Filing 19


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IN THE UNITED STATES DISTRICT COURT F O R THE EASTERN DISTRICT OF PENNSYLVANIA D IA N E AQUILINO v. H A R T F O R D LIFE AND ACCIDENT IN S U R A N C E COMPANY : : : : : : : C IV IL ACTION N O . 10-2044 M E M O R A N D U M AND ORDER E L IZ A B E T H T. HEY U N IT E D STATES MAGISTRATE JUDGE 1 P la in tif f Diane Aquilino ("Plaintiff") brought this action against Defendant H a rtf o rd Life and Accident Insurance Company ("Defendant" or "Hartford") seeking p a ym e n ts and damages arising from Hartford's decision to terminate her long-term d is a b ility ("LTD") benefits effective May 8, 2009. Presently before the court is a dispute a s to whether Plaintiff is entitled to discovery beyond the paper record which Hartford re lie d upon in making its decision to terminate Plaintiff's LTD benefits (the " A d m in is tra tiv e Record"). For the following reasons, I find that Plaintiff is not entitled to d is c o v e ry beyond the Administrative Record. This case was originally assigned to the Honorable William H. Yohn. Judge Y o h n referred the matter to me for all proceedings upon the consent of the parties. See D o c s . 6 & 8. 1 I. R E L E V A N T FACTS AND PROCEDURAL HISTORY P la in tif f was employed as a program coordinator by Certainteed Corporation, w h ic h was a fully owned subsidiary of Saint-Gobain Corporation, from December 1984, th ro u g h April 25, 2008. See Doc. 1, Exh. 2 ("Compl.") at 3,4, 7. Plaintiff was a p a rtic ip a n t in the group benefit plan for its employees, which provided LTD benefits to e lig ib le and qualified employees pursuant to the terms of a group policy of insurance (the " P o l i c y" ) . 2 P la in tif f suffers from Crohn's Disease and related illnesses and became unable to p e rf o rm the essential duties of her job by April 2008. Compl. at 8. Plaintiff received s h o rt-te rm disability benefits pursuant to the Policy from August 31, 2007, through April 2 5 , 2008, and LTD benefits beginning on April 26, 2008. Id. at 9, 10. Meanwhile, in a c c o rd a n c e with beneficiary obligations under the Policy, Plaintiff filed a claim for Social S e c u rity Benefits on May 27, 2008, and was awarded benefits on April 23, 2009, with an e f f e c tiv e start date of November 26, 2007. Id. at 11. On May 7, 2009, Hartford determined that Plaintiff was no longer entitled to re c e iv e LTD benefits, and terminated the benefits effective the following day. Compl. at 13. Plaintiff requested reconsideration of the LTD termination notice by letter dated N o v e m b e r 2, 2009, and Hartford denied the request by letter dated November 19, 2009. Id. at 14, 15. 2 The Policy is attached to the Complaint at Exh. "A." 2 Plaintiff commenced suit in state court, asserting claims against Defendant for b re a c h of contract and bad faith. See Compl. at Counts I & II. Defendant removed the m a tte r to federal court on the basis that Plaintiff's claims were preempted by the E m p lo ye e Retirement Income Security Act of 1974, 29 U.S.C. 1001, et seq. ("ERISA"), a n d filed a motion to dismiss the state law bad faith claim asserted in Count II of the C o m p la in t. See Docs. 1 & 3. On June 8, 2010, after the matter was referred to me, I held a teleconference with c o u n s e l to discuss the pending motion to dismiss and a dispute concerning the scope of d is c o v e ry. Two orders followed, the first granting Defendant's motion to dismiss as u n o p p o s e d and dismissing Count II of the Complaint, and the second directing Plaintiff to n o tif y Defendant of all discovery sought beyond the Administrative Record and setting f o rth a schedule for the parties to address the discovery dispute in responsive letter briefs. See Docs. 9 & 10.3 C o n s is te n t with my scheduling order, Plaintiff sent Defendant a letter proposing s ig n if ic a n t discovery beyond the Administrative Record. See 06/24/10 letter, attached to D o c . 16 at Exh. "A." For example, Plaintiff seeks to depose various individuals, in c lu d in g Rakesh Vinayek, M.D., the medical consultant who reviewed Plaintiff's file, S te p h e n Murray, a senior claims investigator with Hartford, and Christine Chiodo of T h e latter order was revised by two subsequent orders dated June 15, 2010, and J u ly 6, 2010, respectively. See Docs. 11 & 12. 3 3 Certainteed's human relations department. See id. at 1-2. Plaintiff also seeks production o f various documents, including all correspondence between Plaintiff and Defendant, the m e d ic a l case manager's file, the Commonwealth of Pennsylvania Attorney General's O f f ic e file related to a fraud report concerning Plaintiff which was submitted by Mr. M u rra y, and Plaintiff's employment records from Certainteed covering the period January 1 , 2006, through November 25, 2007. See id. at 2. Defendant thereafter filed a letter brief opposing Plaintiff's proposed discovery in its entirety (Doc. 16), Plaintiff submitted a letter brief in response (Doc. 17), and D e f e n d a n t submitted a letter brief in reply (Doc. 18). The discovery dispute is now ripe f o r review. II. D ISC U S S IO N T h e sole issue presented is whether Plaintiff is entitled to discovery in this matter b e yo n d the Administrative Record utilized by Defendant in its decision to terminate P la in tif f 's LTD benefits. The parties agree that resolution of this issue turns on what s ta n d a rd of review applies at trial. Plaintiff argues that the court should engage in de n o v o review, in which case Plaintiff should be permitted to develop her case beyond the e x is tin g Administrative Record. Defendant counters that the arbitrary and capricious s ta n d a rd of review applies, and that no such expanded discovery is permissible. The p a rtie s agree that if the more deferential arbitrary and capricious standard of review a p p lie s, Plaintiff would not be entitled to any expanded discovery. See Doc. 17 at 4 4 ("[S]hould the Court adopt . . . the arbitrary and capricious standard, I [Plaintiff's c o u n s e l] would agree . . . that the discovery requested by [Plaintiff] is not authorized."). Plaintiff concedes that the Policy conveys upon Hartford "full discretion" to determine eligibility for benefits under the Policy. See Doc. 17 at 1 (quoting the Policy at p . 32) ("The Plan has granted the Insurance Company full discretion and authority to d e te rm in e eligibility for benefits and to construe and interpret all terms and provisions of th e Policy."). Ordinarily, such discretionary language in a policy is sufficient to shift ju d ic ia l review of a benefits determination from de novo to discretionary review. See F ire s to n e Tire & Rubber Co. v. Bruch, 489 U.S. 101, 111, 115 (1989) (de novo review g e n e ra lly applies in ERISA cases, but where a plan grants administrator or fiduciary d is c re tio n a ry authority to determine benefits eligibility, "[t]rust principles make a d e f e re n tia l standard of review appropriate"). Nevertheless, Plaintiff argues that de novo re v ie w should apply in this case because Hartford is vested with both discretionary a u th o rity to determine eligibility for benefits and responsibility for paying those benefits, th u s creating a conflict of interest. See Doc. 17 at 1, 5. In support of her argument, Plaintiff relies on Hall v. UNUM Life Ins. Co., 300 F .3 d 1197 (10th Cir. 2002). See Doc. 17 at 1-2. In Hall, the Tenth Circuit considered the q u e s tio n of what discovery should be permitted in the context of de novo ERISA cases. See 300 F.3d at 1200-01. The court concluded that "the best way to implement ERISA's p u rp o s e s . . . is ordinarily to restrict de novo review to the administrative record, but to 5 allow the district court to supplement that record `when circumstances clearly establish th a t additional evidence is necessary to conduct an adequate de novo review of the benefit d e c is io n .'" Id. at 1202 (quoting Quesinberry v. Life Ins. Co. of N. Am., 987 F.2d 1017, 1 0 2 5 (4th Cir. 1993)). The Tenth Circuit identified several "exceptional circumstances" th a t could warrant such additional evidence, including "instances where the payor and the a d m in is tra to r are the same entity and the court is concerned about impartiality." Id. at 1 2 0 3 (quoting Quesinberry, 987 F.2d at 1027). Plaintiff's reliance on Hall is misplaced for two reasons. First, the policy a d m in is tra to r in Hall did not have discretionary authority and therefore the parties in that c a s e did not dispute the lower court's determination that de novo review applied. See 300 F .3 d at 1200-01. Thus, the question in Hall was not the same as that implicated here n a m e ly, whether de novo review applies but rather whether the "exceptional c irc u m s ta n c e s " identified by the court entitled Petitioner to obtain evidence beyond the a d m in is tra tiv e record in the context of de novo review. Id. at 1202-03. Second, as to the question whether a conflict of interest constitutes an "exceptional c irc u m s ta n c e " warranting a shift in the standard of review from discretionary to de novo, a s Plaintiff suggests, that proposition has been explicitly rejected by the United States S u p re m e Court. In Metropolitan Life Ins. Co. v. Glenn, 554 U.S. 105, 128 S.Ct. 2343 (2 0 0 8 ), the Supreme Court explained that the fact that the same entity both determines e lig ib ility for, and is responsible for paying, benefits, did not imply "a change in the 6 standard of review, say, from deferential to de novo review." 128 S.Ct. at 2350 (e m p h a s is in original). Instead, the Supreme Court held that deferential review is a p p lic a b le , and that the reviewing judge should "take account of the conflict when d e te rm in in g whether the [administrator] . . . has abused his discretion." Id. Prior to the Supreme Court's decision in Glenn, the Third Circuit "adjusted the s ta n d a rd of review using a `sliding scale' in which the level of deference we accorded to a p la n administrator would change depending on the conflict or conflicts of interest a f f e c tin g plan administration." Estate of Schwing v. Lilly Health Plan, 562 F.3d 522, 525 (3 d Cir. 2009). In light of Glenn, the Third Circuit in Schwing abandoned its earlier a p p ro a c h and held that in such cases courts "should apply a deferential abuse of discretion s ta n d a rd of review across the board and consider any conflict of interest as one of several f a c to rs in considering whether the administrator or the fiduciary abused its discretion." 562 F.3d at 524.4 Since Glenn and Schwing, courts in this jurisdiction have repeatedly h e ld that the existence of a conflict does not alter the standard of review, and that the d e c is io n s of claims administers in such circumstances should be reviewed under the d e f e re n tia l arbitrary and capricious standard of review. See, e.g., Doroshow v. Hartford L if e & Accident Ins. Co., 574 F.3d 230, 233-34 (3d Cir. 2009), cert. denied, 130 S.Ct. 1 0 6 0 (2010) (existence of conflict of interest does not change deferential standard of In the ERISA context, the "abuse of discretion" and "arbitrary and capricious" s ta n d a rd s are "practically identical." Schwing, 562 F.3d at 526 n.2 (citing Abmathiya v. H o f f m a n -L a Roche Inc., 2 F.3d 40, 45 n.4 (3d Cir. 1993)). 7 4 review); Lubich v. Liberty Life Assur. Co., 2010 WL 1253547, *5 (W.D. Pa. Mar. 4, 2 0 1 0 ) (same); Kovach v. UNUM Life Ins. Co., 08-5388, 2009 WL 5217076, *2-3 (E.D. P a . Dec. 30, 2009) (Robreno, J.) (arbitrary and capricious standard of review applies w h e re administrator is vested with discretion to make disability determinations). S o m e courts have permitted limited discovery, even in the context of arbitrary and c a p ric io u s review, so long as the discovery is narrowly tailored to explore an alleged c o n f lic t of interest by a claims administrator. See, e.g., Sivalingam v. UNUM Provident C o rp ., 09-4702, 2010 WL 2650428, *3 (E.D. Pa. July 1, 2010) (Bartle, C.J.) ("Discovery is the only way the record can be fully developed on the conflicts issue"). Here, Plaintiff s e e k s broad discovery based on her argument that de novo review applies, and has not ta ilo re d her requests to the question of Hartford's conflict of interest. This broad, meritsb a s e d evidentiary pursuit is not permitted in the context of arbitrary and capricious re v ie w . See Dandridge v. Raytheon Co., 2010 WL 370598, *3 (D.N.J. Jan. 26, 2010) (F a lk , M.J.) ("[T]o the extent Plaintiff seeks discovery into the merits of the Defendant's c la im determination, it is clear that such discovery is prohibited"). In light of the Supreme Court's ruling in Glenn and subsequent Third Circuit case la w , I conclude that the deferential arbitrary and capricious standard of review applies in th e present case. I further conclude that Plaintiff has not established that she is entitled to d is c o v e ry beyond the Administrative Record. See Bauer v. Reliance Standard Life Ins. C o ., 09-0397, 2009 WL 4287407, *3 (E.D. Pa. Aug. 13, 2009) (Joyner, J.) 8 (acknowledging conflict of interest may have influenced policy interpretation, but c o n c lu d in g "additional conflict of interest discovery outside the administrative record is n o t required for the Court's analysis of the reasonableness of the Policy's in te rp re ta tio n ." ); Smathers v. Multi-Tool, Inc., 298 F.3d 191, 199-200 (3d Cir. 2002) (" W h e th e r a claim determination is arbitrary and capricious requires a determination `w h e th e r there was a reasonable basis for [the administrator's] decision, based upon the f a c ts known to the administrator at the time the decision was made.'") (quoting Levinson v . Reliance Std. Life Ins. Co., 245 F.3d 1321, 1326 (11th Cir. 2001)). III. C O N C L U S IO N F o r the foregoing reasons, I conclude that this matter is subject to the deferential a rb itra ry and capricious standard of review, and that Plaintiff is not entitled to discovery b e yo n d the existing Administrative Record. Accordingly, I will deny Plaintiff's request f o r expanded discovery. An appropriate Order follows. 9

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