Winburn v. Progress Energy Carolinas Inc et al

Filing 41

ORDER granting 29 Motion to Supplement the Record. Signed by The Honorable R Bryan Harwell on 7/25/2013.(hcic, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
FLORENCE DIVISION
Kimberly B. Winburn,

)
)
Plaintiff,
)
)
vs.
)
)
Progress Energy Carolinas, Inc.,
)
and Prudential Insurance of
)
America,
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Defendants.
)
______________________________)

Civil Action No. 4:11-3527-RBH
ORDER

Pending before the Court in this ERISA action is Plaintiff’s [29] Motion to Supplement the
Record and to Permit Plaintiff to Serve Requests to Admit. This action was filed in state court on
November 18, 2011. The Complaint alleged causes of action for (1) a declaratory judgment that
Defendants are liable to Plaintiff for $400,000 in Accidental Death and Dismemberment insurance;
(2) breach of contract; and (3) specific performance/equitable payment of benefits. Defendants
removed the case to this court and alleged federal jurisdiction on the basis of diversity and also
federal question jurisdiction on the basis that Plaintiff’s claims are, in whole or in part, preempted
by ERISA. An ERISA Case Management Order was filed on January 19, 2012.
On June 4, 2012, Plaintiff filed an Amended Complaint alleging causes of action for (1)
declaratory judgment, (2) breach of contract/misrepresentation/failure to pay benefits, (3) ERISA §
502(a)(1)(B) “Recovery of benefits due provision, and (4) ERISA § 502(a)(3) “Appropriate
Equitable Relief” Provision. Plaintiff also filed her Answers to the Court’s Specialized
Interrogatories. Both defendants filed Answers to the Amended Complaint. The parties filed a Joint
Certification on August 7, 2012.

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The plaintiff alleges that she was an employee of Defendant Progress Energy and was an
insured under a group plan administered by Defendant Prudential. The plan permitted employees to
purchase Optional Accidental Death and Dismemberment (AD&D) insurance on the lives of family
members. She purchased coverage for her husband, Roger Winburn. Roger was killed in a
motorcycle accident while intoxicated on May 11, 2008. Coverage was denied based on an alleged
intoxication exclusion. Plaintiff contends that the “certificate of insurance” which she was given in
2001 when she enrolled Roger in the plan did not contain such an exclusion and that she was not
notified that the terms of the plan had changed until after Roger’s death. She also alleges that
Progress Energy affirmatively informed employees in 2005 that the AD&D coverage “will not be
changed.” (Amended Complaint, ECF No. 13, p. 2, ¶ 8).
Plaintiff requests the Court to allow her to supplement the record with an affidavit which
was not presented to the plan administrator during the administrative review. Her attorney did
submit a letter containing her legal arguments. The proposed affidavit outlines the plaintiff’s
version of the facts of the case, including the various communications that she received from the
plan and when they were received. In ¶ 22, she avers that she relied to her detriment on the
information that she was provided. Plaintiff also requests leave to serve Requests to Admit on the
defendants which relate to the various notices that they sent her. In support of her motion, Plaintiff
asserts:
The Administrative Record in this case is an inadequate resource for the Court to
examine pertinent facts and circumstances regarding Plaintiff’s equitable claims.
The Administrative Record in this case was compiled solely by the Defendants using
their own documents and their own analysis, and was based solely on facts the
Defendants deemed to be significant. In fairness to Plaintiff, the equitable claims
alleged under her June 4, 2012 Amended Complaint should also be reviewed from
her perspective as described in her attached affidavit.

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ECF No. 29, p. 5.
Defendant Prudential argues that Plaintiff’s requests are untimely and that any affidavit
should have been submitted during the administrative process. It also asserts that, under the abuse
of discretion standard1, the court must only consider the administrative record. In the alternative, it
asserts that if the affidavit is considered, then she should be deposed so as to allow for crossexamination. Prudential further contends that any supplementation of the record would require a
remand so that the new evidence could be considered by the claims administrator.
Defendant Progress Energy (“Progress”) makes similar arguments and also contends that, if
the court allows supplementation of the record, the case should be remanded to the administrator for
further evaluation. It also refers to the Court’s Specialized Case Management Order (ECF No. 6),
which provides: “Supplementation of the record after the certification is filed with the court will not
be allowed absent consent or upon showing good cause for the delay in production.” (At the time
the Joint Certification was filed, Progress gave Plaintiff various notices on which it would rely.)
Progress also contends that the only parts of the proffered affidavit that are not already in the record
are Paragraphs 2 and 22. (In paragraph 2, plaintiff alleges that her husband had attempted to stop
drinking unsuccessfully. In paragraph 22, she states that, had she known about the exclusion, she
would have sought coverage from another company.) Finally, Progress contends that, in the
requests to admit, Plaintiff merely seeks to authenticate the various documents in the record.
Progress contends that, if the plaintiff’s motion is granted, then it should also be allowed to conduct

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The plan provides in Section 3.2a for the duties and powers of the Plan Administrator:
“Complete discretionary authority to construe and interpret this Plan and/or the applicable component
Plans including, without limitation, determining an Employee’s eligibility to participate in and receive
benefits under one or more of the applicable Plans. . .” (ECF No. 37-1, p. 7).
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discovery.
Plaintiff responds that the purpose of filing the affidavit is to support her equitable claims
under (a)(3), as recognized in CIGNA Corp. v. Amara, 131 S.Ct. 1866 (2011) and applied in
McCravy v. Metropolitan Life Ins. Co., 690 F.3d 176 (4th Cir. 2012). She asserts that the default
standard of review is de novo and that the only exception is for (a)(1)(B) appeals. She asserts that
the de novo standard should apply in claims for equitable remedies under (a)(3). She also asserts
that, if the Quesinberry case discussed below applies, then “extraordinary circumstances” exist to
authorize the court to admit the affidavit.
The seminal case in the Fourth Circuit on consideration of additional evidence in the district
court in ERISA cases is Quesinberry v. Life Ins. Co. of America, 987 F.2d 1017 (4th Cir. 1993).
The court cited Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101 (1989) for the proposition
that, unless the plan gives the administrator discretionary authority to determine eligibility for
benefits or construe the terms of the plan, the review by the district court is de novo. (Prior to
Firestone, the standard of review was whether the benefit denial was arbitrary and capricious.) The
Fourth Circuit held that courts conducting a de novo review “should review only the evidentiary
record that was presented to the plan administrator or trustee except where the district court finds
that additional evidence is necessary for resolution of the benefit claim.” 987 F.2d at 1026-1027.
Exceptional circumstances that may warrant an exercise of the court’s discretion to
allow additional evidence include the following: claims that require consideration of
complex medical questions or issues regarding the credibility of medical experts; the
availability of very limited administrative review procedures with little or no
evidentiary record; the necessity of evidence regarding interpretation of the terms of
the plan rather than specific historical facts; instances where the payor and the
administrator are the same entity and the court is concerned about impartiality;
claims which would have been insurance contract claims prior to ERISA; and
circumstances in which there is additional evidence that the claimant could not have
presented in the administrative process.
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Id. at 1027.
The Quesinberry court further states that this list of factors is not exhaustive and that in
determining whether to grant a motion to supplement the record the court should “address why the
evidence proffered was not submitted to the plan administrator.” Id.
In Israel v. Prudential Ins. Co. of America, No. 7:11-793-TMC, 2012 WL 3116544 (D.S.C.
July 31, 2012), United States District Judge Timothy M. Cain applied Amara and McCravy in
denying the defendant’s motion to strike a supplemental affidavit by the plaintiff because he did not
submit it during the administrative process. The court also cited the standards established in
Quesinberry. The court noted that the plaintiff asserted that he did not include the supplemental
affidavit during administrative review because he did not “see its relevance to that process.
However, in light of the Supreme Court’s decision in . . . Amara and the Fourth Circuit’s
interpretation in McCravy . . ., the issue of equitable relief is now present in this case. The facts
alleged in the supplemental affidavit go to the heart of the equitable relief issue. Therefore, the
court finds the ‘circumstances clearly establish the [this] additional evidence is necessary’ to
determine the outcome in this case.” Israel, 2012 WL 3116544 at * 4. The plan in Israel did not
provide for discretion by the trustee, so the court conducted a de novo review.
The Fourth Circuit has apparently not decided the issue of the scope of discovery in an
(a)(3) case. An excellent discussion of the issue is found in Malbrough v. Kanawha Ins. Co., No.
2:11 CV 1842, 2013 WL 1818032 (W.D. La. April 29, 2013) a case that cited McCravy with
approval. The court in Malbrough quotes Jensen v. Solvay Chemicals, Inc., 520 F.Supp.2d 1349
(D. Wyo. 2007), as follows:
Case law does not constrain discovery under ERISA [ § 1132(a)(3) ] actions. . . The
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limited discovery ordered by [the magistrate judge] . . . is limited to claims arising
under ERISA [ § 1132(a)(1)(B) ] . . . This is logical as these actions do not benefit
from the administrative process. Courts are not required to give deference to plan
committees or fiduciaries in [ § 1132(a)(3) ] actions and therefore limitations to the
administrative record are not required . . . Section [1132(a)(3) ] actions are to enforce
rights not arising under ERISA plans, but rather arising from ERISA itself. . .
Therefore, a finding that claims arise from ERISA [ § 1132(a)(3) ] reverts discovery
into the traditional realm and is governed under traditional federal, circuit, and local
procedure.
Id. at * 7.
The court also cites other district courts which have allowed discovery in breach of fiduciary
duty cases: Mainieri v. Bd. of Trustees of Operating Engineer’s Local 825 Pension Fund, No. 071133, 2008 WL 4224924 (D.N.J., Sept. 10, 2008); Jackson v. Rohm & Haas Co., No. 05-4988,
2007 WL 2916396, at *1 (E.D. Pa. Oct. 1, 2007); Kulkarni v. Metropolitan Life Ins. Co., 187
F.Supp.2d 724, 728 (W.D. Ky. 2001). See also, Cress v. Georgia-Pacific, LLC, No. 6:08cv00005,
2008 WL 3895796 (W.D. Va. July 9, 2008), decided before Amara, which was a breach of fiduciary
duty case under ERISA. (“The cases defendants cite in support of their motion to limit discovery to
the administrative record are ERISA claims confined to denial of benefits under § 502(a)(1)(B) of
the Act. . . None of these cases involve an ERISA fiduciary withdrawing benefits and seeking to
recover previously overpaid benefits or involve claims under § 502(a)(3)(B). Because this is
precisely plaintiff’s situation and his complaint contains equitable claims raised under §
502(a)(3)(B), a limited amount of discovery outside of the administrative record is appropriate.”)
See also, Terry v. Northrop Grumman Health Plan, Civil Action No. 1:12-CV-263, 2012 WL
4056739 at *2 (M.D. Pa. Sept. 14, 2012)(“Where disputed factual issues define a breach of
fiduciary duty claim, we believe that limited discovery pertaining solely to the issues of breach of
fiduciary duty may be appropriate.”); Sconiers v. First Unum Life Ins. Co., 830 F.Supp.2d 772, 778

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(N.D. Ca. 2011)(“This order finds that discovery into plaintiff’s communications with defendants
regarding her disability claim is warranted.2”)
In the case at bar, the administrative appeal process occurred in 2008 and 2009, before the
Amara and McCravy cases were decided. (ECF No. 39, p. 6) The Joint Certification was filed on
August 7, 2012, shortly after McCravy was decided on July 5, 2012 and Israel was decided on July
31, 2012. Plaintiff has shown “good cause” under the case management order for the delay in
moving to supplement the record. Quesinberry involved only a claim for benefits under §
502(a)(1)(B), not a claim for equitable relief under § 502(a)(3).
The plaintiff’s affidavit sets forth facts from the plaintiff herself and not her attorney
supporting her position that Defendants failed to disclose the intoxication exclusion to her or
affirmatively misrepresented to the plaintiff that the AD&D coverage terms delivered to her in 2001
were still in force. The requests to admit can help narrow the issues and establish when and if
certain notices were sent or not sent to the plaintiff.
After careful consideration of this matter, the Court finds that the record should be
supplemented with the plaintiff’s affidavit. In addition, limited discovery should be allowed only
regarding the (a)(3) claim for equitable relief. Plaintiff is allowed to serve the proposed Requests to
Admit on the defendants. Also, the defendants are allowed to depose the plaintiff, such deposition
to be concluded within sixty (60) days. In light of this Court’s ruling allowing the plaintiff her
limited discovery and also allowing the defendants to depose her, the Court believes this should

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The court allowed Plaintiff to serve twenty narrow interrogatories and thirty narrowly drawn
document requests. The court required that the discovery be limited to certain issues including the
company’s methods for providing notice of the policy and Plaintiff’s communications with the
defendants concerning which policy governed her long-term disability claim.
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satisfy Defendants’ discovery needs. However, should they believe additional discovery is
necessary, they should contact opposing counsel to attempt to resolve the situation or file a request
with the Court setting forth any additional limited discovery they believe is necessary.
After conclusion of discovery, the case shall be remanded back to the plan administrator for
consideration of the effect, if any, of the new evidence resulting from this discovery on the
administrator’s decision as to the terms of the plan which governs this claim and as to the merits of
the claim. The case in this Court shall be stayed pending the administrative process remand. The
administrator shall complete its review by December 31, 2013 and counsel shall notify this Court of
the decision.
AND IT IS SO ORDERED.
July 25, 2013
Florence, SC

s/R. Bryan Harwell
R. Bryan Harwell
United States District Judge

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