Musser v. Harleysville Life Insurance Company et al

Filing 25

MEMORANDUM re pltf's Motion to Determine Standard of Review and Supplementation of the Record 18 (Order to follow as separate docket entry)Signed by Honorable Sylvia H. Rambo on 08/10/15. (ma)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
BARRY E. MUSSER,
Plaintiff
v.
HARLEYSVILLE LIFE
INSURANCE COMPANY &
RELIANCE STANDARD LIFE
INSURANCE COMPANY d/b/a
CUSTOM DISABILITY
SOLUTIONS,
Defendants

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Civil No. 1:14-CV-2041

Sylvia H. Rambo

MEMORANDUM
In this civil action, Plaintiff has filed suit against the administrators of
his employer’s long term disability plan to recover benefits he claims are due to him.
Presently before the court is Plaintiff’s motion to determine the standard of review
and supplementation of the record, wherein Plaintiff argues that the court should
review the administrators’ denial of his benefits de novo and permit discovery
beyond the administrative record. Defendants, in contrast, contend that the court
should apply an arbitrary and capricious standard of review and not permit additional
discovery. For the reasons set forth below, the court finds that the denial of benefits
will be reviewed de novo and that no further discovery is warranted under the facts
of this case.

I.

Background
A.

Factual Background

At all times relevant hereto, Plaintiff Barry Musser (“Plaintiff”) was a
certified public accountant and certified financial planner employed by Hamilton &
Musser, P.C., an accounting firm that offered a long term disability plan (the “Plan”)
through insurance provided by Defendants Harleysville Life Insurance Co.
(“Harleysville”) and Reliance Standard Life Insurance Company d/b/a Custom
Disability Solutions (“CDS”) (collectively, “Defendants”). As a participant in the
Plan, which was governed by the Employee Retirement Income Security Act of 1974
(“ERISA”), Plaintiff began receiving long term disability payments in 2009 in the
amount of $7,000 per month after he was diagnosed with cancer and became unable
to work due to the associated treatments. On January 5, 2011, Plaintiff returned to
work part-time, and thereafter self-reported his earnings on a monthly basis to CDS.
Based on those reports, CDS proportionately reduced the benefits paid to him under
the Plan.
After providing long term disability benefits to Plaintiff for nearly four
years, CDS issued a letter to Plaintiff on June 6, 2013 indicating that it had
completed a review of his claim file and determined that he was no longer eligible
for continued benefits, retroactive to January 1, 2012, because he no longer satisfied
the definition of disability and his monthly earnings exceeded eighty-percent of his
indexed pre-disability earnings. (Administrative Record (“A.R.”), pp. 359-65.)
Specifically, CDS explained that, while calculating his partial payroll in February
2013, it observed that Plaintiff’s net earnings exceeded his gross earnings. (Id. at p.
362.) Since this is “not [a] typical” scenario, CDS forwarded Plaintiff’s file to a
2

certified public accountant who noted that, while Plaintiff’s “Basic Monthly
Earnings” calculation properly included income derived from his employer only, his
“Current Monthly Earnings” calculation should include income derived from both
his employer and other sources. (Id.) After including income allegedly received by
Plaintiff from Central Penn Advisors for financial planning services in Plaintiff’s
current monthly earnings calculation, the accountant determined that Plaintiff’s
earnings had exceeded the eighty-percent limit as of January 1, 2012. (Id.)
Consequently, CDS informed Plaintiff that his claim had been overpaid by
$81,645.04, and directed him to remit a payment in that amount within 21 days. (Id.
at p. 364.) CDS further advised Plaintiff that he could request a review of its
determination in writing within 180 days, and that a “final determination” regarding
the appeal would be rendered within 45 days. (Id.) However, in the event “special
circumstances require[d] an extension of time for processing,” CDS indicated that
Plaintiff would “be notified of [its] decision no later than 90 days from the date”
CDS received his request for review. (Id.) Plaintiff, through counsel, timely
appealed CDS’s June 6, 2013 determination.
By letter dated January 16, 2014, CDS denied Plaintiff’s appeal, stating
that it was “unable to alter [its] previous determination” of June 6, 2013. (Id. at p.
183.) However, rather than affirming its prior determination that Plaintiff’s claim
had been overpaid by $81,645.04 due to his income exceeding the eighty-percent
threshold as of January 1, 2012, CDS advised Plaintiff that his claim had been
overpaid by $141,324.71, retroactive to January 1, 2011, and requested
reimbursement in that amount. (Id.) The letter included an explanation of the

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methodology and calculations utilized by CDS in arriving at its determination,
stating, in part:
A financial analysis of the income tax, payroll, and
employer representations received after benefits were
approved and paid ultimately found that Mr. Musser’s
partial return to work earnings exceeded the 80% threshold
as of January 1, 2011. In addition, because of Mr.
Musser’s 2009 wages from Hamilton & Musser, P.C. and
2009 commissions from Central Penn Advisors, his
Monthly Rate of Basic Earnings (MBE) or pre-disability
earnings have been calculated at $14,674.08 per month,
and as such, for the period of September 30, 2009 through
December 31, 2009, Mr. Musser was not eligible for the
$7,000 monthly benefit. Furthermore, based on an analysis
of Mr. Musser’s income tax records and supporting
documentation, partial [long term disability] benefits were
payable only for nine months: April 2010 through
December 2010, in the monthly amount of $4,126.33. For
the period of September 30, 2009 through the date benefits
were terminated, Mr. Musser was paid [long term
disability] benefits in the amount of $178,461.71, but
should only have been paid $37,137.00 for the limited
period in 2010, based on our analysis of his earnings record
for 2009 through 2012. As such, his LTD claim has been
overpaid in the amount of $141,324.71.
(Id. at p. 185.)
Just as it had provided Plaintiff the opportunity to appeal its prior
determination, CDS informed Plaintiff of his right to appeal the January 16, 2014
determination, as well as his ability to submit additional information in support of his
appeal, as follows:
Since this calculation represents a new determination on
[your] claim, you may request a review of this
determination by submitting your request in writing to
[CDS].
This written request for review must be submitted within
180 days of your receipt of this letter. Your request should
state any reasons why you feel this determination is
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incorrect, and should include any written comments,
documents, records, or other information relating to Mr.
Musser’s claim for benefits. Only one review will be
allowed, and your request must be submitted within 180
days of your receipt of this letter to be considered.
Under normal circumstances, you will be notified in
writing of the final determination within 45 days of the
date we receive your request for review. If we determine
that special circumstances require an extension of time for
processing, you will ordinarily be notified of the decision
no later than 90 days from the date we receive your request
for review.
(Id. (emphasis supplied).)
On July 15, 2014, Plaintiff, through counsel, timely filed an appeal to
the January 16, 2014 determination (id. at pp. 169-174), and in support thereof,
submitted a report by an insurance industry expert disputing the reasoning and
analysis employed by CDS in reaching its January 16, 2014 determination (see id. at
pp. 162-167; Doc. 24, p. 4 of 15).
On July 18, 2014, CDS, by letter, informed Plaintiff that it was in
receipt of his appeal as follows:
We wish to acknowledge receipt of your appeal of our
decision to deny Barry Musser’s claim for Long Term
Disability benefits. Your letter was received in our office
on July 16, 2014. At this time[,] Mr. Musser’s file has
been referred to the Appeals Unit where it will be reviewed
in its entirety, along with any new information submitted
for consideration.
Under ERISA guidelines, the Appeals Unit has 45 days
from our receipt of your appeal to provide you with a final
claim determination in writing. If additional time is
necessary to complete the review, you will be advised in
writing of the specific reason, and an extension (up to an
additional 45 days) will be requested.
(A.R., p. 252.)

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CDS did not issue a final claim determination within the 45-day period
for review, which ended on August 30, 2014. Rather, in a letter dated August 30,
2014,1 CDS requested an extension of time of up to 45 days to complete their review
and advised Plaintiff that he may expect a final determination no later that October
14, 2014. (Id. at p. 126.) CDS, however, has yet to render a decision on Plaintiff’s
July 15, 2014 appeal, some 387 days later. (Doc. 19, p. 9 of 29; Doc. 22, p. 10 of
31.)
B.

Procedural Background

Plaintiff initiated this lawsuit by filing a complaint on October 23, 2014,
wherein he asserted a claim for wrongful denial of benefits under Section
502(a)(1)(B) of ERISA, 29 U.S.C. § 1132(a)(1)(B). (Doc. 1.) On December 23,
2014, Defendants filed an answer and a counterclaim to recover overpayment of
benefits pursuant to 29 U.S.C. § 1132(a)(3). (Doc. 5.) Following a case
management conference, the court issued an order directing Plaintiff to file a motion
and supporting brief as to the appropriate standard of review and supplementation of
the record. (Doc. 17.) Pursuant to the order, Plaintiff filed the instant motion (Doc.
18) and brief in support thereof on March 13, 2015 (Doc. 19). Defendant filed a
brief in opposition on March 30, 2015 (Doc. 22), and Plaintiff replied on April 16,
2015 (Doc. 24). Thus, the motion is ripe for consideration.

Plaintiff alleges that CDS’s letter requesting an extension of time, while dated
August 30, 2014, was postmarked September 12, 2014, which was beyond the initial 45-day deadline.
(Doc. 1, ¶ 41; Doc. 19, p. 9 of 29.)
1

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II.

Discussion
In their respective motions, Plaintiff argues that the court should apply a

de novo standard of review, whereas Defendants contend that the more deferential
arbitrary and capricious standard should apply. In addition, Plaintiff seeks to
supplement the record with additional discovery beyond the administrative record,
while Defendants argue that additional discovery is unnecessary. The court will first
address the appropriate standard to be applied to this case before considering
whether additional discovery is warranted, as the latter consideration hinges on the
applicable standard of review.
A.

Standard of Review

In his motion, Plaintiff argues that Defendants’ failure to decide his July
15, 2014 appeal from the termination of his disability claim within the time limits
established by ERISA, as well as Defendants’ own policies, permits the court to
review CDS’s decision de novo. Defendants counter by arguing that an action to
recover plan benefits under ERISA should be judicially reviewed under an arbitrary
and capricious standard when, as in this case, the Plan expressly reserves
discretionary authority to determine eligibility for benefits or to construe the terms of
the Plan to the plan administrator, and the plan administrator has exercised such
discretion.
Although ERISA itself “does not specify the standard of review that a
trial court should apply in an action for wrongful denial of benefits,” Post v.
Hartford Ins. Co., 501 F.3d 154, 160 (3d Cir. 2007), the Supreme Court has held that
“a denial of benefits challenge under § 1132(a)(1)(B) is to be reviewed under a de
novo standard unless the benefit plan gives the administrator or fiduciary
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discretionary authority to determine eligibility for benefits or to construe the terms of
the plan,” Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). When
the benefit plan gives the administrator such discretion, the denial of benefits is to be
reviewed under an arbitrary and capricious standard, id., wherein “the plan
administrator’s interpretation of the plan ‘will not be disturbed if reasonable,’”
Conkright v. Frommert, 559 U.S. 506, 508 (2010). As the administrators of the Plan,
Defendants bear the burden of establishing the applicability of a deferential standard
of review. Viera v. Life Ins. Co. of N. Am., 642 F.3d 407, 413 (3d Cir. 2011) (citing
Kinstler v. First Reliance Std. Life Ins. Co., 181 F.3d 243, 249 (2d Cir. 1999)).
The parties agree that the Plan grants CDS the discretionary authority
which would typically warrant the deferential standard of review to be applied.
Plaintiff argues, however, that CDS’s failure to comply with ERISA-mandated time
limits in deciding his July 15, 2014 appeal requires the court to apply the same de
novo standard of review that would be required if discretion had not been vested in
CDS.
On June 6, 2013, CDS informed Plaintiff that he was not eligible for
continued benefits and claimed that he had been overpaid by $81,645.04, retroactive
to January 1, 2012. Plaintiff timely sought an administrative appeal of that decision,
pursuant to which CDS, by letter dated January 16, 2014, issued a “new
determination,” which increased CDS’s demand for reimbursement from $81,645.04
to $141,324.71. The January 16, 2014 letter explicitly provided that Plaintiff could
administratively appeal that decision to CDS within 180 days and that a final
determination regarding the appeal would be issued within 45 days of the date it was

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received, unless special circumstances required a 45-day extension. Plaintiff timely
sought such an appeal by letter dated July 15, 2014.
CDS’s 45-day deadline to decide Plaintiff’s appeal emanates from
ERISA’s requirement that, “[i]n accordance with regulations of the Secretary [of
Labor], every employee benefit plan shall . . . afford a reasonable opportunity to any
participant whose claim for benefits has been denied for a full and fair review by the
appropriate named fiduciary of the decision denying the claim.” 29 U.S.C. §
1133(2); LaAsmar v. Phelps Dodge Corp., 605 F.3d 789, 797 (10th Cir. 2010). The
regulations implementing that “reasonable opportunity” for review obligation
require, inter alia, that the plan administrator notify a claimant of the plan’s benefit
determination within 45 days after receipt of the claimant’s request for review by the
plan, unless special circumstances require an extension of time for processing the
claim. 29 C.F.R. § 2560.503-1(i)(1)-(3). If the plan administrator determines that an
extension of time is required, “written notice of the extension shall be furnished to
the claimant prior to the termination of the initial [45]-day period,” but “in no event
shall such an extension exceed a period of [45] days from the end of the initial
period.” Id. Thus, under both the Plan and the applicable regulations, an appeal
from a denial of benefits must be resolved within a maximum of ninety days.
The parties do not dispute that Plaintiff filed his second appeal on July
15, 2014, or that Defendants have yet to issue a decision on that appeal, more than
one year later. The question is thus whether Defendants’ failure to issue a timely
decision—or rather, failure to issue any decision—on Plaintiff’s second appeal
deprives Defendants of the deference to which they would otherwise be due.

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In answering that question, Plaintiff argues that the court should rely on
Gritzer v. CBS, Inc., 275 F.3d 291 (3d Cir. 2002). In Gritzer, the Third Circuit
applied de novo review to a plan that otherwise granted discretion to the
administrator based upon the plan administrator’s failure to analyze or make any
decision on the appellants’ claims until five months after litigation commenced. Id.
at 295. Turning to an analogy between ERISA and trusts, the Third Circuit stated
that, “[w]here a trustee fails to act or to exercise his or her discretion, de novo review
is appropriate because the trustee has forfeited the privilege to apply his or her
discretion; it is the trustee’s analysis, not his or her right to use discretion or a mere
arbitrary denial, to which a court should defer.” Id. (citation omitted); accord
Gilbertson v. Allied Signal, Inc., 328 F.3d 625, 631 (10th Cir. 2003) (“[T]o be
entitled to deferential review, not only must the administrator be given discretion by
the plan, but the administrator’s decision in a given case must be a valid exercise of
that discretion.”) Because Defendants failed to issue a decision on his July 15, 2014
appeal, Plaintiff argues that Defendants forfeited its privilege to exercise their
discretion, and the court should therefore apply de novo review.
Defendants contend that Gritzer is distinguishable from the instant case
because there the plan did not respond at all to the appellants’ initial claim until five
months after litigation commenced, whereas here CDS exercised discretion in the
course of terminating Plaintiff’s benefits by interpreting the plan, calculating an
overpayment, and denying Plaintiff’s first appeal. Emphasizing the Gritzer court’s
statement that it would agree with the district court’s application of the arbitrary and
capricious standard “[h]ad discretion in fact been exercised in the course of denying
benefits,” Gritzer, 275 F.3d at 295, Defendants essentially argue that the court
10

should defer to the reasoning and analysis provided in CDS’s January 16, 2014
decision on Plaintiff’s first appeal.
That decision, however, is not entitled to any such deference. In its
June 6, 2013 denial of benefits letter, CDS indicated, inter alia, that it was
terminating Plaintiff’s benefits, retroactive to January 1, 2012, because his current
monthly earnings, as derived from both his employer and other sources, exceeded
eighty-percent of his indexed pre-disability earnings. In its January 16, 2014
determination, however, CDS employed entirely new methodology and calculations
to arrive at a self-described “new determination” that is markedly different from the
June 6, 2013 initial determination. For example, the June 6, 2013 initial
determination calculated Plaintiff’s Monthly Rate of Basic Earnings, i.e., his predisability earnings, at $11,933.33, whereas the January 16, 2014 determination
calculated this figure at $14,674.08. Significantly, CDS further reduced and denied
Plaintiff’s benefits by finding that Plaintiff’s earnings exceeded the eighty-percent
threshold as of January 1, 2011, in contrast to its initial determination that those
earnings exceeded that threshold on January 1, 2012, and by requesting recoupment
of an alleged overpayment in the amount of $141,324.71, nearly twice the amount it
initially claimed to have overpaid. As such, the January 16, 2014 “new
determination” effectively superseded the June 6, 2013 initial determination by
further reducing Plaintiff’s benefits under the Plan, and, therefore, is an adverse
benefit determination from which appeal lies under ERISA. See 29 C.F.R. §
2560.503-1(m)(4) (defining “adverse benefit determination” to include “a denial,
reduction, or termination of, or a failure to provide or make payment (in whole or in
part) for, a benefit”). Indeed, CDS appropriately provided Plaintiff the opportunity
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to appeal the new adverse determination in its January 16, 2014 letter, expressly
stating, in accordance with ERISA, that he may request a review of the decision
within 180 days and that he should include therein any additional information
relating to his claim. See 29 C.F.R. § 2560.503-1(h)(2)(i)-(ii) (requiring that the
claimant be provided appropriate notice and an opportunity to submit documentation
and evidence supporting his claim); id. at § 2560.503-1(h)(2)(iv) & (3)(ii) (requiring
that the plan administrator’s review “take[ ] into account all [additional information]
. . . without regard to whether such information was submitted or considered in the
initial benefit determination,” and be “conducted by an appropriate named fiduciary
of the plan who is neither the individual who made the adverse benefit determination
that is the subject of the appeal, nor the subordinate of such individual”). The letter
further provided that CDS would issue a final determination within, at most, 90 days,
in conformity with ERISA’s regulatory deadlines. See id. at § 2560.503-1(i)(3).
However, no such final determination was made. 2
As the Third Circuit has noted, once a claim is brought in federal court,
it is the “plan administrator’s final, post-appeal decision [that] should be the focus of
review. . . . To focus elsewhere would be inconsistent with ERISA’s exhaustion
requirement.” Funk v. Cigna Group Ins., 648 F.3d 182, 191 n.11 (3d Cir. 2011)
(noting that the district court improperly focused on the plan administrator’s initial
Defendants’ attempt to characterize Plaintiff’s July 15, 2014 appeal as voluntary is
not only contrary to ERISA’s requirement that an appeal be provided following an adverse benefit
determination, but it is also belied by CDS’s admonishment to Plaintiff that his failure to request review
within 180 days of his receipt of the letter may constitute a failure to exhaust his administrative
remedies and may affect his ability to bring a civil action. (A.R., p. 186.) Thus, according to
Defendants, Plaintiff had not exhausted his administrative remedies as of January 16, 2014, and was
required to appeal the “new determination” to do so. Defendant’s argument that Plaintiff’s July 15,
2014 appeal was voluntary is, therefore, without merit. See 29 C.F.R. § 2560.503-1(c)(3)(iii)
(permitting voluntary appeals only after administrative appeals have been exhausted).
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decision rather than its final decision). As discussed above, while ostensibly labeled
a post-appeal decision, the January 16, 2014 decision was effectively a new adverse
benefit determination that, by utilizing entirely new methodology and arriving at a
significantly increased overpayment calculation, rendered inoperative the initial June
6, 2013 determination. Because no determination has been rendered on Plaintiff’s
appeal of the January 16, 2014 decision, there is no analysis to which the court may
defer, see Gritzer, 275 F.3d at 295, and, therefore, the de novo standard of review
applies.
The significance of an administrator exercising its discretion in deciding
an appeal relative to the standard of review to be employed by the court was wellstated by the Northern District of California:
The administrative appeals process provides an important
‘second look’ at the plan administrator’s initial
determination and justifies a more deferential review by the
district court. Thus, where the plan administrator fails to
resolve an appeal—or at least declines to issue a decision
before the claimant has invested substantial time and
resources litigating in federal court—it is more than a
‘technical violation[ ] of ERISA’s requirements.’ Gatti v.
Reliance Std. Life. Ins. Co., 415 F.3d 978, 985 (9th Cir.
2005)]. In such an instance, the administrator . . . ‘has
forfeited the privilege to apply his or her discretion.’
Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955, 972
(9th Cir. 2006) (citing Gritzer, 275 F.3d at 296).
Langlois v. Metro. Life Ins. Co., 833 F. Supp. 2d 1182, 1188 (N.D. Cal. 2011). The
same reasoning applies here. Because CDS has failed to exercise its discretion by
resolving Plaintiff’s July 15, 2014 appeal of its January 16, 2014 determination, there
is no analysis to which deference may be afforded.
The court’s conclusion is further bolstered by the Department of
Labor’s commentary, in enacting the new regulations, that it intended “to clarify that
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the procedural minimums of [Section 2560.503-1] are essential to procedural fairness
and that a decision made in the absence of the mandated procedural protections
should not be entitled to any judicial deference.” 65 Fed.Reg. 70246-01, 70255
(Nov. 21, 2000).3
Significantly, there do not appear to be any special circumstances
justifying Defendants’ substantial delay in deciding Plaintiff’s July 15, 2014 appeal.
Indeed, Defendants have not provided any credible explanation as to why they have
yet to issue a final determination. Instead, Defendants rely on Conkright v.
Frommert, 559 U.S. 506 (2010), to suggest that their failure to issue a decision on
Plaintiff’s second appeal was a single mistake, and, as such, it was insufficient to
deny them the deference to which they would otherwise be afforded. In Conkright,
the Supreme Court reversed a Second Circuit decision that the district court need not
use a deferential standard of review on remand when a plan administrator’s previous
construction of the same plan terms was found to violate ERISA. Id. at 513-14
(noting that under the Second Circuit’s view the district court “was entitled to reject
a reasonable interpretation of the Plan offered by the Plan Administrator, solely
because the Court of Appeals had overturned a previous interpretation by the
Administrator,” and referring to this approach as “one-strike-and-you’re-out”). In
allowing the administrator a second chance for deferential review, the Supreme
Court noted the plan’s grant of discretion to the administrator and the importance of
Firestone deference to the balancing of interests under ERISA. The Court explained

While the court finds the Department of Labor’s intentions regarding the judicial
scope of review noteworthy, it recognizes that those intentions may not be entitled to Chevron
deference. See Seger v. ReliaStar Life, Civ. No. 3:04-cv-16/RV/MD, 2005 WL 2249905, *9 (N.D. Fl.
Sept. 14, 2005).
3

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that “a single honest mistake in plan interpretation” does not strip the plan
administrator’s discretion or justify de novo review for subsequent related
interpretations. Id. at 517.
The facts in Conkright, however, are distinguishable from the case sub
judice where the Defendants have yet to issue a decision on Plaintiff’s appeal. Such
inaction—continuing even after a lawsuit was filed—for over a year cannot
reasonably be deemed a “single honest mistake,” and the court accords little weight
to Defendants’ rationale that they have withheld issuing a post-litigation
determination out of deference to the court. The court’s research has uncovered a
wealth of case law involving decisions by insurance companies issued following
commencement of litigation. See, e.g., Conkright, 559 U.S. at 510-11; Gritzer, 275
F.3d at 295; Rasenack v. AIG Life Ins. Co., 585 F.3d 1311, 1314-15 (10th Cir. 2009);
Ott v. Litton Indus., Inc., Civ. No. 4:04-cv-763, 2005 WL 1215958, *4 (M.D. Pa.
May 20, 2005). While Defendants’ proffered reason for failing to do the same here
is an excuse based in argument, it fails to qualify as a justification based in law.
Indeed, as Defendants themselves point out, some courts have reviewed for abuse of
discretion untimely post-litigation decisions by administrators. See, e.g., Wedge v.
Shawmut Design, Civ. No. 12-cv-5645, 2013 WL 4860157, **8-9 (S.D. N.Y. Sept.
10, 2013) (providing an analysis of the post-Conkright obligation to apply a
deferential standard of review where an appeal decision is issued after
commencement of litigation). Although the Third Circuit has instructed that “postcommencement-of-litigation determinations under the aegis of attorneys are not
benefit eligibility analyses by a plan administrator to which a court must defer,”
Gritzer, 275 F.3d at 295 n.4, the court certainly could have elected to defer to such a

15

decision under the proper circumstances, see Wedge, 2013 WL 4860157 at **8-9
(applying deferential standard of review when administrator’s decision was thirteen
days late). Here, however, there is no final decision to which the court may elect to
defer.4
Accordingly, the court concludes that the de novo standard of review is
appropriate in this case and will grant Plaintiff’s motion in this regard.
B.

Scope of Discovery

In addition to his motion to determine the standard of review, Plaintiff
also moves for discovery beyond the administrative record. In conducting a de novo
review, the role of the court “is to determine whether the administrator made a
correct decision.” Viera, 642 F.3d at 413 (citation omitted). “De novo means [ ], as
it ordinarily does, that the court’s inquiry is not limited to or constricted by the
record, nor is any deference due the conclusion under review.” Luby v. Teamsters
Health Welfare & Pension Trust Funds, 944 F.2d 1176, 1184 (3d Cir. 1991) (quoting
Doe v. United States, 821 F.2d 694, 697 (D.C.C. 1987) (noting that for the review of
administrative decisions, “the reviewing court is not confined to the . . . record, but
may pursue whatever further inquiry it finds necessary or proper to the exercise of

The court is likewise unpersuaded by Defendants’ argument that the court should
remand the case to them for a decision on Plaintiff’s July 15, 2014 appeal. The court has found no
relevant case law to support such a proposition. Indeed, remanding at this time, and thereby permitting
the plan administrator to avoid de novo review by belatedly deciding an appeal after the claimant has
filed suit, would conflict with ERISA’s stated purpose, namely, “protect[ing] . . . the interests of
participants in employee benefit plans and their beneficiaries, . . . by establishing standards of conduct,
responsibility, and obligation for fiduciaries of employee benefit plans, and by providing for appropriate
remedies, sanctions, and ready access to the Federal courts.” 29 U.S.C. § 1001(b); see also 29 C.F.R. §
2560.503-1(l) (“In the case of a failure of a plan to establish or follow claims procedures . . . , a claimant
shall be deemed to have exhausted the administrative remedies available under the plan and shall be
entitled to pursue any available remedies under section 502(a) of [ERISA].” Accordingly, the court will
not remand the case to provide Defendants with the opportunity to belatedly exercise their discretion.
4

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the court’s independent judgment.”). Rather, the court has discretion to consider
supplemental evidence that was not before the administrator. Id. at 1184-85; Moran
v. Life Ins. Co. of N. Am., Civ. No. 3:13-cv-0765, 2014 WL 5342677, *1 (M.D. Pa.
Oct. 20, 2014) (citing Viera, 642 F.3d at 418); see Laslavic v. Principal Life Ins. Co.,
Civ No. 11-cv-0684, 2013 WL 254450, *9 (W.D. Pa. Jan. 23, 2013) (“[A] court
reviewing a benefits decision de novo has discretion to consider ‘any supplemental
evidence’ presented by the parties.”). If the record is sufficiently developed,
however, “the district court may, in its discretion, merely conduct a de novo review
of the record of the administrator’s decision, making its own independent benefit
determination.” Luby, 944 F.2d at 1185. Therefore, “[w]hen reviewing de novo a
decision of the plan administrator, it is within the discretion of the court to expand
the record as needed or proceed on the basis of the previously developed record.”
Viera v. Life Ins. Co. of N. Am., 871 F. Supp. 2d 379, 385 (E.D. Pa. 2012). Thus, the
court must determine whether the record is sufficiently developed to make an
independent benefit determination. Id.
Plaintiff submits that it would assist the court in conducting its de novo
review to consider the following:
(1)

Defendant’s prior interpretations of the Plan
language at issue in other benefits decisions;

(2)

All documents, including internal memoranda
between Defendants and third parties, where the Plan
language was discussed or construed;

(3)

A full, un-redacted agreement between Harleysville
and CDS regarding CDS’s role and authority in this
case;

(4)

Deposition testimony of claim representatives to
ascertain why Defendants did not previously include

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certain financial calculations in making benefits
payments; and
(5)

Discovery related to the CPAs who reviewed
Plaintiff’s benefits calculations, including
determining why Defendants changed CPAs during
the pendency of their review.

(Doc. 19, pp. 23-25 of 29). In addition, Plaintiff requests that the court conduct a de
novo evidentiary hearing for purposes of supplementation of the record so as to
permit full and fair review. (Id. at p. 25.)
Defendants argue, on the other hand, that the record is sufficiently
developed and requires no supplementation. Emphasizing that this is an unusual
long term disability case because a medical determination on Plaintiff’s disability is
not at issue, Defendants cite to the nearly 2000-page administrative record and argue
that it contains sufficient information to make a financial determination on Plaintiff’s
earnings and application of the Plan’s use of the term “Current Monthly Earnings.”
Defendants highlight that the Administrative Record includes the pertinent tax
returns, annual 401K summary reports, information related to Hamilton & Musser’s
treatment of financial planning income and taxation, the CPA reports obtained by
Defendants, and the report of Plaintiff’s retained expert. (Doc. 22, p. 26 of 31.)
After considering the parties’ arguments and reviewing the
administrative record, the court concludes that the discovery Plaintiff seeks will not
assist the court in its de novo review. In this case, the court must construe the Plan
and then determine if and when Plaintiff’s earnings exceeded the eighty-percent
threshold for receiving disability benefits. In this regard, the administrative record
already contains the Plan and the necessary financial documents that the court must
rely on in making its decision. Any discovery relating to Defendants’ previous

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interpretations of the policy or why the claims representatives did or did not rely on
certain information is not relevant to the court’s de novo review, as the court gives no
“deference or presumption of correctness” to the administrator’s decisions. Viera,
642 F.3d at 414. The court likewise sees no relevance to additional information
related to Defendants’ CPAs or why Defendants changed CPAs during the pendency
of their review. As the CPAs’ reports are already included in the administrative
record, a “sideline journey of uncertain destination appears unlikely to lead to the
discovery of admissible evidence.” Viera, 871 F. Supp. 2d at 386 (citing Fed. R.
Civ. P. 26(b)). Indeed, much of the evidence Plaintiff seeks seems to relate to a
potential conflict of interest, but a purported conflict of interest “is only pertinent to
an abuse-of-discretion standard of review.” Viera, 642 F.3d at 418.
Accordingly, the court concludes that this case can be properly resolved
on the administrative record without the need for discovery. While the court
recognizes that additional evidence might under some circumstances “increase the
likelihood of an accurate decision,” the possibility of increased accuracy here is
speculative and would come at the price of increased litigation costs for both parties.
Viera, 871 F. Supp. 2d at 386 (citing Patton v. MFS/Sun Life Fin. Distribs. Inc., 480
F.3d 478, 492 (7th Cir. 2007)); see also Atkins v. UPMC Healthcare Benefits Trust,
Civ. No. 2:13-cv-520, 2013 WL 6587170, *1 (W.D. Pa. Dec. 16, 2013) (“Discovery
in an ERISA context must reflect the statute’s goal of a speedy, inexpensive, and
efficient resolution of claims.”)

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III.

Conclusion
In conclusion, because Defendants have failed to issue a decision on

Plaintiff’s appeal of CDS’s January 16, 2014 adverse benefits determination, the
court will apply a de novo standard of review. However, the court is confident that it
can properly resolve this case on the administrative record and will not permit
Plaintiff to conduct additional discovery.

s/Sylvia H. Rambo
United States District Judge
Dated: August 10, 2015.

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