Johnston v. Commerce Bancshares, Inc. et al

Filing 40

ORDER granting in part 34 motion for additional discovery. Signed on 8/1/16 by Chief District Judge Greg Kays. (Strodtman, Tracy)

IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
WESTERN DIVISION
JOHN JOHNSTON,
Plaintiff,
vs.
COMMERCE BANCSHARES, INC., and
PRUDENTIAL INSURANCE COMPANY
of AMERICA
Defendants.

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No. 4:15-CV-0852-DGK

ORDER GRANTING IN PART MOTION FOR ADDITIONAL DISCOVERY
This ERISA action arises from Defendant Prudential Insurance Company of America’s
(“Prudential”) termination of Plaintiff’s long-term disability benefits.
Now before the Court is Plaintiff’s motion to allow discovery beyond the administrative
record (Doc 34). Because Plaintiff has shown good cause to conduct some limited discovery
outside of the administrative record, the motion is GRANTED IN PART.
Plaintiff may discover: (1) internal communications from Prudential related to the reason
his particular file was brought up for review; and (2) Standard Operating Procedures (“SOP”)
used by Prudential to determine when to review and terminate benefits, including SOP outlining
any criteria used for triggering a review. This discovery is limited to requests for production of
documents and things, and it excludes taking any depositions.
Background
Defendant Commerce Bancshares, Inc. (“Commerce”), employed Plaintiff as a senior
computer programmer. As part of his compensation, it provided him with long-term disability
insurance purchased from Prudential. Under the policy, Prudential operated as both the claims

administrator and the plan administrator who owed a fiduciary duty to the plan participants. As
such, an inherent conflict of interest existed. Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 112,
114 (2008).
In June 2013, doctors found Plaintiff had a colloid cyst resulting in hydrocephalus, a
condition which caused fluid buildup in his brain. Plaintiff had brain surgery to correct the
problem, but apparently the procedure was not totally successful:

the Social Security

Administration declared Plaintiff totally disabled, and in November of 2013, Prudential
determined he qualified for long-term disability benefits under the policy.
In January 2014, Commerce selected a new insurance company to provide disability
insurance benefits, thus Prudential would not receive any premium payments for new policies.
(Plaintiff, of course, retained any right to benefits he may have had under Prudential’s policy.)
Two months later, Prudential began reviewing Plaintiff’s continued eligibility for benefits. On
October 2, 2014, Prudential terminated Plaintiff’s benefits retroactively, effective August 31,
2014.
Plaintiff subsequently sued Defendants under ERISA.
Prudential and Plaintiff hotly dispute the reasons why Prudential began reviewing his
claim. Prudential contends that after it approved Plaintiff’s claim it received additional medical
records from Plaintiff’s doctors that led it to question whether he was eligible for benefits. At
least one of the reviewing doctors who examined these records questioned whether Plaintiff fully
exerted himself in the testing. Plaintiff argues that the timing of events suggests that after
Commerce terminated its relationship with Prudential, Prudential acted in its own self-interest to
clear its books of a long-term financial liability in violation of its fiducial duty to Plaintiff as a
plan participant.

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Plaintiff now moves to conduct discovery outside of the administrative record. Plaintiff
seeks:
1.

Any communications regarding the termination of relationship between

Commerce and Prudential either internal or between the parties.
2.

Any internal communications regarding Johnston from Prudential, including those

related to the reason he was brought up for review or regarding his termination of benefits.
3.

Prudential’s SOP regarding review and termination of benefits as well as those

outlining the criteria needed to trigger a review.
4.

The criteria Prudential used to engage a reviewing doctor.

5.

Any and all communications made between Prudential and the reviewing doctors.

6.

Any and all statistics regarding the dismissal rate of claims for the reviewing

physicians in this case.
7.

Information on any company incentive programs for employees of Prudential,

specifically those related to claim denial and saving the company money.
8.

Employee records of the persons conducting review of Plaintiff’s situation.
Standard

Since Congress enacted ERISA to provide for the quick and inexpensive adjudication of
benefit disputes, and permitting extensive discovery would increase the cost of the litigation,
Winterbauer v. Life Ins. Co. of N. Am., No. 4:07-cv-1026-DDN, 2008 WL 4643942, at *3 (E.D.
Mo. Oct. 20, 2008), discovery in ERISA cases is generally limited to what is in the
administrative record. See Jones v. ReliaStar Life Ins. Co., 615 F.3d 941, 945 (8th Cir. 2010).
Prior to the Supreme Court’s decision in Metropolitan Life Insurance Company v. Glenn,
courts permitted discovery beyond the administrative record if the plaintiff established good

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cause. See Menz v. Procter & Gamble Health Care Plan, 520 F.3d 865, 871 (8th Cir. 2008)
(noting “If a conflict of interest is not apparent from the record, the district court may permit
discovery and supplementation of the record to establish these facts if the plaintiff makes a
showing of good cause.”). Glenn arguably liberalized discovery in ERISA cases, at least with
respect to conflict of interest issues. Winterbauer, 2008 WL 4642942 at *4-5. Eight years after
Glenn, however, it is still unclear when a plaintiff may conduct discovery into the extent of a
plan administrator’s conflict of interest. Atkins v. Prudential Ins. Co., 404 F. App’x 82, 85 (8th
Cir. 2010) (noting the Eighth Circuit has “not yet decided whether Glenn affects discovery
limitations under ERISA”).
Eighth Circuit guidance on this issue is limited. The Eighth Circuit reviews a district
court’s decision to grant or deny discover in an ERISA case under an abuse of discretion
standard. Jones, 615 F.3d at 945. And while it has repeatedly upheld a decision to deny
discovery on the grounds that the plaintiff did not need information beyond that in the
administrative record, see, e.g., id., it has apparently never reviewed a decision granting
discovery into the extent of a plan administrator’s conflict of interest. But several district courts
in this circuit, including this one, have approved discovery into the extent of an administrator’s
conflict of interest where the plaintiff showed good cause. See, e.g., Schoolman v. United Health
Ins. Co., No. 4:13-282-TIA, 2013 WL 6683111, at *2 (E.D. Mo. Dec. 18, 2013); Porter v. Sun
Life & Health Ins. Co., No. 4:09-0344-DGK (W.D. Mo. Aug. 27, 2010), Winterbauer, 2008 WL
4643942, at *4-5.
Accordingly, consistent with its previous rulings and the rulings of other district courts in
this Circuit, the Court holds Plaintiff should be permitted to conduct discovery into the extent of
the administrator’s conflict of interest if he shows good cause.

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Discussion
I.

Plaintiff has not established good cause to conduct discovery from Commerce.
Commerce notes its role in this case was limited to purchasing Plaintiff’s long-term

disability insurance policy from Prudential.

Commerce observes it was not the plan

administrator or the claims administrator so it could not be operating under a conflict of interest.
Nor is it not responsible for compiling or supplementing the administrative record, so it would
have no idea whether the administrative record is complete.
Plaintiff contends discovery from Commerce “is necessary to show evidence of motive as
well as to ensure that proper methodology was used in the initiation of the claim prior to the start
of the administrative record.” Reply Br. (Doc. 37) at 1.
The Court finds any alleged motive relevant to this case would be Prudential’s motive as
the plan administrator/claims administrator to review and deny Plaintiff’s eligibility for benefits.
Any records documenting such a motive would be in Prudential’s files, not Commerce’s.1
Further, Plaintiff has not explained what “proper methodology . . . used in the initiation of the
claim” is, much less how it is relevant to this case. Accordingly, Plaintiff has not established
good cause to conduct any discovery from Commerce.
II.

Plaintiff has established good cause to conduct discovery from Prudential on two
narrow issues.
Prudential responds to Plaintiff’s request for discovery by arguing the information sought

is: (1) already addressed in the administrative record which was previously produced to Plaintiff;
(2) unrelated to any potential conflict of interest; or (3) unnecessary to determine whether a
conflict of interest played a role in its decision to review and deny Plaintiff’s claim.

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Granted, some relevant documents might be found in both Defendants’ records; for example, a letter sent from
Prudential to Commerce explaining that it was raising its rates to compensate for expenses associated with
Plaintiff’s claim. Even then, a copy of this letter would still be in Prudential’s files.

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The Court largely agrees with Prudential’s observations and finds Plaintiff has not shown
good cause to conduct any discovery on categories 1 and 4-8. However, Plaintiff’s allegations
are plausible and sufficiently corroborated by the record, namely the timing of events in this
case, so as to establish good cause to conduct very limited discovery into the extent of
Prudential’s conflict of interest. Thus Prudential should answer portions of requests 2 and 3.
Accordingly, the Court holds Plaintiff may discover: (1) internal communications from
Prudential related to the reason his particular file was brought up for review; and (2) SOP used
by Prudential to determine when to review and terminate benefits, including SOP outlining any
criteria used for triggering a review. This discovery is limited to requests for production of
documents and things, and it excludes taking any depositions.
IT IS SO ORDERED.
Date:

August 1, 2016

/s/ Greg Kays
GREG KAYS, CHIEF JUDGE
UNITED STATES DISTRICT COURT

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