VERME-GIBBONEY v. THE HARTFORD INSURANCE COMPANY et al
Filing
51
MEMORANDUM OPINION AND ORDER Denying 42 Motion to Compel. Signed by Magistrate Judge Joel Schneider on 12/16/13. (js)
[Doc. No. 42]
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
CAMDEN VICINAGE
CATHERINE VERME-GIBBONEY,
Plaintiff,
Civil No. 11-3796 (RMB/JS)
v.
THE HARTFORD INSURANCE
COMPANY, et al.,
Defendants.
MEMORANDUM OPINION AND ORDER
This
matter
is
before
the
Court
“Motion to Compel Discovery.” [Doc. No. 42].
on
plaintiff’s
The Court received
defendant’s response [Doc. No. 44], plaintiff’s reply [Doc. No.
48], and held oral argument. The issue to be addressed generally
concerns the scope of discovery plaintiff is entitled to in this
ERISA case. For the reasons to be discussed, plaintiff’s motion
is DENIED.
Background
Defendant
benefit
plan,
insured
which
plaintiff
provides
through
long
term
an
employee
welfare
disability
(“LTD”)
benefits to participants. In July 2008, plaintiff was placed on
disability by her treating physician and sought LTD coverage.
Defendant initially accepted plaintiff’s claims and provided LTD
benefits
but
on
January
14,
2010,
1
defendant
terminated
the
benefits. See Amended Compl. ¶¶ 7, 8 [Doc. No. 11]. Plaintiff
filed a claim with defendant to have her LTD benefits reinstated
but
defendant
decision.
denied
After
the
the
request.
appeal
was
Plaintiff
denied
appealed
plaintiff
filed
the
this
action in the Superior Court of New Jersey seeking damages and
reinstatement
of
her
LTD
benefits.
Defendant
subsequently
removed the case to this Court.
This is plaintiff’s second Motion to Compel Discovery. On
October
24,
2012
[Doc.
No.
33]
the
Court
denied
plaintiff’s
first motion which asked the Court to Order defendant to respond
to
her
notice.
plan
interrogatories,
documents
requests
and
deposition
In its Order the Court found that since plaintiff’s
granted
determine
discretionary
eligibility
authority
benefits,
to
the
administrator
defendant’s
decision
to
to
terminate plaintiff’s LTD benefits “must be reviewed under an
arbitrary and capricious standard.”
Order at 4.
The Court,
therefore, denied plaintiff’s request that defendant respond to
her “de novo discovery” directed to the merits of defendant’s
decision
to
terminate
plaintiff’s
benefits.
The
Court
ruled:
[P]laintiff may conduct limited discovery to determine
the scope of defendant’s conflict and the extent to
which
the
conflict
may
have
affected
the
administrator’s
determination
about
plan
eligibility.... However, discovery should only be
permitted to fill gaps in the administrative record.
If the administrative record adequately explains the
2
also
procedures used to prevent or mitigate a conflicts
problem, limited discovery is not permissible.
Order at 6.
Following
up
on
the
Court’s
October
24,
2012
Order,
plaintiff served defendant with interrogatories and a corporate
designee
deposition
notice.
Defendant
served
objections
and
responses to the interrogatories, and objected to the deposition
notice. 1
Plaintiff argues her discovery is designed to “fill in
the gaps of the administrative record to determine whether or
not the potential conflict of the arbitrator, and/or what and
how
said
individual
insulated
and/or
isolated
themselves.”
March 3, 2013 Letter Brief (“LB”) at 2.
Defendant argues it
provided
information
plaintiff
required to produce.
with
all
the
relevant
it
was
Defendant’s Brief states:
In
brief,
Hartford
explained
that
the
initial
termination was made in the claims department while
the final determination was made in a wholly separate
appeals unit. Personnel in the claims and appeals
units do not have access to or knowledge of financial
information regarding any policyholder, nor is the
information regarding the profitability or any other
financial
information
regarding
a
policyholder
provided to, or accessible by, those people. Rather,
the
people
deciding
initial
claims
or
making
determination on appeal have been effectively “walledoff” from Hartford’s finance department by ensuring
that their compensation is not determined by reference
to their record in approving or denying claims.
Additionally, claims personnel are separate from and
not
involved
with
the
persons
responsible
for
1
Defendant’s objections and responses to interrogatories are attached as
Exhibit C to defendant’s Declaration. [Doc. No. 44-2 at 14-41]. Defendant’s
objection to plaintiff’s deposition notice is attached as Exhibit B. [Id. at
8-11].
3
Hartford’s financial operations or decisions and they
do not have any role or responsibility for management,
reporting, or other functions regarding Hartford’s
finances. They are not required to interact in any way
with employees involved in underwriting or other
financial concerns when making benefit decisions.
Response Brief at 4-5.
to
provide
any
According to defendant, it does not have
further
information
or
produce
a
witness
for
deposition because the additional requested information is not
needed to fill in any gaps in the administrative record.
3.
Id. at
In response plaintiff argues:
Pursuant to relevant case law, plaintiff is
and has always been entitled to inquire into
how, if at all defendant was able to elect
“a
firewall”
to
prevent
the
inherent
conflict
associated
with
making
a
determination as to whether or not one would
be entitled to ongoing benefits from one’s
own insurance company, despite representing
and working for the company in question.
April 15, 2013 LB at l.
Plaintiff also argues she is “entitled
to a determination as to whether or not defendant created a
firewall
sufficient
conflict.”
to
avoid
prejudice
and
any
inherent
Id. at 2.
Discussion
There are several problems with plaintiff’s motion.
First,
although plaintiff asks the Court to Order defendant to serve
supplemental
discovery
answers,
she
did
not
specifically
identify the relevant information she requested that was not
produced.
Further,
plaintiff
4
asks
the
court
to
order
defendant’s designee to appear for what is presumably a Fed. R.
Civ. P. 30(b)(6) deposition, but she did not attach the notice
to her moving papers.
The Court has a copy of defendant’s
objection (Response at Exhibit B), but not a copy of plaintiff’s
notice.
The most significant substantive problem with plaintiff’s
motion
is
that
discovery
in
established
it
the
that
does
not
present
the
appreciate
context.
Federal
the
proper
It
of
Rules
is,
of
Civil
scope
course,
Procedure
of
well
allow
broad and liberal discovery. See Pacitti v. Macy’s, 193 F.3d
766, 777 (3d Cir. 1999).
ERISA context.
However, this does not apply in the
In a situation such as this where the arbitrary
and capricious standard of review applies, the review is limited
to
the
administrative
ordinarily permitted.
record
and
as
such
discovery
is
not
Mitchell v. Eastman Kodak Co., 113 F.3d
433, 437-38 (3d Cir. 1997); Irgon v. Lincoln Nat. Life Ins. Co.,
C.A. No. 13-4731 (FLW), 2013 WL 6054809, at *3 (D.N.J. Nov. 15,
2013)(“Under the arbitrary and capricious standard of review,
courts
must
limit
their
review
of
the
plan
administrator’s
denial of benefits to only the evidence that was before the
administrator when the decision was made.”).
The
Court
previously
permitted
regarding
discovery
is
a
held
structural
“limited.”
Order
5
that
even
conflict
at
6.
if
discovery
is
of
interest,
the
In
fact,
the
if
administrative record adequately explains the procedure used to
prevent
or
mitigate
permissible.
Id.
a
conflicts
problem
(citations omitted);
no
discovery
is
Shvartsman v. Long Term
Disability Income Plan for Choices Eligible Employees of Johnson
& Johnson, C.A. No. 11-03643 (JAP), 2012 WL 2118126, at *10
(D.N.J. June 11, 2012).
As noted in the case law, discovery in
the ERISA context “is limited by the statute’s goal of a speedy,
inexpensive, and efficient resolution of claims.”
Courts
deciding
have
wide
discretion
whether
discovery
administrative
record
is
and
“considerable
outside
appropriate.
the
Irgon at *4.
latitude”
scope
Irgon
at
in
of
the
*4.
This
discretion includes a ruling denying any discovery beyond the
administrative
record.
Id.
at
*7.
See
also
Stevens
v.
Santander Holdings USA, Inc., C.A. No. 11-7473 (PGS), 2013 WL
322628, at *9. (D.N.J. Jan. 28, 2013)(denying discovery in ERISA
action because plaintiff’s broad allegations lacked a factual
basis that did not raise a reasonable suspicion of misconduct by
defendants or the administrator); Reed v. Citigroup, Inc., C.A.
No. 12-2934 (JAP)(DEA), 2013 WL 2761132, at *2 (D.N.J. July 16,
2013)(denying discovery in ERISA action because plaintiff did
not present evidence that a structural conflict or procedural
irregularity existed). Plaintiff cites to Metro Life Ins. Co. v.
Glenn, 554 U.S. 105 (2008), for the proposition that she is
entitled to broad discovery.
Plaintiff misreads Glenn.
6
As this
this Court wrote in its October 24, 2012 Order, “Glenn does not
specifically address discovery issues.” Order at 5. In addition,
as
discussed
herein,
numerous
courts
support
the
discovery in this context is non-existent or limited.
view
that
Plaintiff
has not cited to any contrary authority.
To be sure, discovery in this context is not completely out
of bounds. Discovery outside the administrative record may be
permitted if it is directed to an administrator’s structural
conflict of interest or procedural irregularities that occurred
during
the
reviewing
process.
Irgon
at
*3.
The
structural
inquiry focuses on the financial incentives created by the way
the plan is organized.
Post v. Hartford Ins. Co., 501 F.3d 154,
162 (3d Cir. 2007). The structural analysis does not ask about
the administrator’s behavior.
Id. at 164. The Third Circuit has
held “that a structural conflict arises when the Administrator
has
a
non-trivial
financial
incentive
interests of the beneficiaries.”
to
Id. at 162.
act
against
the
Thus, a conflict
of interest may exist if an employer funds and evaluates claims.
A conflict may also exist if an employer pays an independent
insurance company to both evaluate claims and pay plan benefits.
Irgon at *5.
(citations omitted).
A conflict does not exist if
an employer funds a benefits plan but an independent third-party
is paid to administer the plan.
Also, no conflict exists if an
employer establishes a plan and creates an internal benefits
7
committee vested with the discretion to interpret the plan and
administer
benefits.
Id.
As
to
the
inquiry
into
procedural
irregularities, it “focuses on how the administrator treated the
particular
claimant.”
(citation
Id.
omitted).
Procedural
irregularities occur where the administrator has given the court
reason to doubt its fiduciary neutrality. Id.; see also Post,
501 F.3d at 165 (“In considering procedural factors, the focus
is
whether,
in
[the]
claimant’s
case,
the
administrator
has
given the court reason to doubt its fiduciary neutrality.”)
Plaintiff has not cited to any procedural irregularity in
the record. Instead, plaintiff focuses on defendant’s alleged
structural conflict of interest.
The Court’s October 24, 2012
Order granted plaintiff leave to conduct limited discovery to
address
the
“inherent
defendant’s
group
eligibility
and
benefit
pays
(citation omitted).
has
a
copy
of
structural
the
plan
claims
conflict
because
under
the
of
interest
defendant
plan.”
in
determines
Order
at
7.
However, despite the fact that plaintiff
administrative
record
and
it
received
defendant’s interrogatory answers, plaintiff does not point to
any “gaps” in the administrative record.
Although plaintiff
says she wants to fill in the gaps, she does not cite to any
deficiency that she wants to address. 2
2
In fact, the Court reads
The Court will not address plaintiff’s arguments raised for the first time
at oral argument that were not mentioned in her moving papers. Defendant did
not have an opportunity to address the arguments.
8
plaintiff’s briefs as acknowledging she does not presently know
of
any
“gaps”
because
she
wants
to
determine
decision maker was insulated or isolated.
2.
“whether”
the
March 3, 2013 LB at
In addition, plaintiff does not question whether defendant’s
firewall existed but just whether it was “sufficient.”
April
15, 2013 LB at 2.
Simply because plaintiff raises the specter of a conflict
of
interest
blanche”
does
not
conflict
give
of
her
the
right
interest
to
conduct
discovery
“carte
beyond
the
administrative record. Irgon at *5. Before plaintiff can conduct
the
discovery
she
requests
she
“must
establish
a
reasonable
suspicion of misconduct.” Id. Stated another way, plaintiff “must
allege a good faith basis of conflict of interest to warrant
discovery.”
Plaintiff
Id.
did
Plaintiff
not
cite
to
has
any
not
satisfied
portion
of
the
record to support her request for discovery.
her
burden.
administrative
She also did not
cite to any evidence of an “irregularity” to show there is a
good faith belief that misconduct occurred.
In its response to interrogatory 3 (Doc. No. 44, Exhibit C,
pp. 19-21) defendant provided a detailed explanation regarding
the
steps
it
took
to
insulate
claims
decisions
from
the
company’s financial matters, and the steps it took to prevent or
mitigate
a
conflicts
problem.
Defendant
explained
that
plaintiff’s initial termination was made by a Claims Specialist
9
and approved by a Team Leader, both of whom were part of the
claims department. Defendant further explained that plaintiff’s
appeal was denied by the separate appeals unit. In addition,
defendant
explained
how
it
“walled-off”
claims
examiners
and
appeals specialists, and that its claims and appeals decisions
are insulated from the financial and underwriting departments.
Further, defendant cited to the portion of the administrative
record (HLI 70-74, 28-35) where it identified the factors it
relied upon to uphold the termination of plaintiff’s claim for
benefits.
Defendant also identified in the record the health
care professionals it consulted with regarding plaintiff. These
professionals whose C.V.’s were produced included Sergio Loaiza,
M.D., Board Certified in Neurology with the added qualification
in Clinical Neurophysiology by the American Board of Psychiatry
and
Neurology,
and
Thomas
Klein,
Otolaryngology. Id. at 29-30, 35-39.
interrogatories
defendant
“incentive program”
Id. at 27-28.
also
M.D.,
Board
Certified
in
In response to plaintiff’s
explained
that
there
is
no
regarding the denial of disability claims.
And, that the decision makers are paid “fixed
salaries and performance bonuses that are wholly unrelated to
the number of claims paid or claims denied.”
Id. at 28.
This
detailed response does not evidence a lack of thoroughness on
the
part
discovery.
of
the
administrator
Irgon at *5.
10
that
justifies
additional
It
appears
to
the
Court
that
plaintiff
served
generic
interrogatories asking for information such as how many claims
were presented for appeal, how many were denied and accepted,
how
was
the
appeal
decision
made,
was
the
decision
maker
influenced by outside factors, was there an incentive program,
was the decision maker reprimanded, and the person’s training.
Presumably
topics.
plaintiff’s
Unfortunately
demonstrated
that
any
deposition
for
notice
plaintiff,
additional
covered
however,
discovery
is
the
she
same
has
not
appropriate
or
necessary. Defendant represents it produced the administrative
record
to
certainly
plaintiff
had
enough
on
December
time
to
20,
2011.
identify
Plaintiff
irregularities
in
has
the
record that might justify additional discovery. Plaintiff has
not done so and, therefore, plaintiff’s motion will be denied.
As
discussed,
discovery
in
the
ERISA
context
is
limited.
In
effect, if the Court granted plaintiff’s motion then any time
the
arbitrary
and
capricious
standard
of
review
applied
a
claimant denied disability benefits would be entitled to serve
detailed
interrogatories
and
take
a
corporate
designee
deposition. This position is not supported in the case law and
is
inconsistent
with
ERISA’s
goals.
Before
plaintiff
is
permitted to embark on detailed discovery to pursue an alleged
structural
conflict
she
must
identify
11
a
good
faith
basis
to
believe an irregularity has occurred. Since plaintiff has not
done this her motion is denied.
Conclusion
Accordingly, for all the foregoing reasons, it is hereby
ORDERED this 16th day of December, 2013, that plaintiff’s Motion
to Compel Discovery is DENIED.
s/Joel Schneider
JOEL SCHNEIDER
United States Magistrate Judge
12
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