Bailey v. United of Omaha Life Insurance Company
Filing
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ORDER denying 15 Plaintiff's Rule 37 Motion to Compel Discovery Responses. Signed by Magistrate Judge Charmiane G. Claxton on 11/10/2014. (Claxton, Charmiane)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TENNESSEE
WESTERN DIVISION
BEVERLY BAILEY,
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Plaintiff,
v.
UNITED OF OMAHA LIFE
INSURANCE COMPANY,
Defendant.
Case No. 13-cv-02996 SHL cgc
ORDER DENYING PLAINTIFF”S
RULE 37 MOTION TO COMPEL DISCOVERY RESPONSES
Before the Court, by way of Order of Reference (Docket Entry “D.E.” #18), is Plaintiff’s Rule
37 Motion to Compel Discovery Responses (D.E. #15). After reviewing the motion and Defendant’s
Response (D.E. #17), Plaintiff’s motion is hereby DENIED.
I. BACKGROUND
The instant Complaint asks the District Court to review the most recent denial of long-term
disability benefits after Plaintiff’s initial benefits denial by Defendant was remanded for a full and fair
review by District Judge William G. Young (11-cv-02344-WGY-dkv, D.E. #30) on March 27, 2013. On
December 18, 2013, Plaintiff filed her Complaint for recovery of plan benefits alleging that Defendant
“failed to provide benefits due under the terms of the Plan, and this denial of benefits to Plaintiff
constitutes a breach of the Plan” (Compl. ¶ 26), that “the decision to deny benefits was wrong under the
terms of the Plan” (Compl. ¶ 27), that “the decision to deny long term disability benefits and decision‐
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making process were arbitrary and capricious” (Compl. ¶ 28), and that “the decision to deny long term
disability benefits was not supported by substantial evidence in the record” (Compl. ¶ 29).
On August 15, 2014, Plaintiff filed the instant motion to compel responses to certain
interrogatories and requests for production of documents propounded upon Defendant. Plaintiff
argues that the interrogatories and requests for production are appropriate because they seek
information regarding Defendant’s “conflict of interest and potential bias on the part of reviewing
doctors.” Plaintiff asserts that she has modeled her requests on those approvingly permitted by other
courts in the Sixth Circuit.
Defendant’s August 29, 2014 response urges the Court to deny Plaintiff’s motion because
“discovery is inappropriate under the particular facts and circumstances of this ERISA matter, and it
unnecessarily increases litigation costs.” Defendant further argues that Plaintiff “does not provide
specific reasons why discovery is pertinent to United of Omaha’s decision after remand,” that Plaintiff
“seeks irrelevant discovery about demonstrably unbiased independent physician reviews that she did
not review or pursue in her initial action,” and that “United of Omaha has already provided much of
what she requested.”
II. ANALYSIS
The Federal Rules of Civil Procedure generously permit discovery “regarding any
nonprivileged matter that is relevant to any party’s claim or defense . . . “ Fed. R. Civ. P. 26(b)(1).
Generally, the trial court cannot consider evidence outside the administrative record in adjudicating
the merits of an ERISA denial of benefits plan. Wilkins v. Baptist Healthcare Sys., Inc., 150 F.3d 609, 619
(6th Cir. 1998). The review of solely the administrative record serves ERISA’s purpose of providing
“a method for workers and beneficiaries to resolve disputes over benefits inexpensively and
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expeditiously.” Perry v. Simplicity Eng’g, 900 F.2d 963, 967 (6th Cir. 1990). Consequently, matters
outside the record are generally not relevant or discoverable. See Wilkins, 150 F.3d at 619; Fed. R. Civ.
P. 26(b)(1). “An exception is recognized, however, when evidence outside the record ‘is offered in
support of a procedural challenge to the administrator’s decision, such as an alleged lack of due
process afforded by the administrator or alleged bias on its part.’” Johnson v. Conn. Gen. Life Ins. Co.,
324 F. App’x (6th Cir. 2009) (quoting Wilkins, 150 F.3d at 619). In instances involving such challenges,
evidence outside the record may be relevant and discoverable. See id.; Fed. R. Civ. P. 26(b)(1).
The United States Supreme Court, in Metropolitan Life Insurance Company v. Glenn, 554 U.S.
105 (2008), made clear that a plan administrator who is a professional insurance company operates
under a conflict of interest when it serves the dual role of an ERISA plan administrator and payor of
plan benefits. Id. at 114. The Glenn Court then proceeded to consider how this conflict “should be
taken into account on judicial review of a discretionary benefit determination.” Id. at 115 (internal
quotation marks and citation omitted). The Court concluded that the structural conflict of interest
created by the administrator’s dual roles is a relevant consideration, among several case‐specific
considerations, lower courts should consider, with the significance of such a conflict to depend on the
circumstances of each case. Id. at 115‐17. “The conflict of interest . . . should prove more important
(perhaps of great importance) where circumstances suggest a higher likelihood that it affected the
benefits decision, including, but not limited to, cases where an insurance company administrator has
a history of biased claims administration.” Id. at 117. “It should prove less important (perhaps to the
vanishing point) where the administrator has taken active steps to reduce potential bias and to
promote accuracy, for example, by walling off claims administrators from those interested in firm
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fianances, or by imposing management checks that penalize inaccurate decision‐making irrespective
of whom the inaccuracy benefits.” Id.
Following Glenn, in Johnson v. Connecticut General Life Insurance Company, 324 F. App’x. 459
(6th Cir. 2009), the United States Court of Appeals for the Sixth Circuit considered the propriety of a
district court’s decision to allow limited discovery concerning the conflict of interest created when an
employer utilizes dual‐role administrators under an ERISA plan. Id. at 465‐67. The Johnson court first
cited with approval the Sixth Circuit precedent holding that “a mere allegation of bias is not sufficient
to permit discovery under Wilkins’ exception.” Id. at 466. Citing Glenn, the Johnson court nevertheless
rejected the defendant’s contention that Sixth Circuit precedent should be interpreted to impose a
threshold evidentiary showing of bias as a prerequisite to discovery under Wilkins. Id. at 466. The
Johnson court also rejected the notion that Glenn permits discovery automatically in instances where
the defendant is both the administrator and the payor. Id. at 467. Instead, the court indicated that
“[d]istrict courts are well‐equipped to evaluate and determine whether and to what extent limited
discovery is appropriate in furtherance of a colorable procedural challenge under Wilkins.” Id. at 467;
accord Bell v. Ameritech Sickness & Acc. Dis. Ben. Plan, 399 F. App’x 991, 998 (6th Cir. 2010)
(“Discovery may be appropriate to determine the weight to accord a conflict of interest, . . . but the
district court retains discretion to decide when to allow such discovery.”).
After Johnson, courts have taken several approaches concerning requests for discovery outside
the administrative record. Some have found that discovery regarding claims of bias is appropriate when
the only showing of bias is the allegation of an inherent conflict of interest. Pemberton v. Reliance
Standard Life Ins. CO., No. 08-86-JBC, 2009 WL 89696, at *2 (E.D.Ky. Jan. 13, 2009); Cramer v.
Appalachian Reg’l Healthcare, Inc., No. 5:11-49-KKC, 2012 WL 996583, at *2 (E.D.Ky. Mar. 23,
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2012); Busch v. Hartford Life & Accident Ins. Co., No. 5:01-111-KKC, 2010 WL 3842367, at *3
(E.D.Ky. Sept. 27, 2010). These courts reason that the act of denying discovery until there has been an
initial showing of bias “essentially handcuffs the plaintiff, who . . . will rarely have access to any evidence
beyond a bare allegation of bias, in the absence of discovery.” Kinsler v. Lincoln Nat. Life Ins.Co. , 660
F. Supp. 2d 830, 836 (M.D.Tenn. 2009). These courts find that the Supreme Court’s instruction that it
does not “believe it is necessary or desirable for courts to create special burden-of-proof rules, or other
special procedural or evidentiary rules, focused narrowly upon the evaluator/payor conflict” renders the
inherent conflict of interest sufficient to allow limited discovery. Busch, 2010 WL 3842367, at *2
(quoting Glenn, 544 U.S. at 106).
Conversely, other courts have required more than a mere showing of an inherent
administrator/payor conflict. Donavan v. Hartford Life & Acc. Ins. Co., No. 1:10-2627-PAG, 2011 WL
1344252, at *2 (N.D.Ohio Apr. 8, 2011); see also Geer v. Hartfore Life & Acc. Ins. Co., NO. 08-12837DAS, 2009 WL 1620402, at *5 (E.D.Mich. June 9, 2009) (“discovery should be allowed where a plaintiff
has provided sufficient initial facts suggesting a likelihood that probative evidence of bias or procedural
deprivation would be developed.”). These courts have found that an allegation of bias alone is
insufficient to permit discovery. Instead, a plaintiff must make a sufficient factual showing to expand
discovery beyond the administrative record. Similarly, one court has created a two-step process under
which a plaintiff may obtain discovery on the sole issue of whether the defendant or the individuals
participating in the review of the plaintiff’s claim have any financial interest in the outcome of the claim.
Clark v. Am. Elec. Power Sys. Long Term Disability Plan, 871 F. Supp. 2d 655, 662 (W.D.Ky. 2012).
Despite the differing approaches, this Court has sided with the Courts that allow limited discovery if the
plaintiff alleges that the insurer occupies this dual role under the reasoning that an inherent conflict of
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interest exists and that Glenn “resolved the ‘threshold or no threshold’ debate in favor of the ERISA
plaintiff.” Linda Byrd v. GTX, Inc., No. 2:08-cv-02852-JPM-cgc, 2009 WL 3839478 (W.D.Tenn. Nov.
13, 2009).
In the instant case, while it is undisputed that United of Omaha is a professional insurance
company that acts both as an ERISA plan administrator and payor of plan benefits, Plaintiff’s Complaint
contains no allegation that United of Omaha acted improperly based upon this conflict of interest.
Thus, the United States Court of Appeals for the Sixth Circuit has explicitly held in Johnson that Plaintiff
is not automatically entitled to even limited discovery based solely upon the inherent conflict of interest
of an insurer occupying this dual role. 324 F. App’x. at 467.
Even assuming, arguendo, that raising the issue of a conflict of interest for the first time in
discovery requests on an ERISA claim is sufficient to be deemed an “allegation,” which the Court finds
it is not, Plaintiff would at most be permitted very limited discovery. Plaintiff has propounded four
interrogatories and four requests for production to which she argues in the instant motion Defendant has
not adequately responded. These eight discovery requests all pertain to the two doctors who reviewed
Plaintiff’s claim on United of Omaha’s behalf—Dr. Vicki Kalen and Dr. Joe Ordia. A summary of the
discovery requests at issue and the substantive disclosure(s)1, if any, provided by United of Omaha is as
follows:
Interrogatory #4: Plaintiff requests the number of times that Dr. Kalen or Dr. Ordia
reviewed a claim on behalf of United of Omaha in 2012, 2013, and 2014, whether
contracted directly by United of Omaha, or by a third party with whom United of Omaha
contracted to obtain such a review.
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For purposes of this analysis only, the Court omits United of Omaha’s objections to the
discovery requests as set forth in each response and focuses only on the substantive discovery
provided.
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Defendant’s Response to Interrogatory #4: United of Omaha states Dr. Kalen reviewed
Plaintiff’s claim for United of Omaha. On remand, Dr. Ordia reviewed Plaintiff’s claim
for United of Omaha. Neither Dr. Kalen nor Dr. Ordia are employees of United of
Omaha. Upon information and belief, Dr. Kalen is a contract reviewer for Reliable
Review, Services and Dr. Ordia is a contract reviewer for University Disability
Consortium. Reliable Review Services and University Disability Consortium are
vendors of United of Omaha but are not related to United of Omaha.
Interrogatory #5: Plaintiff requests the financial payments made to these doctors by
United of Omaha directly (to the doctor) or indirectly (to the doctor’s non-Omaha
employer, if applicable) in 2012, 2013, and 2014.
Defendant’s Response to Interrogatory #5: No substantive disclosure by Defendant in
response to Interrogatory #5.
Interrogatory #6: Plaintiff requests the method by which financial payments were
calculated (e.g. payment by the hour spent reviewing, payment per page of records
reviewed, payment per file reviewed, etc.) for payments made by United of Omaha
directly or indirectly to Dr. Kalen and Dr. Ordia in 2012, 2013, and 2014.
Defendant’s Response to Interrogatory #6: United of Omaha pays University
Disability Consortium at an hourly rate. No substantive disclosure by Defendant as to
Reliable Review Services.
Interrogatory #7: Plaintiff asks, for files United of Omaha referred to Dr. Kalen and Dr.
Ordia for review in 2012, 2013, and 2014, state the number of files reviewed in which
the doctors found claimants able to work in at least a light occupation or were otherwise
not disabled under the policy’s definition of disability.
Defendant’s Response to Interrogatory #7: United of Omaha does not track this
information.
Request for Production #2: Plaintiff requests copies of any and/or all contracts or
agreements between Dr. Kalen and Dr. Ordia, their employers, and United of Omaha.
Defendant’s Response to Request for Production #2: No substantive disclosure by
Defendant in response to Request for Production #2.
Request for Production #3: Plaintiff requests copies of any and/or all correspondence
between the Dr. Kalen and Dr. Ordia or their employers and United of Omaha
concerning Plaintiff’s disability claim.
Defendant’s Response to Request for Production #3: No substantive disclosure by
Defendant in response to Request for Production #3.
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Request for Production #4: Plaintiff requests that United of Omaha produce records of
any invoices or bills sent by Dr. Kalen and Dr. Ordia or those doctors’ non-Omaha
employees to United of Omaha for reviews performed in the years 2012, 2013, and 2014.
Defendant’s Response to Request for Production #4: No substantive disclosure by
Defendant in response to Request for Production #4.
Request for Production #5: Plaintiff requests that United of Omaha produce any
payments made by Omaha to Dr. Kalen and Dr. Ordia for reviews performed in the years
2012, 2013, and 2014.
Defendant’s Response to Request for Production #5: No substantive disclosure by
Defendant in response to Request for Production #5.
In addition to its discovery responses, United of Omaha has provided the Affidavit of Kevin
Balvin, Director of Long Term Disability Claims, which explains that the company “takes active steps
to ensure that external medical reviews are not biased by employing procedures to eliminate any possible
influence it could have over reviewers.” (Def.’s Resp., Exh. A (“Baldwin Aff.”) ¶ 3). Specifically,
United of Omaha does not refer claims for evaluation to specific external reviewers, requests external
reviews from its vendors that are responsible for assigning the reviewers, and does not control the roster
of reviewers that may be assigned to a claim by the vendor. (Id. ¶¶ 4-6). External reviewers do not
determine whether claims are paid or denied. (Id. ¶ 7). The claims analyst on a given case may either
accept or reject the reviewer’s opinion in reaching his or her decision. (Id. ¶ 8). After a determination
is made, United of Omaha does not inform the reviewer about whether the claim is paid or denied. (Id.
¶ 9). United of Omaha does not pay reviewers more for reaching a particular conclusion. (Id. ¶ 10).
Courts have considered affidavits of this nature to determine whether discovery is appropriate and, if so,
the permissible scope. See, e.g., J. Kay Raver v. Lincoln Life & Annuity Company of New York, 2:12-cv00830, 2013 WL 1149180, at *2 (S.D.Ohio Mar. 19, 2013). Based upon United of Omaha’s discovery
responses and the Baldwin Affidavit, it is clear to the Court that it has “taken active steps to reduce
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potential bias and to promote accuracy.” Glenn, 554 U.S. at 117; see also Raver, 2013 WL 1149180, at
*2 . Thus, as already stated, even if Plaintiff had properly alleged a conflict of interest in her Complaint,
which she has not, based upon the responses provided by Defendant and the Baldwin Affidavit, the
Supreme Court has significantly limited the bounds of any permissible discovery when the insurer has
demonstrated steps to reduce conflict of interest—“perhaps to the vanishing point.” Id.
Finally, Plaintiff argues that the Court should compel Defendant to fully respond to these
discovery requests because she has closely modeled her requests upon those permitted by other district
courts within the Sixth Circuit. However, the Court finds that the cases cited by Plaintiff are inapposite.
For example, in Kasko v. Aetna Life Ins. Co., No. 5:13-243-DCR, 2014 WL 3586085 (E.D.Ky. July 21,
2014), the court permitted interrogatories concerning the following: payments to doctors who reviewed
a claim; the number of times over a three-year period that each doctor reviewed a claim on behalf of the
insurer; whether the reviewing doctors were contracted directly by the insurance company or by a third
party; and, the number of times over a three-year period that each reviewing physician recommended a
finding of sedentary work or otherwise not disabled. Id. at *4-*5. The Kasko court permitted requests
for production of documents concerning the following: all contracts or agreements between the insurance
company and the doctors that reviewed the plaintiff’s claim; all records of invoices or bills sent by the
doctors that reviewed the plaintiff’s claim during a three-year period; and, all records of payments during
a three-year period made by the insurance company to the doctors that reviewed the plaintiff’s claim.
Id. at *5-*6.
While these interrogatories and requests for production approved in Kasko do closely mirror
Plaintiff’s proposed discovery requests, the Kasko court made clear that it permitted such broad discovery
because the plaintiff had first offered very strong proof and “made a sufficient showing of potential bias.”
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Id. at *3. Specifically, the Kasko plaintiff had demonstrated that approximately eighty-five percent to
ninety percent of the claims considered by the doctor that had reviewed plaintiff’s claim resulted in a
recommendation that the claimant was not disabled. Id. The reviewing doctor in Kasko had also been
“criticized by other courts for the content and frequency of reviews she makes” on behalf of the
defendant-insurer. Id. (citing cases). Accordingly, because the Kasko plaintiff had demonstrated
“circumstances [that] suggest a higher likelihood that it affected the benefits decision, including, but
not limited to, cases where an insurance company administrator has a history of biased claims
administration,” see, Glenn 554 U.S. at 117, she was entitled to much broader discovery.
Also cited by Plaintiff for the proposition that her discovery requests mirror those permitted by
other courts is Pemberton v. Reliance Standard Life Insurance Company, No. 08-86-JBC, 2009 WL
89696 (E.D.Ky. Jan. 13, 2009). Yet, even the Pemberton court heavily focuses on the threshold question
of eligibility for discovery and notes that it is clear that even a “mere allegation of bias is insufficient to
throw open the doors of discovery in an ERISA case.” Id. at *1 (internal citations omitted) (citing Likas
v. Life Ins. Co. of North America, 222 F. App’x 481, 486 (6th Cir. 2007); see also Moore v. LaFayette
Life Ins. Co., 458 F.3d 416, 431 (6th Cir. 2006) (“[U]ntil a due process violation is at least colorably
established, additional discovery beyond the administrative record into a plaintiff’s denial of benefits
claim is impermissible.”)). The Pemberton plaintiff “provided more than a ‘mere allegation of bias’ by
showing that a conflict of interest is present.” 2009 WL 89696 at *2. As to the scope of any permitted
discovery, the Pemberton court declined to “rule on the appropriateness of each individual interrogatory
or request for production of documents” but noted it its guidance “on why type of information is
discoverable” that an alleged conflict of interest would be “more significant under circumstances that
suggest that it affected the benefits decision, such as when the administrator has a history of making
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biased decisions.” Id. at *3. The Pemberton court, like the Kasko court, also noted that discovery was
less appropriate if the insurer had taken active steps to reduce potential bias and to promote accuracy.
Id. at *3; see Glenn 554 U.S. at 117.
Ultimately, in the instant ERISA action, the Complaint contains no allegation that United of
Omaha denied Plaintiff’s claim due to a conflict of interest. Thus, Johnson prohibits automatic discovery
into this issue. Even if the Court were to consider whether Plaintiff is nonetheless entitled to limited
discovery absent any allegation that a conflict of interest resulted in her claim denial, United of Omaha’s
responses to Plaintiff’s discovery requests and its voluntary provision of the Baldwin Affidavit
demonstrate that it has taken significant steps to reduce a conflict of interest, which weighs heavily
against compelling United of Omaha to provide further discovery. Finally, although Plaintiff’s discovery
requests do indeed track those permitted by other courts, those courts were presented with either
allegations or even strong proof of conflict of interest. Such is not present in the instant case.
Accordingly, Plaintiff’s Rule 37 Motion to Compel Discovery Responses is hereby DENIED.
IT IS SO ORDERED this 10th day of November, 2014.
s/ Charmiane G. Claxton
CHARMIANE G. CLAXTON
UNITED STATES MAGISTRATE JUDGE
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