Boyce v. Eaton Corporation Long Term Disability Plan
Filing
37
ORDER GRANTING IN PART and DENYING IN PART WITHOUT PREJUDICE 25 Motion to Lift Stay on Discovery. FURTHER ORDERED that Plaintiff's 25 Motion to Amend the Case Management Plan is GRANTED IN PART in that the parties have 90 days from the date of entry of this Order to complete the discovery allowed hereby. FURTHER ORDERED that the dispositive motion deadline held in abeyance by the Court's previous Order [Doc. 27] is extended to 120 days after the entry of this Order.( Discovery due by 10/16/2017. Motions due by 11/15/2017.)Signed by District Judge Martin Reidinger on 7/18/2017. (khm)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NORTH CAROLINA
ASHEVILLE DIVISION
DOCKET NO. 1:16-CV-242
BARBARA BOYCE,
)
)
Plaintiff,
)
)
vs.
)
)
EATON CORPORATION LONG
)
DISABILITY PLAN,
)
)
Defendants.
)
_______________________________ )
ORDER
THIS MATTER is before the Court on the Plaintiff’s Motion to Lift the
Stay on Discovery and Motion to Amend the Case Management Plan. [Doc.
25].
I.
PROCEDURAL AND FACTUAL BACKGROUND
Plaintiff Barbara Boyce (“Plaintiff”) filed this action pursuant to 29
U.S.C. § 1132(a)(1)(B), after having exhausted her administrative remedies,
seeking long term disability benefits under an Employee Retirement Income
Security Act (ERISA) plan of her former employer, Eaton Corporation
(“Eaton”). [Complaint, Doc. 1 at ¶¶ 3, 8; Answer, Doc. 6 at ¶ 8].
The Plaintiff’s employment with Eaton began on November 20, 2000.
[Doc. 15 at 32]. On September 29, 2009, the Plaintiff sustained a rotator cuff
injury while on duty at Eaton. [Doc. 15 at 21]. On June 18, 2010, after having
received short term disability benefits for approximately seven months, the
Plaintiff applied for long term disability benefits under the Eaton Corporation
Disability Plan for U.S. Employees (the “Plan”),1,2 as a result of the rotator
cuff injury. [Id.; see Doc. 15 at 33].
On July 15, 2010, the Plaintiff’s application for long term disability
benefits was approved and on July 23, 2010, the Plaintiff began receiving
these benefits. [Doc. 15 at 29-33]. Sedgwick Claims Management Services,
Inc., (“Sedgwick”) served as the Claims Administrator for the Plan during the
times relevant in this matter. [See, e.g., Doc. 15 at 33; Doc. 18 at 365].
Sedgwick periodically reviewed the Plaintiff’s long term disability benefits
claim under the Plan. On August 21, 2015, Sedgwick advised the Plaintiff
that it had completed one of these reviews and that, under the terms of the
Plan, it found she was no longer totally disabled and that benefits would be
The Plan reflects that the technical Plan Name is “Eaton Corporation Disability Plan for
U.S. Employees,” as alleged by Defendant in its Answer, [Doc. 6 at 1; Doc. 18 at 3, 552],
and not the “Eaton Corporation Long Term Disability Plan,” as named and alleged by the
Plaintiff. [Complaint, Doc. 1 at 1]. It should be noted, however, that the name “Eaton
Corporation Long Term Disability Plan” is used interchangeably with the Plan’s technical
name throughout the Administrative Record.
1
In addition to the primary Plan document, [Doc. 18 at 356-375], the Plan also includes
what it defines as Operative Documents, which “may include, but are not limited to, plan
summaries, insurance agreements and other appropriate documents….” [Doc. 18 at 358].
These documents are collectively referred to herein as the “Plan.”
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2
terminated as of August 31, 2015. [Doc. 15 at 474]. Namely, it found the
Plaintiff’s condition no longer met the definition of “disability,”3 as defined by
the Plan. [Doc. 15 at 474]. Under the Plan, long term disability benefits end,
for among other reasons, when the employee “no longer h[as] a covered
disability under the Plan, as determined by the Claims Administrator.” [Doc.
18 at 533].
On September 30, 2015, pursuant to 29 U.S.C. § 1133, the Plaintiff
timely appealed the denial of benefits. [Doc. 15 at 477]. On March 15, 2016,
Sedgwick advised the Plaintiff that the denial of her claim for disability
benefits had been reviewed and that, “because the medical information in
the file does not support the inability to perform any occupation, as defined
by the Plan [ ], we have no alternative other than to reaffirm the denial of
benefits for the period of September 1, 2015 forward.” [Doc. 16 at 27-28].
On March 23, 2016, the Plaintiff notified Eaton that she was appealing the
March 15, 2016 decision upholding the previous decision to deny her
benefits. [Doc. 16 at 31]. Pursuant to ERISA, this level appeal was made to
The Plan considers an employee “disabled” if, during months 1 through 23 after the onset
of disability, the disability makes the employee “[t]otally and continuously unable to
perform the essential duties of [her] regular position or any suitable alternative position
with the Company,” and/or at month 24 and beyond, the disability makes the employee
“[t]otally and continuously unable to engage in any occupation or perform any work for
compensation or profit for which [the employee is], or may become, reasonably well fit by
reason of education, training or experience – at Eaton or elsewhere.” [Doc. 18 at 529].
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the Plan Administrator, which the Plan defines as the Eaton Corporation
Health and Welfare Administrative Committee (the “Committee”). [Doc. 18
at 552]. Pursuant to the terms of the Plan, the Committee was required to
give a “full and fair review” of the March 15, 2016 decision denying the
Plaintiff’s claim. 29 U.S.C. § 1133(2).
On June 15, 2016, after review of the March 15, 2016 decision was
stayed for 21 days at the request of Plaintiff’s counsel to allow for “additional
time to consider submitting medical records” and after a 45-day extension
for additional time for the Committee to conduct its review, the Committee
upheld the denial of the Plaintiff’s claim for long term disability benefits under
the Plan. [Doc. 18 at 99, 104]. On July 15, 2016, after having exhausted her
administrative remedies, the Plaintiff filed this action, seeking long term
disability benefits under the Plan pursuant to 29 U.S.C. § 1132(a)(1)(B).
[Complaint, Doc. 1 at ¶ 3].
On December 21, 2016, the Court entered a Pretrial Order and Case
Management Plan (“Pretrial Order”), which provides, in pertinent part, “[t]he
parties agree that discovery is not required in this case.” [Doc. 10 at 2
(emphasis added)]. The Administrative Record (the “Record”) was filed on
February 27, 2017. [See Docs. 15-18]. The Plaintiff represents that “on or
about April 13, 2017, the Defendant provided Plaintiff with additional
4
documents which were not initially disclosed nor provided in the
administrative record when the Defendant initially sent the record.” [Doc. 25
at 1-2]. On May 30, 2017, in response to the parties’ Joint Motion to File
Supplemental Materials as Part of the Administrative Record (“Joint Motion”),
[Doc. 32], the Court ordered these additional documents be filed within 7
days of the entry of that order. [Doc. 34].
The Supplemental Materials include the following: (1) a basic timeline
of events relevant to the Plaintiff’s injury and disability claim, [Doc. 33 at 5];
(2) a “Summary of Long Term Disability Claim Second Level Appeal” (the
“Summary Report”), [Doc. 33 at 6-11]; (3) a document that reflects that
attorney Patrick Egan (“Mr. Egan”) was invited to a one-hour meeting and/or
teleconference of the Committee to occur on May 13, 2016, regarding the
“Boyce Disability Appeal” (the “Committee Meeting”) and prior to which the
“Claim Summary”4 was to be sent to the Committee, [Doc. 33 at 12]; and (4)
an e-mail dated April 21, 2016, from a litigation paralegal of Mr. Egan’s firm,
Benesch, Friedlander, Coplan & Aronoff LLP (the “Law Firm”) to Nathaniel
Bax, the Plaintiff’s attorney, enclosing a blurred and incomplete copy of a
It appears that the “Claim Summary” referenced in this document and the Summary
Report are one and the same.
4
5
“Statement of Barbara Boyce” and requesting that Mr. Bax transmit another
copy of the same. [Doc. 33 at 13-15].
On May 2, 2017, before the Joint Motion was filed, the Plaintiff filed the
Motion now before the Court seeking to lift “the stay” on discovery imposed
by the Pretrial Order and to amend the Case Management Plan in order to
extend the dispositive motions deadline. [Doc. 25; see Doc. 10]. The Plaintiff
contends, in light of the Supplemental Materials, “it has come to Plaintiff’s
attention that limited discovery is necessary in this case.”5 [Doc. 25 at 8].
The Plaintiff argues that the Supplemental Materials (1) raise additional
questions regarding whether she received a “full and fair review” and (2)
indicate that there may be a conflict of interest which caused the Committee
to abuse its discretion in denying her claim for long term disability benefits.
In the instant Motion, the Plaintiff requests: (1) “the opportunity to
perform limited discovery as to who prepared the [Summary Report], who
reviewed the report, and who forwarded the report to Defendant’s appeal
committee,” because “the summary calls into question ‘the adequacy of the
materials considered to make the decision,’” [Doc. 25 at 17, citing Champion
v. Black & Decker (U.S.) Incorporated, 550 F.3d 353, 359 (4th Cir. 2008)];
The Plaintiff filed proposed discovery requests as an exhibit to the Motion. [Doc. 30, Ex.
C].
5
6
(2) discovery on “what process was taken and materials considered by the
Defendant’s appeal committee during the 30 minute [Committee Meeting],”6
because this goes to whether the “Defendant’s appeal committee carefully
reviewed adequate materials, using a principled and reasoned process,”
[Doc. 25 at 17]; and (3) discovery “to determine how many other cases exist
where Defendant’s outside counsel has participated both in the appeal
review process and subsequently represented Defendant in litigation,” which
“is necessary to show a pattern of behavior and, consequently, the extent of
the conflict of interest and the extent of Defendant’s conducting of reviews
that conform with the requirements of ERISA.” [Doc. 25 at 17-8]. Then, in
her Reply Brief, the Plaintiff states she “is only seeking information about the
conflict of interest, how it influenced the Committee’s decision, and the
process by which the Benefits Committee came to its decision,” [Doc. 30 at
2], as well as “discovery on what exactly the appeals committee reviewed as
it goes to the very heart of ERISA’s promise that every claimant will receive
a full and fair review.” [Doc. 30 at 10].
Without citation to the Record or otherwise, the Plaintiff contends that two different long
term disability appeals were to be considered during the one-hour Committee Meeting
and, therefore, concludes the duration of the Committee Meeting regarding the Boyce
Disability Appeal must have been 30 minutes. [Doc. 25 at 17]. This appears to contradict
the document in the Supplemental Materials that reflects Mr. Egan’s possible attendance
at the Committee Meeting, which shows a one-hour time slot allocated to the Plaintiff’s
appeal. [Doc. 33 at 12].
6
7
It appears there are two distinct, but related questions before the Court.
First is the more general question of whether extra-record discovery should
be permitted to enable a plaintiff to demonstrate that a plan administrator did
not conduct a “full and fair review” of her claim. The second is whether and
to what degree discovery can and should be allowed where a plaintiff seeks
to establish that a plan administrator abused its discretion in denying benefits
because of an alleged conflict of interest held by the plan’s attorney.
II.
STANDARD OF REVIEW
A.
Discovery Issues
“District courts exercise broad discretion over discovery issues,”
Seaside Farm, Inc. v. United States, 842 F.3d 853, 860 (4th Cir. 2016), and
our appellate courts “review[ ] discovery rulings only for an abuse of that
discretion,” Beckner v. American Benefit Corp., 273 Fed.Appx. 226, 232 (4th
Cir. 2008) (citation omitted).
Furthermore, “[a] party is not entitled to
discovery that would be futile….” Seaside, 842 F.3d at 860 (citing Rich v.
United States, 811 F.3d 140, 146 (4th Cir. 2015)).
B.
Underlying Benefits Decision
The standard for review of a benefits denial necessarily informs both
the degree to which discovery may be permitted in this action generally and
whether an alleged conflict of interest may be relevant to that review. When
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plan language grants a plan administrator discretionary authority to make
benefits decisions, review of benefits decisions is conducted under the
abuse of discretion standard. Carden v. Aetna Life Ins. Co., 559 F.3d 256,
260 (4th Cir. 2009) (citations omitted). On the other hand, when the plan
does not give the administrator discretion in its decision-making process, the
benefits decision is reviewed de novo. Under de novo review, the existence
of a conflict of interest is not relevant and discovery intended to investigate
such a conflict would be unnecessary and improper. Firestone Tire and
Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989); see Seaside Farm, 842 F.3d
at 860. The Plan here grants the administrator, which is the Committee in
this case, discretionary authority to make benefits decisions. It provides, in
pertinent part:
PLAN INTEPRETATION
Benefits under the Eaton Plans will be paid only if the
Plan Administrator and/or the appointed Claims
Administrator decides that the applicant is entitled to
them under the terms of the Plan. The Plan
Administrator and/or the Claims Administrator has
discretionary authority to determine eligibility for
benefits and to construe any and all terms of the
Plan, including but not limited to any disputed or
doubtful terms. The Plan Administrator and/or
Claims Administrator also has the power and
discretion to determine all questions arising in
connection with the administration, interpretation and
application of the Plan….
9
[Doc. 18 at 560 (emphasis added)]. Therefore, because the Plan gives
Committee discretionary authority in making benefits decisions, the review
of the benefits denial will be under the abuse of discretion standard.
III.
ANALYSIS
A.
Discovery in ERISA under Discretionary Review
In Booth v. Wal-Mart Stores, Incorporated Associates Health Welfare
Plan, 201 F.3d 335 (4th Cir. 2000), the Fourth Circuit compiled a list of eight
non-exclusive
factors
courts
may
consider
in
determining
the
reasonableness of a plan fiduciary’s discretionary benefits decision:
(1) The language of the plan; (2) the purposes and
goals of the plan; (3) the adequacy of the materials
considered to make the decision and the degree to
which they support it; (4) whether the fiduciary’s
interpretation was consistent with other provisions in
the plan and with earlier interpretations of the plan;
(5) whether the decisionmaking process was
reasoned and principled; (6) whether the decision
was consistent with the procedural and substantive
requirements of ERISA; (7) any external standard
relevant to the exercise of discretion; and (8) the
fiduciary’s motives and any conflict of interest it may
have.
201 F.3d at 342. “As is facially apparent, a district court in many cases may
not be able to adequately assess a number of the Booth factors in the
absence of evidence from outside the administrative record.”
Helton v.
AT&T, Inc., 709 F.3d 343, 354 (4th Cir. 2013). Furthermore, the Fourth
10
Circuit “has long recognized that certain types of extrinsic evidence often are
necessary for a court to assess whether an administrator abused its
discretion in denying a plan member’s request for benefits.” Id. at 353.
Indeed, in her Motion, the Plaintiff contends that information revealed
by the Supplemental Materials, specifically the Summary Report, the
Committee Meeting, and the alleged conflict of Mr. Egan,7 implicate three of
the Booth factors: “(3) the adequacy of the materials considered to make the
decision and the degree to which they support it, … (5) whether the
decisionmaking process was reasoned and principled, … and (8) the
fiduciary’s motives and any conflict of interest it may have,” respectively.
With respect to the third and fifth factors, the Plaintiff argues discovery should
be allowed to enable the Court to determine whether the Plaintiff received a
full and fair review under the abuse of discretion standard. After the parties
agreed that discovery was not necessary, as reflected in the Pretrial Order,
the Defendant provided additional documentation to Plaintiff that undermined
the basis for the Plaintiff’s agreement that discovery was not necessary.
Helton, under these circumstances, dictates that limited discovery be
7
The alleged conflict of Mr. Egan is addressed separately in subsection B below.
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allowed to enable the Court to conduct a proper review of the denial of the
Plaintiff’s long term disability benefits under Booth.8
B.
Discovery Specific to a Plan Fiduciary’s Conflicts of Interest
Under the eighth Booth factor, a fiduciary’s conflicts of interest may be
relevant to the determination of the reasonableness of a fiduciary’s
discretionary decision. Booth, 201 F.3d at 342. Therefore, limited discovery
to address this may be allowed. See Fresenius Medical Care Holdings, Inc.
v. Brooks Food Group, Inc., No. 3:07CV14-H, 2008 WL 189869, at *3
(W.D.N.C. Jan. 18, 2008) (Horn, J.). “ERISA defines a fiduciary as one who
‘exercises any discretionary authority or discretionary control respecting
management of [a] plan or exercises any authority or control respecting
management or disposition of assets.” Firestone, 489 U.S. at 113 (citing 29
U.S.C. § 1002(21)(A)(i)). ERISA requires that every employee benefit plan
name one or more fiduciaries who are responsible for controlling and
managing the operation and administration of the plan. ERISA, Section
402(a), 29 U.S.C. § 1102(a). The Plan in this case names the Committee as
the fiduciary. [Doc. 18 at 362, Art. IV, § 4.1; Doc. 18 at 552].
Given that the Court has before it only a motion to amend the Case Management Plan,
rather than a motion to compel discovery responses, the Court need not examine each
of Plaintiff’s proposed discovery requests and rule on their individual suitability for the
aforementioned purposes.
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The Plaintiff contends Mr. Egan “may actually be a Benefits Committee
member,” [Doc. 30 at 3], and “respectfully submits that she is seeking
discovery for a conflict of interest on the part of the fiduciary and not a service
provider.” [Id. at 7]. In support of her argument that Mr. Egan may be a
Benefits Committee member [Doc. 30 at 3], the Plaintiff relies on a single
page of the Supplemental Materials that reflects Mr. Egan was invited to
attend a telephone conference on May 13, 2016, regarding the “Boyce
Disability Appeal.”9
[See Doc. 33 at 12].
The Fourth Circuit squarely
addressed this issue in Colucci v. Agfa Corp. Severance Pay Plan, 431 F.3d
170 (4th Cir. 2005),10 when it rejected the plaintiff’s argument that “a conflict
of interest could be presumed from the attendance of [the attorney for the
company sponsoring the plan at issue] at the Administrative Committee’s
meeting.” 431 F.3d at 180. The Fourth Circuit made clear that the pertinent
inquiry is not the conflicts of the administrator’s attorney but the conflicts of
In her reply brief, the Plaintiff references an “October 28, 2016 email from Bonnie Graff
to the Defendant’s appeal committee” and represents “there were only two committee
members present with Mr. Egan: Gordon Harmon and Douglas Grossman-McKee,” at
this meeting. [Doc. 30 at 7]. The Plaintiff fails to provide a record citation for this e-mail
and the Court sees no evidence of it in the Record or Supplemental Materials.
9
Colucci was abrogated on other grounds by Champion, which recognized that “a conflict
of interest is readily determinable by the dual role of an administrator or other fiduciary”
in both evaluating and paying claims and such conflict “is considered as one factor,
among many, in determining the reasonableness of the discretionary determination” by
that administrator. Champion, 550 F.3d at 359. Champion, however, does not change
or undermine Colucci’s holding that the relevant inquiry is whether the administrator, as
opposed to the administrator’s attorney, operated under a conflict of interest.
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the administrator.
Id.
As such, if Mr. Egan was simply attending the
Committee Meeting as an attorney for the Plan or for Eaton, any conflicts of
interest he held are irrelevant to this Court’s review and not properly the
subject of discovery.
On the other hand, if Mr. Egan was an actual
Committee member, any conflicts of interest he held would be one factor
relevant to evaluating whether the Committee abused its discretion in
denying the Plaintiff’s benefits. “[O]ne can envision many circumstances in
which a court would need to look to extrinsic evidence to evaluate … the
impact of a plan fiduciary’s conflict of interest, as is required by the eighth
[Booth] factor.” Helton, 709 F.3d at 354.
As such, the Plaintiff, will be allowed to investigate whether Mr. Egan
was a Committee member. Such discovery is limited, however, to seeking
information and/or documents reflecting the identities of the members of the
Committee during the period of the Committee’s review of the Plaintiff’s
claim, namely between March 23, 2016, and June 15, 2016.
ORDER
IT IS, THEREFORE, ORDERED that the Plaintiff’s “Motion to Lift the
Stay on Discovery” [Doc. 25] is GRANTED IN PART in that limited discovery
is allowed consistent with the terms of this Order and DENIED IN PART
WITHOUT PREJUDICE in that discovery into the conflicts of interest issue
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may be revisited should the limited discovery on this issue reveal that Mr.
Egan was, in fact, a member of the Committee.
IT IS, THEREFORE, FURTHER ORDERED that the Plaintiff’s Motion
to Amend the Case Management Plan [Doc. 25] is GRANTED IN PART in
that the parties have 90 days from the date of entry of this Order to complete
the discovery allowed hereby.
IT IS, THEREFORE, FURTHER ORDERED, in light of the foregoing,
that the dispositive motion deadline that was held in abeyance by the Court’s
previous Order [Doc. 27] is extended to that date 120 days after the entry of
this Order.
IT IS SO ORDERED.
Signed: July 18, 2017
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