Brainard v. Liberty Mutual Insurance Company et al
Filing
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MEMORANDUM OPINION & ORDER: Plaintiff's motion to compel discovery [Record No. 29 is GRANTED, in part, limited to requests pertaining to the defendant's conflict of interest and alleged bias as described above, but DENIED as to the remainder of the interrogatories. Signed by Judge Danny C. Reeves on 12/30/2014. (MRS)cc: COR
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
SOUTHERN DIVISION
(at London)
JOHN BRAINARD,
Plaintiff,
V.
LIBERTY LIFE ASSURANCE CO.
OF BOSTON,
Defendant.
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Civil Action No. 6: 14-110-DCR
MEMORANDUM OPINION
AND ORDER
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This matter is pending for consideration of Plaintiff John Brainard’s motion to compel
Defendant Liberty Life Assurance Company of Boston (“Liberty”) to answer the plaintiff’s
interrogatories.
[Record No. 29]
Having reviewed Brainard’s motion and Liberty’s
response, the Court will grant a portion of the relief sought. A reply is not needed for this
purpose.
I.
Relevant Facts
Brainard was covered through his former employer, Community Trust Bancorp, Inc.,
under a group disability income policy governed by the Employee Retirement Income
Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001, et seq. Brainard claims that he became
disabled on September 17, 2011. Accordingly, he filed a request for long-term disability
(“LTD”) benefits with Liberty, Community Trust’s policy administrator and provider of
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coverage. [Record No. 32, p. 1-2] On July 22, 2013, Liberty terminated Brainard’s LTD
benefits.1 [Record No. 1, p. 4]
Brainard filed this action on May 14, 2014, alleging that Liberty improperly denied
his claim. He contends that the decision to deny his claim was influenced by a conflict of
interest. [Record No. 29-1, p. 4] On September 19, 2014, Brainard served the defendant
with interrogatories and requests for production of documents. Liberty responded to this on
October 22, 2014. The defendant’s responses included a number of objections that the
parties have been unable to resolve. As a result, the plaintiff now moves the Court to compel
answers to the following interrogatories:
Interrogatory No. 1: State the name of the person answering these
Interrogatories on behalf of Defendant, the position held with Defendant, the
length of time said person has held such position, and the job duties of said
position.
Interrogatory No. 2: Identify all other persons with whom you have
conferred in answering any of these interrogatories and, for each person so
identified, state the position held with Defendant and the job duties of said
position.
[Record No. 29-1, p. 1]
Additionally, with respect to Doctors Terry Troutt, Ellen Ballard, Sanjay
Chadigiri, and Howard Gratton, the plaintiff moves the Court to compel answers to
the following:
. . . state the following information for the five (5) year period preceding the
performance of the medical review of Plaintiff’s claim for benefits and up
through the present:
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It appears that Brainard was receiving benefits until May 8, 2012, when Liberty initially
terminated the payments due to Brainard’s temporary improvement. On October 25, 2012, following an
appeal, benefits were reinstated with retroactive effect. Brainard’s current administrative appeal involves
Liberty’s most recent termination of benefits on July 22, 2013. [Record No. 1, p. 4]
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a.
The number of claims for which Defendant has retained said
doctor or any company employing or using said doctor, to perform a review to
determine if a claimant is “disabled” or has a “disability.”
b.
The number of times said doctor has opined that the claimant is
“disabled” or has a “disability.”
c.
The number of times said doctor has determined that the
claimant is not “disabled” or does not have a “disability.”
d.
The amount of money paid by Defendant to said doctor, or any
company employing him as a consultant or reviewer, for the performance of
medical reviews and/or the issuance of reports concerning said reviews.
[Record No. 29-1, pp. 2-3, Pl.’s Interrogs. 3, 6, 9, and 12]
II.
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
limitation 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
further 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
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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 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. Furthermore, “a reviewing court should consider that conflict as a factor in determining
whether the plan administrator has abused its discretion in denying benefits; and . . . the
significance of the factor will depend upon the circumstances of the particular case.” Id.
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 held that threshold evidentiary showings are not required for
discovery in ERISA cases. Johnson, 324 F. App’x at 466. Nevertheless, discovery is not
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
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did not abuse its discretion by allowing 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.
Bell v. Ameritech Sickness & Acc. Disability Ben. Plan, 399 F. App’x 991, 998 (6th Cir.
2010). District courts possess discretion to determine whether discovery should be allowed.
Id.
After Johnson, courts have taken several approaches in resolving 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. Pemberton v. Reliance Standard Life Ins. Co., No.
08-86-JBC, 2009 U.S. Dist. LEXIS 2070, 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). 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 dual-role conflict of interest. See O’Bryan v. Consol Energy, Inc., No.
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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 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
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. 0812837-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. Other
courts have 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). Under
this approach, if the plaintiff shows some evidence that a conflict exists, he or she will be
permitted further discovery. Id.
This Court follows its earlier precedent, holding that the presence of a conflict of
interest, on its own, is sufficient to permit a court to allow discovery beyond the
administrative record. See Pemberton, 2009 U.S. Dist. LEXIS 2070, at *5. By showing that
a conflict of interest is present as a matter of law, the plaintiff has provided more than “a
mere allegation of bias.” Because the defendant’s conflict of interest is a factor that the
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Court must consider when deciding whether the defendant abused its discretion in denying
the plaintiff’s claim and because the significance of that factor depends on the particular
circumstances in the case, limited discovery regarding the conflict of interest is appropriate.
Without such discovery, plaintiffs would be severely hindered in their ability to obtain
evidence to show the significance of the conflict of interest.
Brainard seeks to discover information regarding a potential conflict of interest
involving the review of his claim for benefits. He believes discovery may reveal that the
denial of his claim was based on a financial incentive by the defendant or bias by the claim
reviewers.
The plaintiff may obtain limited information that will enable the Court to
evaluate whether the conflict of interest resulted in an abuse of discretion.
III.
Scope of Discovery
While the plaintiff may request discovery, the scope of that discovery must be limited
to the conflict of interest and any allegations of bias. District courts must determine whether
a conflict of interest affected a benefits decision. Glenn, 554. U.S. at 117. Factors pertinent
to this inquiry include whether: (i) there is a history of biased claim denials; (ii) the employer
has taken steps to reduce potential bias and promote accuracy; and (iii) company policies
formally or informally encourage claim denials. Kasko v. Aetna Life Ins. Co., No. 5: 13-243DCR, 2014 U.S. Dist. LEXIS 98366, at *10 (E.D. Ky. July 21, 2014).
Through Interrogatory Nos. 3, 6, 9, and 12, Brainard seeks to determine the number
of times during the last five years each reviewing doctor advised Liberty, the results of each
doctor’s previous reviews, and the compensation paid by Liberty to the claim reviewers.
These interrogatories closely mirror discovery requests that have been found permissible in
this district. See Kasko, 2014 U.S. Dist. LEXIS 98366, at *12-14; Pemberton, 2009 U.S.
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Dist. LEXIS 2070, at *8. The Court will allow limited discovery to reveal the relationship
between Liberty and any reviewer who was involved in the plaintiff’s claim. See Pemberton,
2009 U.S. Dist. LEXIS 2070, at *8. Thus, Brainard is permitted to discover the financial
payments made annually to the claim reviewers from Liberty, the statistical data about the
number of claims sent to the reviewers, and the resulting number of denials and findings of
“not disabled.”
The defendant argues that it would be unduly burdensome for it to collect the
requested statistical data. [Record No. 32, p. 15] While a “primary goal of ERISA was to
provide a method for workers and beneficiaries to resolve disputes over benefits
inexpensively and expeditiously,” Perry, 900 F.2d at 967, “ERISA was [also] enacted to
promote the interests of employees and their beneficiaries in employment benefit plans and
to protect their contractually defined benefits.” Firestone Tire and Rubber Co. v. Bruch, 489
U.S. 101, 109 (1989) (internal quotations omitted). Thus, the Court must balance the two
competing purposes of ERISA. In the present case, the plaintiff’s request for statistical data
has been sufficiently narrowed to include only those reviewers who were involved in his
claim. Moreover, the request is limited to the last five years. [Record No. 29-1, p. 2]
Therefore, the request is not unduly burdensome.
However, the Court will deny the portion of Brainard’s motion that is unrelated to this
issue. Liberty is not required to respond to requests outside the scope set forth above,
including Interrogatories 1 and 2, as these requests are unlikely to lead to evidence of any
claim of bias or conflict of interest. See Raney v. Life Ins. Co. of N. Am., No. 08-169-JMH,
2009 U.S. Dist. LEXIS 34098, at *9 (E.D. Ky. Apr. 20, 2009).
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IV.
Conclusion
Plaintiff Brainard is entitled to discovery within the parameters outlined above. The
permitted discovery will enable the plaintiff to obtain enough information to evaluate the
extent of the alleged conflict of interest without being unduly burdensome to the defendant.
Accordingly, it is hereby
ORDERED that the plaintiff’s motion to compel discovery [Record No. 29] is
GRANTED, in part, limited to requests pertaining to the defendant’s conflict of interest and
alleged bias as described above, but DENIED as to the remainder of the interrogatories.
This 30th day of December, 2014.
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