Riley v. Sun Life and Health Insurance et al

Filing 27

ORDER granting 21 Motion for leave to conduct discovery. Plaintiff is hereby given permission to serve on the defendants the Interrogatories and Requests for Production of Documents attached as Exhibits 1 and 2 to Filing 23 . The defendants shal l serve responses to the plaintiff's Interrogatories and Requests for Production of Documents within the time allowed by Fed. R. Civ. P. 33 and 34. A party may object to this order by filing an "Objection to Magistrate Judge's Order&q uot; within 14 days after being served with the order. The objecting party must comply with all requirements of NECivR 72.2. The filing of an objection does not stay paragraph 2 of this Order. See NECivR72.2(c). Ordered by Magistrate Judge F. A. Gossett. (CLS, )

IN THE UNITED STATES DISTRICT COURT F O R THE DISTRICT OF NEBRASKA J A M E S RILEY, P l a i n t i f f, vs. S U N LIFE AND HEALTH I N S U R A N C E CO., f/k/a Genworth Life and Health Insurance Co., and G R O U P LONG TERM DISABILITY IN S U R A N C E , D e f e n d a n t s. ) ) ) ) ) ) ) ) ) ) ) ) )

8 :0 9 C V 3 0 3 ORDER

T h is is an action under the Employee Retirement Income Security Act, 29 U.S.C. § 1 0 0 1 , et seq. ("ERISA") and is now before the magistrate judge on the plaintiff's Motion for P e r m is s io n to Conduct Discovery (Filing 21). Having considered the defendant's response (F i li n g 22), together with the "administrative record" (Filings 19 & 20) filed by the d e f en d a n ts on December 14, 2009, I find that plaintiff should be allowed to conduct d is c o v e ry as requested. BACKGROUND T h e defendants' Answer (Filing 13) indicates that Sun Life and Health Insurance Co. ("S u n Life") is the underwriter of a group insurance policy ("Policy") that provides long-term d is a b ility benefits to the Group Long Term Disability Insurance Plan ("Plan") for eligible and q u a lifie d employees of Sumaria Systems, Inc. Plaintiff, a former employee of Sumaria S ys te m s , Inc., suffers from Multiple Sclerosis. D e f e n d a n t's predecessor approved plaintiff's application for Long Term Disability b e n e fits on or about March 7, 2005. (Filing 20-5 at p. 3-7/35). At that time, the plaintiff was a d v is e d :

T h e benefits payable under this policy are reduced by certain "Other Income" b e n e fits or amounts you receive or are entitled to receive. These "Other I n c o m e " benefits include Primary and Family Social Security benefits, W o rk e r's Compensation benefits, Employer funded Retirement Pension b e n e fits as well as disability benefits under any compulsory benefit act or law p ro v id e d or available during the same period or as a result of the same d i s a b ility. (Please refer to your Insurance Certificate for complete details.) P ro m p t notification furnishing the status of these "Other Income" benefits is o f importance since any adjustment on our part is made on a retroactive basis. P a rt 5, paragraph 5 of the Policy (Complaint Exhibit A, Filing 1-2 at p. 15/30) defines the te r m "Other Income" as: A n y amount of disability or retirement benefits under: a) T h e United States Social Security Act to which; i) yo u are entitled; and ii) yo u r Dependents may be entitled because of your disability or re tirem e n t; b) c) th e Railroad Retirement Act; a n y other similar act or law provided in any jurisdiction.

T h e plaintiff is a veteran and receives monthly benefits from the Veteran's A d m in is tra tio n ("VA"). Citing Part 5, paragraph 5 of the Policy, Sun Life determined that th e plaintiff's VA benefits are subject to offset against long-term disability benefits under the P la n . Plaintiff exhausted his administrative remedies under the Plan as of August 10, 2009. S u n Life and the Plan filed a joint answer on October 14, 2009 in which Sun Life s p e c if ic a lly denies that it is the administrator of the Plan. Answer, Filing 13 at p. 2/4, ¶ 20. T h e defendants' affirmative defenses are, however, premised on the fact that the unfavorable c la im decision was made by Sun Life.

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D IS C U S S IO N "[A] denial of benefits challenged under [ERISA] is to be reviewed under a de novo s ta n d a rd unless the benefit plan gives the administrator discretionary authority to determine e lig ib ility for benefits or to construe the terms of the plan." Firestone Tire & Rubber Co. v. B r u c h , 489 U.S. 101, 115 (1989). If an ERISA plan gives its administrator or trustees d is c re tio n a ry authority to determine eligibility for benefits, the court reviews such a decision f o r an abuse of discretion. See Firestone Tire & Rubber Co. v. Bruch, 489 U.S. at 115; a c c o r d Metropolitan Life Ins. Co. v. Glenn, 128 S. Ct. 2343, 2348 (2008); . T h e issue immediately presented in this motion is whether the plaintiff is entitled to c o n d u c t discovery outside the "administrative record" that has been divulged by the d e f en d a n ts to the plaintiff and to the court. Citing Metropolitan Life Ins. Co. v. Glenn, 128 S . Ct. 2343, 2348 (2008), the defendants assume that the claim decision is subject to an "a b u se of discretion" standard of review and conclude that the plaintiff is not entitled to c o n d u c t any discovery. F o llo w in g the Supreme Court's decision in Glenn (which did not address the scope o f discovery appropriate in cases arising under ERISA), the Eighth Circuit observed: There is no doubt that Glenn changed ERISA review in some ways. First, th e Supreme Court determined specifically that when the entity that a d m i n is te rs the plan "both determines whether an employee is eligible for b e n e f its and pays benefits out of its own pocket" a conflict of interest exists. G le n n , 128 S.Ct. at 2346. Prior to Glenn, this Court held the opposite. See, e.g., Chronister I, 442 F.3d at 655 ("[I]t is wrong to assume a financial conflict o f interest from the fact that a plan administrator is also the insurer.") (quoting M c G a r r a h v. Hartford Life Ins. Co., 234 F.3d 1026, 1030 (8th Cir.2000)). S im ila rly, under this Court's pre-Glenn precedent, a financial conflict of in ter e st would not trigger less-deferential review unless the claimant could s h o w that the conflict was causally connected to the specific decision at issue. S e e Woo v. Deluxe Corp., 144 F.3d 1157, 1160 (8th Cir. 1998); McGarrah, -3-

2 3 4 F.3d at 1030. Glenn makes clear that, while a causal connection might be im p o rt a n t in determining the appropriate level of scrutiny for a plan a d m in is tra to r's decisionmaking, such a connection is not required. Glenn, 128 S .C t. at 2351 ("The conflict of interest ... should prove more important ... w h e re circumstances suggest a higher likelihood that it affected the benefits d ec isio n ...." ). Under Glenn, courts must analyze the facts of the case at issue, takin g into consideration not only the conflict of interest, but also other factors th a t might bear on whether the administrator abused its discretion. Id. C h r o n is te r v. Unum Life Ins. Co., 563 F.3d 773, 775 (8th Cir. 2009). The Chronister court n o ted that it was not faced with determining whether Glenn changes the discovery limitations in ERISA cases. Id. at 775 n.2. In this case, the defendants' "administrative record" (Filings 19 & 20) is neither a u th e n tic a te d nor organized. Significantly, the defendants have not divulged the identity of th e Plan administrator, and the Plan documents were not included (at least the court could n o t find them) in the defendants' 391-page "administrative record." The court could find n o th in g in the "administrative record" showing that the ERISA Plan delegated to anyone the d is c re tio n a ry authority to determine eligibility for benefits. Sun Life admits that it made the c la im s decision but specifically denies that it was the Plan administrator. Based on the c o n ten t of the defendants' "record," it is quite possible that the decision to offset benefits is s u b je c t to de novo review. T h e Glenn decision was not intended to "bring about near universal review by judges d e novo­i.e., without deference­of the lion's share of ERISA plan claims denials." Glenn, 1 2 8 S. Ct. at 2350. However, even in a case which is not subject to de novo review, the court m u s t analyze the facts of the case at issue, considering all the factors that might bear on w h e th e r the Plan administrator abused its discretion. See Chronister, 563 F.3d at 775. H is to ric a lly, within the Eighth Circuit, those factors include whether the administrator acted u n d e r a conflict of interest, dishonestly, with an improper motive, or without using judgment.

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In this case, the defendants were ordered to file their administrative record early in the c a s e so that the appropriate scope of discovery­if any­could be determined without delay. T h e court has reviewed the documents filed by the defendants and agrees with the plaintiff th a t it is far from clear whether the defendants' "administrative record" is complete or intact. F u rth e rm o re , the defendants have identified no document giving Sun Life any discretion to d e te rm in e eligibility for benefits­a significant omission in light of the defendants' argument th a t Sun Life's decision can only be reviewed for abuse of discretion. U n d e r the circumstances presented, the court finds that the plaintiff's proposed d is c o v e ry requests (Filing 23, Exhibits 1 & 2) are appropriate and the plaintiff should be a llo w e d to serve the requests on the defendants. ORDER I T IS ORDERED that plaintiff's Motion for Permission to Conduct Discovery ( F ilin g 21) is granted, as follows: 1 . Plaintiff is hereby given permission to serve on the defendants the Interrogatories a n d Requests for Production of Documents attached as Exhibits 1 and 2 to Filing 23. 2 . The defendants shall serve responses to the plaintiff's Interrogatories and Requests f o r Production of Documents within the time allowed by Fed. R. Civ. P. 33 and 34. A party may object to this order by filing an "Objection to Magistrate Judge's Order" w ith in 14 days after being served with the order. The objecting party must comply with all re q u ire m e n ts of NECivR 72.2. The filing of an objection does not stay paragraph 2 of t5his O rd e r. See NECivR72.2(c). DATED February 22, 2010. B Y THE COURT: s / F.A. Gossett U n ite d States Magistrate Judge

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