTIVE ORDER: (1) GRANTING pla's 14 MOTION to Compel - subject to the limitations outline in this order; (2) GRANTING dft's request for a PROTECTIVE ORDER [Record 17 , p.1) as outlined in this order re discovery; (3) the 10 scheduling order is SET ASIDE; parties shall file a revised proposed scheduling order within 20 days. Signed by Judge Danny C. Reeves on 7/21/14.(KJR)cc: COR, Modified text on 7/21/2014 (KJR).
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
LINDA E. KASKO,
AETNA LIFE INSURANCE COMPANY,
Civil Action No. 5: 13-243-DCR
*** *** *** ***
This matter is pending for consideration of Plaintiff Linda E. Kasko’s (“Kasko”) motion to
compel discovery regarding whether a conflict of interest influenced Defendant Aetna Life
Insurance Company’s (“Aetna”) decision to deny her claim for long-term disability (“LTD”)
benefits. [Record No. 15] Having reviewed the briefs filed in support of the parties’ respective
positions, the Court will grant a portion of the relief sought.
Kasko was covered through her former employer, InVentiv Health, under a group LTD plan
governed by the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001,
et seq. Kasko claims that she was disabled and stopped working on July 9, 2011. [Record No. 1,
p. 3] As a result, she filed a claim for LTD benefits with Aetna. The claim was denied. In addition
to providing LTD coverage to InVentiv, Aetna administers the plan.
Kasko filed this action on July 31, 2013, alleging that the decision to deny her claim for LTD
benefits was arbitrary, capricious and not supported by substantial evidence. She further asserts that
“the decision to deny LTD benefits was under a perpetual conflict of interest because the benefits
would have been paid out of its own funds.” [Record No. 1, ¶27] Kasko also contends that the
decision to deny her claim for LTD benefits was influenced by the reviewing doctors’ conflicts of
interest. [Record No. 25, p. 4]
On January 24, 2014, Kasko served the defendant with seven interrogatories and five
requests for production of documents. Aetna objected to a number of the discovery requests.
Thereafter, Kasko moved the Court to compel Aetna to respond. [Record No. 14] The discovery
subject to Aetna’s objections and Kasko’s motion concerns a potential conflict and bias of doctors
hired by Aetna to review Kasko’s benefits claim. [Record No. 15]
Discovery Outside the Administrative Record
Generally, an ERISA claimant may not seek discovery regarding matters outside the
administrative record. See Wilkins v. Baptist Healthcare Sys., Inc., 150 F.3d 609, 618 (6th Cir.
1998) (noting that a district court may not ordinarily consider new evidence). This is based on two
governing principles. First, the reviewing court’s determination is not whether a claimant is eligible
for benefits, but rather whether the administrator’s decision was proper, based on the administrative
record. See Perry v. Simplicity Eng’g, 900 F.2d 963, 966 (6th Cir. 1990) (holding that under either
“de novo” or “arbitrary and capricious” standard, court’s review is limited to the record). Second,
limitations regarding discovery furthers ERISA’s primary goal; that is, the inexpensive and
expeditious resolution of disputes. Id. at 966-67.
However, when a claimant makes a procedural challenge to an administrator’s decision, such
as a challenge based on bias, limited discovery may be appropriate. Johnson v. Conn. Gen. Life Ins.
Co., 324 F. App’x 459, 466 (6th Cir. 2009) (citation omitted). In such a case, the first rationale is
inapplicable and the court may look outside the administrative record to fully consider the
circumstances affecting the administrator’s alleged conflict. Metro. Life Ins. Co. v. Glenn, 554 U.S.
105, 117 (2008). For the same reason, however, discovery must be strictly confined to the
procedural challenge. Johnson, 324 F. App’x at 466; Moore v. LaFayette Life Ins. Co., 458 F.3d
416, 430 (6th Cir. 2006). Moreover, the second rationale for prohibiting discovery remains
applicable. As a result, any discovery which is permitted must be tailored to facilitate the prompt
resolution of the dispute. See Price v. Hartford Life and Acc. Ins. Co., 746 F. Supp. 2d 860, 865-66
(E.D. Mich. Oct. 12, 2010) (courts should account for the “interests of economy, efficiency,
accuracy, and fairness” when addressing scope of discovery issues).
In Glenn, the Supreme Court held that there is an inherent conflict of interest whenever a
plan administrator evaluates and pays benefits on claims. Glenn, 554 U.S. at 117. However, the
Court discouraged special procedural or evidentiary rules for analyzing a potential conflict of
interest. Id. (“Neither do we believe it necessary or desirable for courts to create special
burden-of-proof rules, or other special procedural or evidentiary rules, focused narrowly upon the
evaluator/payor conflict.”). The Sixth Circuit has interpreted this holding to mean that threshold
evidentiary showings are not required for discovery in ERISA cases. Johnson, 324 F. App’x at 466.
But that does not necessarily mean that discovery is available every time the defendant is both the
evaluator and payor under a benefits plan. Id. Rather, the district court must determine whether
discovery is appropriate to further a colorable procedural challenge. Id. In Johnson, the Sixth
Circuit found that the district court did not abuse its discretion by permitting discovery regarding
an alleged conflict of interest where the plaintiff offered more than a mere allegation of bias. Id.
More recently, it held that discovery may be appropriate in determining the weight to give a conflict
of interest. Notwithstanding these determinations, the district court still possesses discretion to
determine whether discovery should be allowed. Bell v. Ameritech Sickness & Acc. Disability Ben.
Plan, 399 F. App’x 991, 998 (6th Cir. 2010).
After Johnson, courts have taken several approaches concerning requests for discovery
outside the administrative record. Some have found that discovery regarding claims of bias is
appropriate when the only showing of bias is the allegation of an inherent conflict of interest, as
defined in Glenn.1 Pemberton v. Reliance Standard Life Ins. Co., No. 08-86-JBC, 2009 WL 89696,
at *2 (E.D. Ky. Jan. 13, 2009); see also Cramer v. Appalachian Reg’l Healthcare, Inc., No.
5:11-49-KKC, 2012 WL 996583, at *2 (E.D. Ky. Mar. 23, 2012); Busch v. Hartford Life & Accident
Ins. Co., No. 5:10-111-KKC, 2010 WL 3842367, at *3 (E.D. Ky. Sept. 27, 2010). These courts
reason that the act of denying discovery until there has been an initial showing of bias “essentially
handcuffs the plaintiff, who . . . will rarely have access to any evidence beyond a bare allegation of
bias, in the absence of discovery.” Kinsler v. Lincoln Nat. Life Ins. Co., 660 F. Supp. 2d 830, 836
(M.D. Tenn. 2009). These courts find that the Supreme Court’s instruction that “it does not ‘believe
it is necessary or desirable for courts to create special burden-of-proof rules, or other special
procedural or evidentiary rules, focused narrowly upon the evaluator/payor conflict,’” renders the
inherent conflict sufficient to allow limited discovery. Busch, 2010 WL 3842367, at *2 (quoting
Glenn, 554 U.S. at 106). In short, some courts – including judges within this district – have found
discovery permissible due to the inherent administrator/payor conflict of interest. See O’Bryan v.
Consol Energy, Inc., No. 08-11, 2009 WL 383401 (E.D. Ky. Feb. 11, 2009) (holding that a plaintiff
is required to show that the discovery he seeks would lead to a finding that the denial was arbitrary
This is sometimes referred to as the “mere allegation” approach.
and capricious by demonstrating that the decision raises questions of fairness, but the inherent
conflict of interest alone meets this showing).
Conversely, other courts have required more than a mere showing of an inherent
administrator/payor conflict. Donovan v. Hartford Life & Acc. Ins. Co., No. 1:10-2627-PAG, 2011
WL 1344252, at *2 (N.D. Ohio Apr. 8, 2011); see also Geer v. Hartford Life & Acc. Ins. Co., No.
08-12837-DAS, 2009 WL 1620402, at *5 (E.D. Mich. June 9, 2009) (“discovery should be allowed
where a plaintiff has provided sufficient initial facts suggesting a likelihood that probative evidence
of bias or procedural deprivation would be developed.”). These courts have found that an allegation
of bias alone is insufficient. Instead, a plaintiff must make a sufficient factual showing to expand
discovery beyond the administrative record.
Similarly, another court within this circuit has
developed a two-step process under which a plaintiff may obtain discovery on the sole issue of
whether the defendant or the individuals participating in the review of the plaintiff’s claim have any
financial interest in the outcome of the claim. Clark v. Am. Elec. Power Sys. Long Term Disability
Plan, 871 F. Supp. 2d 655, 662 (W.D. Ky. 2012). 2 Under this approach, if the plaintiff shows some
evidence of a conflict exists at the first step, he or she will be allowed to obtain further discovery.
Id. But regardless of the approach utilized, all courts allow discovery in cases in which a plaintiff
makes a further showing of potential bias past the inherent conflict of interest claim. Sundermeyer
v. Ohio Educ. Ass’n, No. 2:12-CV-959, 2013 WL 3147952, at *3 (S.D. Ohio June 19, 2013) (“the
Court concludes that Plaintiff has made the barest of an additional showing of potential bias here”);
Cummins v. Liberty Life Assur. Co. of Boston, No. 2:10-CV-00108, 2010 WL 4809269, at *4 (S.D.
This is sometimes described as a “heightened requirement” approach.
Ohio Nov. 19, 2010) (permitting discovery when the plaintiff shows evidence of a financial
relationship between the defendant and medical experts).
In the present case, Kasko has made a sufficient showing of potential bias to permit further
discovery. More specifically, she has offered proof that approximately 85% to 90% of the claims
Dr. Mendelssohn has reviewed have been recommended “not disabled.” [Record No. 15-3, pp. 1718] Further, Dr. Mendelssohn has be criticized by other courts for the content and frequency of
reviews she makes for Aetna. Smith v. Bayer Corp. Long Term Disability Plan, 275 F. App’x 495,
506 (6th Cir. 2008); see also Stephens v. Aetna Life Ins. Co., No. 1:11-CV-513, 2012 WL 2711378,
at *9 (S.D. Ohio July 9, 2012); Neubert v. Life Ins. Co. of N. Am., No. 5:10CV1972, 2012 WL
776992, at *17 (N.D. Ohio Mar. 8, 2012) (collecting cases). This additional information is sufficient
to justify discovery outside the administrative record.
Scope of Discovery
While some discovery will be allowed, the scope of discovery is still at issue. Generally,
courts have allowed discovery regarding whether: (i) there is a history of biased claim denials; (ii)
the employer has made measures to reduce bias and promote accuracy; and (iii) company policies
reward or encourage denials. Raney v. Life Ins. Co. of N. Am., No. 08-169-JMH, 2009 WL 1044891,
at *3 (E.D. Ky. Apr. 20, 2009) (citation omitted). More specifically, courts have permitted
“Incentive, bonus, or reward programs or systems, formal or informal, for
any employee(s) involved in any meaningful way in reviewing disability claims,”
Myers v. Prudential Ins. Co. of America, 581 F. Supp. 2d 904, 914 (E.D. Tenn.
Contractual connections between the administrator and the reviewers utilized
in the plaintiff’s claim, and financial payments paid annually to the reviewers from
the administrator. Pemberton, 2009 WL 89696 at *3.
“Statistical data regarding the number of claims files sent to the reviewers
and the number of denials which resulted.” Id.
“Statistical data concerning the number of times the reviewers found
claimants able to work in at least a sedentary occupation or found that the claimants
were not disabled.” Id.
“Documentation of administrative processes designed only to check the
accuracy of grants of claims (limited to claims guidelines actually consulted to
adjudicate plaintiff's claim).”
Mullins v. Prudential Ins. Co. of America, 267 F.R.D. 504, 513 (W.D. Ky. 2010) (citing McQueen,
595 F. Supp. 2d at 755–56).
This Court has previously determined that a request concerning the number of claims
reviewed was not proper because it would not assist in demonstrating whether there is support in
the administrative record for a determination of that particular plaintiff’s claim. Hulst v. Aetna Life
Ins. Co., No. 5:12-344-DCR, 2013 WL 5675513, at *3 (E.D. Ky. Oct. 17, 2013). However, in Hulst,
discovery was denied because there was no proof of relevance to the claim. Here, Kasko has
sufficiently demonstrated the type of evidence she seeks to discover and the possible relevance of
that evidence in proving the bias she alleges. [See Record No. 15.] Further, the denial in Hulst was
based on the fact that the sole number of reviews made by a reviewing doctor was not relevant to
the matter before the Court. Kasko has gone beyond that assertion. As a result, the rationale in
Hulst does not preclude Kasko from seeking discovery outside of the administrative record in this
Interrogatory Five seeks information regarding payments to doctors who reviewed Kasko’s
claim between 2010 and 2012. [Record No. 15-2, p. 4] Aetna has already provided the amount of
payments made to Kasko’s reviewing doctors. [Id.] Therefore, it contends that any further discovery
regarding this issue would be inappropriate. [Record No. 17, p. 8] However, courts have permitted
discovery concerning the amount of annual payments made by an administrator to reviewing thirdparties. Busch, 2010 WL 3842367, at *4. This information could show long-term financial
incentives influencing doctors hired to review claims for Aetna. Further, the amount paid for only
reviewing Kasko’s claim could be insufficient to demonstrate this type of bias. Thus, while the
amount charged in reviewing Kasko’s claim is a permissible area of inquiry, the historical and
annual payments are proper areas of discovery.
Interrogatory Four requests information regarding the number of times between 2010 and
2012 each doctor that reviewed Kasko’s claim reviewed a claim on behalf of Aetna and whether
they were contracted directly by Aetna or by a third-party. [Record No. 15-2, p. 3] Interrogatory
Seven seeks information regarding the number of files reviewed by doctors that reviewed Kasko’s
claim between 2010 and 2012. It also requests that Aetna provide the number of files in which those
doctors found a claimant able to work in at least a sedentary position or otherwise not disabled.
[Record No. 15-2, p. 5] These requests seek statistical data from Aetna in an attempt to show a
history of biased claim administration. These interrogatories closely mirror discovery requests that
have been found permissible in this district. Pemberton, 2009 WL 89696 at *3.
Aetna argues that complying with these requests would be unduly burdensome because the
physicians do not determine whether a claim should be denied. Instead, they merely assist the claim
department in understanding the medical aspects of the claim. [Record No. 17, pp. 6-7] As a result,
Aetna asserts that producing the discovery requested would require a manual review of every report
to determine the outcome of the claim. [Id.] Regardless, this type of statistical information has been
found to be discoverable in investigating a claim of bias. Indeed, “if [Aetna] relied on the
third-party reviewers whose opinions or reports may have been unduly influenced by financial
incentives, the Court would benefit from information revealing the compensation arrangements in
place.” Crider v. Life Ins. Co. of N. Am., No. 3:07CV331-H, 2008 WL 239659, at *6 (W.D. Ky. Jan.
29, 2008). The financial incentives, combined with the physicians’ recommendations, could assist
the Court in resolving an allegation of biased claim administration.
The Court also notes that Kasko is only requesting this information for a three-year period.
In fact, similar discovery has been found to be sufficiently narrow when it is limited to reviewing
doctors for ten-year period. Pemberton, 2009 WL 89696 at *4. Again, however, according to
Aetna’s representations, these physicians do not technically find a claimant disabled. Thus, Aetna
claims, they do not maintain an index of whether a physician made an actual disability finding.
[Record No. 17, p. 7] Discovery regarding the number of times a physician rendered a finding of
“disabled” would not be possible. Based on these representations, the defendant’s response to
Interrogatory Seven will be limited to the number of files in which the physicians recommended a
finding of sedentary work or otherwise not disabled. As a result, the motion to compel will be
granted concerning the interrogatories, but will be subject to this modification.
Requests for Production of Documents
Request for Production Two asks Aetna to provide all contracts or agreements between
Aetna and the doctors that reviewed Kasko’s claim. [Record No. 15-2, p. 6] Request for Production
Four asks Aetna to produce records of invoices or bills sent by the doctors that reviewed Kasko’s
claim between 2010 and 2012. [Record No. 15-2, p. 6] Request for Production Five asks Aetna to
provide the records of payments between 2010 and 2012 made by Aetna to the doctors that reviewed
Kasko’s claim. [Record No. 15-2, p. 7] These requests seek information concerning the financial
and contractual relationships between the reviewing physicians and Aetna. This type of discovery
request has also been allowed as a “permissible area of inquiry.” Pemberton, 2009 WL 89696 at *3.
However, Aetna asserts that this information falls outside of the scope permitted in an ERISA case.
The Court has discussed the resulting changes to discovery following the Glenn decision.
This type of discovery will allow inquiry into possible financial incentives underlying the reviewing
physicians’ recommendations. As a result, the motion to compel will be granted concerning these
requests for production. However, disclosure of this information will be limited.
Aetna argues that if the Court does permit limited discovery, it should also issue a protective
order to avoid disclosure and dissemination of confidential information, which includes proprietary,
confidential, and private information of certain individuals who are not parties to this litigation.
[Record No. 17, p. 1] Kasko argues that a protective order should not be permitted because: (i)
Aetna did not make a proper motion for a protective order; (ii) it has not given good cause for the
protection of the information to be provided; and (iii) dissemination of the type of evidence at issue
would promote the interests of justice. [Record No. 18, p. 7]
Rule 26(c)(1)(G) of the Federal Rules of Civil Procedure permits a district court to require
that “a trade secret or other confidential research, development, or commercial information not be
revealed or be revealed only a specified way.” If this type of information is found relevant, then
appropriate measures should be taken concerning its disclosure by a protective order. R.C.
Olmstead, Inc., v. CU Interface, LLC, 606 F.3d 262, 269 (6th Cir. 2010) (citing Centurion Indus.,
Inc. v. Warren Steurer & Assocs., 665 F.2d 323, 326 (10th Cir.1981). Courts possess substantial
discretion in granting protective orders. Textured Yarn Co. v. Burkart-Schier Chem. Co., 41 F.R.D.
158, 160 (E.D. Tenn. 1966).
As discussed above, the financial arrangements and contracts between Aetna and the
reviewing physicians are relevant to Kasko’s claim and subject to discovery. However, due to the
privacy interests of non-parties, this discovery will be limited. The financial arrangements between
Aetna and the reviewing physicians implicates Aetna’s business practices. Thus, the production of
such information could be harmful to Aetna in that it could be potentially reviewed by competitors
and duplicated. Additionally, the reviewing physicians are not parties to the suit, but rather
individuals with legitimate privacy concerns. The possible harm of these disclosures demonstrates
sufficient good cause.
The Court also finds that the potential damage of the widespread
dissemination this information outweighs the public interest in disclosure. Further, Kasko has not
demonstrated that she would be harmed by a protective order allowing her access to the information
sought, while also protecting Aetna and the non-party individuals from its dissemination to third
The Court will permit discovery on this information but will limit its review to counsel and
experts. Kasko may not to disclose or exchange this information with anyone not associated with
this case. Further, Kasko should not use this information for any other purpose other than litigating
the instant lawsuit. The confidential review of the requested discovery will allow Kasko to develop
her claim of bias while preventing the harmful and widespread disclosure of the private information
of non-parties and other confidential business arrangements as requested by Aetna.
Accordingly, it is hereby
ORDERED as follows:
Plaintiff Linda E. Kasko’s motion to compel [Record No. 15] is GRANTED, subject
to the limitations outlined above.
Defendant Aetna Life Insurance Company’s request for a protective order [Record
No. 17, p. 1] is GRANTED as outlined above.
The Scheduling Order [Record No. 10] is SET ASIDE. The parties shall file a
revised, proposed scheduling order within twenty (20) days of this date.
This 21st day of July, 2014.
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