Green v. Nationwide Mutual Insurance Company et al

Filing 24

ORDER granting in part and denying in part Plaintiff's 11 Motion for Discovery. Motion deadline extended until 10/9/2012. Signed by Magistrate Judge Linda R. Anderson on 7/23/2012. (ACF)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
JACKSON DIVISION
MICHAEL GREEN

PLAINTIFF

VS.

CIVIL ACTION NO. 3:12cv216-WHB-LRA

NATIONWIDE MUTUAL INS. CO., ET AL.

DEFENDANTS

ORDER
THIS CAUSE is before the Court on Plaintiff Michael Green’s Motion for Discovery,
ECF No. 11. Green, an ERISA claimant, seeks the reinstatement of his long-term disability
benefits from Nationwide Mutual Insurance Company [NMIC], the Nationwide Mutual Insurance
Companies and Affiliates Plan for Your Time and Disability Income Benefits (‘the Plan”),
Nationwide Services Company, LLC, and John Does 1-10. To advance his claim, Green moves
this Court for permission to conduct discovery through the service of interrogatories and requests
for production. Having considered the motion, the response, the rebuttal, and the applicable law
regarding ERISA cases, the Court finds that the Motion should be granted in part and denied in
part, as set forth hereafter.
Defendants determined that Green was entitled to long-term disability benefits on
November 6, 2009. Six months later, Defendants determined that Green was no longer disabled,
and his benefits were terminated. Green seeks discovery related to three topics: (a) the existence of
a conflict of interest arising from NMIC’s role as the entity which simultaneously funds the Plan
and makes determinations regarding whether to pay benefits; (b) the internal consistency of the
Plan under the administrator’s interpretation; and (c) the factual background of the determination
that Mr. Green was no longer entitled to disability benefits. He seeks to propound 30

interrogatories and/or requests for production [mixed in one 11-page document, Exhibit A] to
NMIC, and an identical document to the Plan. Green contends that “Category 1," request numbers
1-14, relate to the identities of the proper party defendants, or the entities involved in the benefits
determinations. “Category 2," request numbers 15-17, relate to the termination of other claimants’
benefits. “Category 3," request numbers 18-23, relate to the Labor Market Survey cited as a basis
for terminating Green’s disability benefits. Within this category, Green requests to depose George
Andrews, Eckman/Freeman & Associates, the author of the survey, and to subpoena his claims file.
“Category 4," request numbers 24-26, relate to discovery from Jo Lynn Polk, M.D., the physician
whose opinion was used to reverse Green’s benefits. Finally, “Category 5,” request numbers 2730, are contention interrogatories requesting Defendants to explain their defenses set forth in the
Answer.
Discovery is not ordinarily granted in ERISA cases. This Court’s review is constrained

to the administrative record, to that evidence which was before the plan administrator in
resolving a plaintiff’s claim for benefits; the Court may not open the record and conduct
discovery as to these determinations, or indulge in fact-finding. Gooden v. Provident Life
& Accident Ins. Co., 250 F.3d 329, 333 (5th Cir. 2001). This Court’s review is subject to an
arbitrary and capricious standard of review, and the applicable law provides only for limited
discovery.
In the case of Crosby v. Louisiana Health Serv. and Indem. Co., 647 F.3d 258, 263264 (5th Cir. 2011), the Fifth Circuit reversed a magistrate judge’s decision to deny a
motion to compel a claimant’s requested discovery in an ERISA case. In doing so, the

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Court discussed and explained its prior holdings1 regarding discovery in ERISA cases. It
concluded that discovery may be allowed only on three narrow topics (separate and apart
from coverage issues):
1. To question the completeness of the administrative record;
2. Whether the plan administrator complied with ERISA’s procedural
regulations; and,
3. The extent of a conflict of interest created by a plan administrator’s dual in making
benefits determinations and funding the plan.
Id. at 263.
Although the Court allowed discovery in these three categories, it also cautioned courts to
“monitor discovery closely” and “guard against abusive discovery.” Id. ERISA cases are strictly
limited to the administrative records, and a participant is “not entitled to a second chance to
produce evidence demonstrating that coverage should be afforded.” Id. at 263, citing Vega, 188
F.3d at 299-300.
Mindful of this cautionary instruction, the Court has carefully considered Green’s requests
and finds as set forth hereafter.
A. NMIC’s Conflict of Interest
Because NMIC funds the Plan, determines who qualifies for Plan benefits, and ultimately
issues payments under the Plan, Green alleges NMIC improperly suffers a conflict of interest in the
distribution of his ERISA benefits. Accordingly, he seeks to discover information regarding
NMIC’s role in the distribution, including facts about the legal existence and character of
numerous entities involved in the process, as well as their relationship to NMIC. In support of his
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request, he cites case law which allows an ERISA claimant discovery if relevant to the extent of a
conflict of interest created by a plan administrator’s dual role in making benefits determinations
and funding the plan.
In response, the Defendants assert that formal discovery is unnecessary to address this
dispute, as the Plan document—an exhibit to the Complaint—plainly names the Benefits
Administrative Committee (BAC) as the Plan Administrator. Defendants contend that the BAC is
vested with all authority to administer and interpret the plan, including the power to make benefit
claims decisions.

Defendants conclude that discovery into the issue is a waste of resources and a

needless investigation into an answered question; there is no conflict of interest even though NMIC
controls the trust which allocates the benefits payments. Defendants point out that the Fifth Circuit
has held that a conflict of interest may still exist where a trust is the funding mechanism for
employee benefits, but that such a conflict is of little significance. Holland v. International Paper
Retirement Plan, 576 F.3d 240, 250 (5th Cir. 2009).
In the undersigned’s opinion, Green has adequately set forth grounds to conduct limited
discovery regarding the organization of the Plan in order to support its allegations that an internal
conflict may exist. Green contends that BAC is merely an alter ego of NMIC. Further, it
challenges whether the BAC has a separate existence apart from NMIC. The undersigned finds
that the proposed discovery is not overly burdensome and would not be unduly costly, considering
the issues involved in this case. Green is entitled to fully explore its conflict claim; Request Nos.
1-11 may be propounded, and Defendants are directed to fully respond to these requests.

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B. NMIC’s Internal Consistency
Additionally, Green seeks to discover information regarding other terminated claimants;
specifically, he seeks information about those who lost their disability payments after the
revocation of their “LTD Disabled” status. Under the terms of the Plan, Green asserts that NMIC
cannot terminate benefits unless a claimant fails to meet one of the four conditions listed in Section
4.05.01. In the instant dispute, Green alleges he continued to meet all four factors. Yet because he
was terminated anyway, Green alleges NMIC based its decision on a legally incorrect
interpretation of the plan. Wildbur v. ARCO Chemical Co., 974 F.2d 631, 638 (5th Cir. 1992).
Accordingly, Green urges this Court should determine whether NMIC “abused its discretion” when
terminating his benefits. In making this determination, Wildbur states that reviewing courts should
examine “the internal consistency of the plan under the administrator’s interpretation.” Green
believes discovery into previously terminated “LTD Disabled” claimants will show an inconsistent
application of the Plan’s grounds for termination, particularly when applied to Green’s case.
According to Green, such information is necessary and directly relevant to the “internal
consistency of the plan under the administrator’s interpretation.”
Conversely, the Defendants assert that Green did fail to meet a condition under Section
4.05.01—he was no longer disabled. Defendants allege that this dispute is factual, turning on
Green’s medical condition. In contrast, Wildbur involved an administrator’s interpretation of Plan
terms, not the administrator’s determinations of fact. Therefore, Green’s discovery request into the
terminations of other Plan participants is overbroad and runs counter to the limited discovery
typically afforded ERISA cases.

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The Court finds that the controversy in this case is not based upon the interpretation of
ambiguous language; instead, it is factual in nature regarding whether or not Green met one of the
four conditions listed in the Plan. The Wildbur case is distinguishable, for the reasons asserted by
Defendants. As the Fifth Circuit held in Pierre v. Connecticut General Life Ins. Co., 932 F.2d
1552, 1562 (5th Cir. 1991), even where the plan does not expressly give the administrator
discretionary authority, factual disputes are reviewed under the abuse of discretion standard of
review. This case does not involve an interpretation of exclusionary language, as it did in the
Wildbur case. How other claimants’ policies were interpreted is not relevant in this case, and the
motion to compel is DENIED as to Request Nos. 15-17.
C. The Factual Background of the Determination
In an attempt to ascertain the factual background behind the termination of his disability
benefits, Green seeks to: 1) subpoena the claim file created by Eckman/Freeman & Associates and
depose George Andrew, author of the Labor Market Survey; 2) depose Dr. Jo Lynn Polk, Green’s
second examining physician; and 3) serve contention interrogatories to learn the factual bases of
Defendants’ affirmative defenses. Each of these requests should be considered separately.
1. The Labor Market Survey.
Green seeks discovery of a Labor Market Survey, on which the Defendants relied to deny
Green’s appeal of his termination. Such discovery is proper, Green alleges, because the “factual
background” of Defendants’ determination, on which discovery is allowed under Wildbur, includes
the “factual background” of the Labor Market Survey. According to Green, in Abromitis v.
Continental Casualty Co., 114 Fed. Appx. 57 (4th Cir. 2004), the Fourth Circuit implied that
discovery should be allowed to determine the validity and accuracy of a labor market survey cited
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as a basis of the administrator’s decision to terminate disability benefits. Specifically, that court
stated that “[o]ne relevant question might have been whether the survey upon which CNA relied
provided false or inaccurate information, rendering CNA’s decisionmaking process unreliable.”
Id. at

Though the Fourth Circuit did not allow discovery in Abromitis because the claimant did

not dispute the accuracy of any fact in the survey, Green believes his discovery will clarify
disputed factual issues—specifically, that Eckman/Freeman & Associates (authors of the Labor
Market Survey) did not contact any prospective employers, obtained no pay information from any
identifiable prospective employer, and collected no underlying data to support the alleged
availability of jobs in the Eckman/Freeman survey. Moreover, Green challenges the validity of the
survey, stating that it contains no references to independent sources, no citations to independent
sources for third-party verification, and no names or addresses of prospective employers.
Defendants counter that Green is not entitled to the labor market survey. When conducting
an abuse of discretion review of a denial of benefits based on an administrative record, the Fifth
Circuit requires that the scope of review be limited to facts known to the plan administrator at the
time of the benefits decision. S. Farm Bureau Life Ins. Co. v. Moore, 993 F.2d 98, 102 (5th Cir.
1993). Since the information would come from a third party, not the Defendants, it is outside the
scope of the Court’s review. Again, Defendants assert that Wildbur properly relates to whether a
“legally correct interpretation of the plan” was made and does not allow an ERISA benefit claim
plaintiff to secure “factual background” discovery with respect to factual determinations made by a
plan administrator. Denial of the discovery request keeps with the Fifth Circuit’s instruction to
limit discovery if “the burden or expense of the proposed discovery outweighs its likely benefit....”
Crosby, 647 F.3d at 264 (citing Fed. R. Civ. P. 26(b)(2)(C)(iii)). Here, the survey is not in
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Defendants’ possession, raising the cost of obtaining the information whether by subpoena or third
party depositions. Moreover, Fifth Circuit precedent does not allow the Court to consider the
survey (even if it is obtained) because the Plan Administrator did not have the additional
information (see S. Farm Bureau, 993 F.2d at 102) when making its decision, and there is no
evidence the labor market survey played an important role in the BAC’s decision to deny
Plaintiff’s appeal. Lastly, Defendants conclude that whether the survey is false or inaccurate are
for the brief on the merits, not discovery.
For the reasons asserted by Defendants, the request for discovery regarding the Labor
Market Survey, Request Nos. 18-23, and the related discovery, is DENIED. The survey is part of
the administrative record, and Green will be allowed to challenge its veracity in addressing the
merits of this case.
2. Deposition of Dr. Jo Lynn Polk
Because Defendants relied on her second evaluation to reverse their decision as to Green’s
LTD Disabled status, Green seeks to depose Dr. Polk. Dr. Polk’s report states “there has been no
significant change in the claimant’s symptomatology or improvements in his sitting tolerance,”
affirming Green’s belief that the removal of his LTD status was improper. Green urges that he
should be allowed to depose Dr. Polk to discover the “factual background of the determination,”
information needed to evaluate whether NMIC abused its discretion with a legally incorrect
interpretation under Wildbur’s test. Further, Dr. Polk should have refused to perform the IME of
Green because she had a pre-existing physician-patient relationship with him, and her failure to
disclose this fact is an “inference of lack of good faith.” Accordingly, Green contends he is
entitled to discover why Dr. Polk did not disclose this information.
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In opposition, Defendants assert that since 2007, only one IME report has been prepared by
Dr. Polk; therefore, Request Nos. 24, 25, & 26 are moot. Defendants contend that deposing Dr.
Polk would lead to “a costly system in which Article III courts would conduct wholesale
reevaluations of ERISA claims and would seriously undermine ERISA’s goal of resolving claims
efficiently and inexpensively.” Crosby, 647 F.3d at 264. Additionally, a prior relationship
between Dr. Polk and Green have nothing to do with a review of the BAC’s decision to terminate
his benefits, further suggesting the denial of Green’s requested discovery.
The Court finds that the information sought by Defendants from Dr. Polk involves the
factual determinations made by the BAC, and this Court’s review is constrained to the evidence
before the plan administrator. Vega, 188 F.3d at 299. Further factual development regarding the
medical evidence is not typically allowed. The cost of a live deposition is prohibitive and would
undermine ERISA’s goal of resolving claims efficiently and inexpensively. Crosby, 647 F.3d at
264, citing Semien v. Life Ins. Co. of No. Am., 436 F.3d 805, 814-15 (7th Cir. 2006).
The motion for discovery is DENIED as to Request Nos. 24-26, and Dr. Polk may not be be
deposed.
3. Contention Interrogatories
Green argues that he should be allowed to serve Defendants’ with contention
interrogatories to learn the factual bases of their affirmative defenses. Defendants disagree: some
of the information Green seeks has already been provided in previous correspondence, and facts
implicated by the discovery request can be satisfied from the administrative record. Further,
explanation of legal theories is protected from discovery by the work-product doctrine or the
attorney-client privilege. As such, there is no reason to permit this discovery.
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The Court finds no authority which would allow Plaintiff to propound the contention
interrogatories set forth in Request Nos. 12, 13, and 27-30, and the motion for discovery is
DENIED as to these requests.
IT IS THEREFORE ORDERED:
1.

Plaintiff’s Motion for Discovery [ECF No. 11] is GRANTED as to Request Nos. 111, and Defendants shall respond to this discovery on or before August 27, 2012.

2.

Plaintiff’s Motion for Discovery is DENIED as to all other requests.

3.

The motion deadline in this case is extended until October 9, 2012.

SO ORDERED, this the 23rd day of July, 2012.

/s/ Linda R. Anderson
UNITED STATES MAGISTRATE JUDGE

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