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THE SCOPE OF DISCOVERY IN ERISA
WRONGFUL DENIAL OF BENEFIT CASES
W
rongful denial of long-term
disability benefits claims
involving employer-sponsored
insurance plans are difFerent from other
insurance disputes in many ways. One of
the primary Chfferences is that generally
there is no discovery Instead, the parties
are left to argue their case solely based
on the administratrve record, which was
developed during the internal appeals
process.'s
one might rmagine, this default
"no discoverv" rule can severely disadvantage plaintilfs for a number of reasons. For
instance, plakntdFs and their doctors never
have the opportunity to testify as to plaintiEs'isabling conditions. Rather, based
on the evidence in the record, the plrunti(F
must prove the plan adminisuator acted
it credited
completely unreasonably'hen
the oprnions of its "independent" doctors
over those of the plaintifF and her treatthat said reviews
ing physicians.'howing
were unreasonable is especially diEicult
without the ability to cross-examine the
insurance company's doctors.
Grven the insurance
conflict of interest (due to their
dual role as both the reviewer of individual's eligibility for benefits and the
payer of claims), plaintifFs continue to
challenge the status quo. After all, insurers are not going to volunteer evrdence of
bias or misconduct. In order for a court
to examine whether the conflict aEected
the plan adminrstrator's decision, plainuffs
must be able to conduct discovery and
present evidence regarding the conAict. As
a result, district courts around the country
have allowed limited discovery concerning
topics such as the claims reviewers'nd
third party doctors'ompensauon
and
bonus structure, claims handling policies
and procedures, and the training of the
insurer's employees.i
This article summarizes the legal
standard with regard to ERISA conRict of
interest discovery as it has developed rn the
Seventh Circuit in the context of arbitrary
companies'nherent
Wisconsin Association for Justice
Dentelle M. Schroikr
and capricious/abuse of discretion standard of review. Since the law in this area
rs far from settled, this artrcle may serve
as a useful starting point for
seeking to advance arguments in
of
conRrct of interest drscovery.
support
ance Co. ofNorth America," stating that
although subsequent cases suggested a
"softening" of rhe Semien standard, the
case has not been rejected altogether."
Semi en required a plaintifl'o demonstrate
two factors before allowing Chscovery:
(I) identify a specific conRict of inter-
I. The Supreme
est or instance of misconduct and (2)
make a prima facie showing that there is
good cause to believe limited discovery
plaintifFs'ttorneys
Court's Decision in
MetLife m Glenn Opened the Door to
Limited Discovery
The basis for discovery in ERISA
wrongful denial of benefits claims reviewed
under the abuse of discretion standard
comes in the wake of the 2008 U.S.
Supreme Court's demsion, Metropolitan
Life Insurance Co. v. Glenn.'n Glenn, the
Supreme Court recognized an insurer's
clear conRict of interest when it both
evaluates claims and pays them out s The
Court held that desprte a court's deferential review, the conAict must be weighed
as a factor in determining whether the
insurer abused its discreuon. Further, in
a close case, the conflict could be used as
a tiebreaker.'s a result of this holding,
some courts have allowed plakntiEs to take
discovery in order to examine the extent
to which the conAict of interest played a
role in the plan administrator's decisionmaking.'he question left for attorneys
representing disabled individuals is —how
exactly do you develop this evidence without formal discovery?
II.
The Seventh Circuit Court of
Appeal's Guidance (Or Lack
Thereof)
Since Gknn, the Seventh Circuit
Court of Appeals has provided very little
guidance in terms of the amount of discovery, if any, permitted to explore an
insurance company's conAict of interest;
Most recently, in Denmion v MONY
Life Retirement Income Secunry Pkn for
Employers, the Court of Appeals reiterated
that trial courts retain "broad discretion"
to permit or deny discovery.i It pointed
to the Seventh Circuit's standard in a
pre-Gknn decision, Semien v. Life Iniur-
defect in the plan
administrator's determination."
The Seventh Circuit Court of Appeals
seems to have backed away from rigidly
requinng a plaintifF to meet the Semien
test as a prerequisite to discovery.'Ibis
holding makes sense since insurers are not
inclined to volunteer information revealing
wrongdoing Only after discovery may a
plaintifl'e able to "identify a specific conRrct of interest or instance of misconduct."
Nonetheless, district courts continue to
apply Semien with fervoryi This creates a
—namely,
problem for plainuffs'ttorneys
how do you meet these threshold requirements without conducting discovery first?
will reveal a procedural
III. District Court
Decisions in the
Seventh Circuit Remain in Flux
District courts interpret Dennison as
precluding discovery in "run-oF the mill"
cases. They say the two part Semien test
"remains rnstructive;" however, the plaintifl's burden in making an initial showing
is "not onerous."" How is that for clarity?
Given the lack of clear direction from
the Court of Appeals, it is no surprise the
district court decisions run the gamut,
from allowing deposiuons of key decisionmakers" to denying conRict oF interest
discovery altogether.'
survey of the
recent Chstrict court decisions on Chscovery
in the wrongful denial of benefits context
follows.
a.
Pre-Dennison Decisions
Permitting Conflict of
Interest Discovery
Most of the cases involving conflict
'Ihe
Vakkrkkc T
27
of interest discovery were decided prior to
the 2013 decision in Dennison. Still, they
provide some guidance as to the evidence
plaintifFs can present to convince a court
to allow plaintiffs to take discovery. These
cases also provide insrght into the permissible scope. It is important to note, however,
that prior to Dennison, many of the district
courts viewed the U.S. Supreme Court's
decision in Glenn as abrogating the Sev-
enth Circuit Court of Appeal's Semien
standard altogether," a position which the
Court of Appeals since has
have the burden of making
an inrual showing of a conRict of interest
in the plan administration. Aside from
the insurer's obvious conRict due to its
dual role, plaintiff may meet its burden by
highlighting other problems with claim
administration. For instance, it may be
sufficient evrdence for a plarntilF to show
the insurer insisted that daimant apply
for Social Security Disability Insurance
(SSDI) benefits, but when SSDI benefits
were approved, the insurer refused to
reconsider its denial of disability benefits."
Additionally, plainuff's evidence that an
insurer granted disability benefits until its
own funds were at risk, despite no change
in the plan definition of disability, may
constitute good cause For discovery" In
a case involving severance benefits, there
was evrdence of biased plan administration where a similarly situated employee
received the benefits under the same plan
under which plarntilF was denred. Plaintiff
also made a showing of procedural unfairrejected.'laintiffs
was both
the iniual adjudicator of benefits and the
chieF Fact-finder at the appeals stage."
Finally, a plaintiff made a showing of misconduct where the plan refused to produce
earlier versions of its plan documents but
failed to cite the versions it was relying on
in its denial letterspi
Regarding the scope of discovery,
courts have granted written discovery
requests seeking the following rnforma-
ness where the same individual
tion:
'Ihe
identities and compensation of
the insurer's employees and other
third-parties responsible For reviewing and denying plaintiff's claim,'4
'Ihe plan administrator's policies and
procedures,
I
'tatistics
as to the approval and
denral rates under the plan, and
'orrespondence with medical exam-
28
Summer 2014, Volume
37:3
iners and their employees about
claimant's claim."
of interest impacted its
decision.i'he court then ordered the
insurer's conRict
Courts generally refuse to allow
plaintifFs'ritten requests for employee
personnel files," the insurer's financial
parties to meet and confer regarding the
discovery required on this topic.
informauon,'nd
Post-Dennison Decisions
Denying Conflict of
Interest Discovery
Courts also have broad discreuon
to deny plaintifFs'equests for discovery
information about
other policyholders'laims
that have been
denied."
In limited instances in the Seventh
Circuit, courts will allow For depositions of
key actors in the claim review process. In
Ho+non v. Sara Lee Corp.,i'he Northern
District of Illinois permitted plaintifF to
depose a member of the committee who
revrewed plainufl's claim as well as a similarly situated employee who was granted
severance paycm Similarly, in Baxter u
Sun Life Assurance Co., the court allowed
plaintifF to depose a claims consultant to
understand his application of the policy's
application of a plan provrsion.ii
b.
Post-Dennison Decisions
Permitting Conflict of
Interest Discovery
Since the Dennison decision, only
one distnct court, the Northern Drstnct
of Illinois, has permitted discovery as to
an insurer's conflict of interest24 In both
cases before that court, plarntilFs were able
to point to specific conflicts or instances
of misconduct," suggesting Semien's influence remains alive and strong. Plaintiffs
directed the court's attention to the plan
administrator's complete disregard of
plaintijps evidence, is its neglect of the
explicit plan language'I and its history of
biased claims administration" as bases for
limited discovery.
Even when discovery has been
permitted, requests still are limited to
rnformauon relevant to a potential conRict or procedural defect In Warner v.
Unum Life Insurance Co, ofAmerica, the
court allowed discovery of compensation and bonus structure oF the doctors
who reviewed the claim and performance
evaluauons of those doctors.'s However, it
refused to allow plaintifF to get statistics on
the doctors'batting average," i.e., statistics
on the reviewing physrcians'p and down
record, and would not allow discovery
related to the profitability of the
Nemitz u Metropolitan Life Insurance
Co., the court stated that most of plaintilfs
requests were directed towards the merits
of the decision, and the only category of
permissible discovery was whether the
policy.i'n
'.
altogether. After Dennison, the Eastern
District of Wisconsin denied a platntijfs
request for conflict of interest discovery,
finding that this was a "run-of-the-mill"
ERISA case and that
ha failed to
point to anything in the record that "raised
suspicions."4'udge Griesbach stated, "In
light of Dennison, the onus of making such
a showing is perhaps lessened, but there
must still be something that serves as a
key to open the door to the additronal discovery that is not permitted in the typical
plaintiff
case."44
The Northern District of Indiana likewise denied plaintiff's motion to conduct
discovery because she failed to identify "a
specific conRrct or instance of misconduct
or [make] a prima facie showing that there
is good cause to believe that limited discovery wifl reveal a procedural
Further attempted to show there
were documents missing from the administrauve record, but the court maintained
her "suspicions [fell] short" of showing relevant material actually was missing.i 'Ihe
holdings in these cases suggest that contrary to the implicit proposition in Glenn,
an insurer —plan administrator's inherent
conRict of interest alone is not enough to
warrant discovery and the Semien standard
maintains strong inRuence in the Seventh
defect."4'laintifF
Circuit.
IV. Conclusion
Plainuffs'ttorneys should not assume
their ERISA wrongful denial of benefits
claims must be limited to the administratrve record alone. If you smell a rat, follow
it Upon careful review of the documents
in the record and consideration of what
is missing, you may be able to rdentify
evidence that the plan administrator's
conRict of interest influenced its decision
to deny benefits to your client. With that
in hand, you will be able to serve written
discovery requests or depose company representatives. Ultrmately, you are in a much
stronger position to resolve the case
WWW.WISIUSTICE.ORG
Danielle Schroder is an associate at
Harvks mendel, a labor and empbryment
fiirm in Madison. Her practice mvolves
employee benefits disputes, discri mi nation
claims, severance and non-competition
agree-
benefit appeah and
general litigation. Ma Schroder received her
JD. (magna curn lausk)Pom the Um'veruty
ments, unemployment
Law School in 2011, where
she was a participant in the Internahonal
Moot Court Team, Mock Trial Team and the
International Law Journal. She has been rec-
of Wisconsin
ognized as a Super Lasvyers "Rising
Star."
Endnotes)
570
F3d 841, 843 (7th Cir. 2009)(citing Perlman
v. Swiss Bank Carp., 195 F.3d 975 (7th Cir
1999)).
i Davis u Unum Life lm. Co. ofAm., 444 F3d
569, 576 (7th Cir. 2006).
Krolm'k u Pnsdential lns. Co. ofAm.,
" See, e.g., Key u UNUM Life Insurance
Company ofAmrrica, 2008 U S Dist LEXIS
64254 *20-22 (WD. Wis. 2008).
4
See, e.g., Cipriani u Liberty Life Auur
Co.,
2014 U.S. Dist. LEXIS 69613 (M.D. Pa.
May 21, 2014); Hoffm an v. Sara Lee Corp,
2012 U.S Dist. LEXIS 15277 (N.D. IIL Feb.
8, 2012); Eitrella v Hartford Life t'r Accident
lns. Co., 271 F.R.D. 8 (D. Mass. Nov. 23,
2010), Bird v GTK Inc, 2009 U.S. Dist.
LEXIS 106301 (WD Tenn. Nov 13, 2009);
Garvey v. Piper Rudmck LLP Long Term Disabilsty lmurance Plan, 2009 U.S. Dist. LEXIS
94694 (N.D. Ill. Oct. 9, 2009); Fischer v. Life
Ins. Co ofN. Am, 2009 U.S. Dist. LEXIS
22487 (S.D Ind Mar. 19, 2009).
'54 U.S. 105 (2008).
s ld, at
112.
116-17.
'ee, rg., Warner v Vnum Life lns Co ofAm,
2013 U.S Dist. LEXIS 105067 (N.D. III.
July 26, 2013) and Baxter u Sun Life Assur.
Co., 713 F. Supp. 2d 766 (N.D. Ill. 2010).
s Dennison
v MONT Lrfe pet Income Sec I(an
for Emple., 710 F 3d 741, 747 (7th Cir. 2013)
n 436 F.3d 805 (7th Cir. 2006).
" Dennison, 710 F.3d at 747
n Semsen, 436 F.3d 805 at 815
'i Dennison, 710 F3d at 747
'd,
at
'i See Gebert
v IhrsventFin. For Lutheraiu
Group Doability Income lns. Plan, 2013 U.S.
Dist. LEXIS 181658 (E.D. Wis. Dec. 27,
2013) and Boxell v. Plan for Group fnc. Of
Versron Commum., 2013 U.S Dist. LEXIS
131621 (N.D. Ind. Sept. 16, 2013).
Gebert, 2013 U.S. Dist. LEXIS 181658 at
*5-6, Boxell, 2013 U.S Dist. LEXIS 131621
ac *15-16.
's Ho+non, 2012
U.S. Dist. LEXIS 15277 at
*13.
n See Gebert, 2013 U.S. Dist. LEXIS 181658
at *23 encl BoxeIL 2013 U.S Dist LEXIS
131621 at s21.
's Ser Baxter, 713 F.
Supp. 2d at 773; Hughes
v CUNA Mat. Group, 257 F.R.D. 176, 179
Wisconsin Association for Justice
"
n
(S D. Ind. 2009); Fucher, 2009 U S Dist.
LEXIS 22487; Gessli ng v. Group Long Term
Doability Planfor Employees ofSprintlUmted
Management Co., 2008 U.S. Dist. LEXIS
96623 (S D. Ind. November 26, 2008).
Dennnvn, 710 F.3d at 747.
Parrilh'. Hartford Lsfe ckAccsdentlm. Co.,
2009 U.S. Dist. LEXIS 100276 (N.D. Ill.
Sept. 29, 2009).
Garvry u Psper Rudnsck LLP Long Term DisabilssyInsurancePlon,
264 FR.D. 394, 399
Dist. LEXIS 22487.
s'ec
257 FR.D. at 180.
" 2012Hughes,
U.S. Dist. LEXIS 15277 (N.D. III. Feb.
8, 2012).
n Id. at *12.
"
Baxter, 713 F. Supp. 2d 766
'sSeeNemitz v Metro. Life lns. Co.,2013 U.S.
Dist. LEXIS 106850 (N.D. Ill. July 31, 2013)
and Warner v. Vnum Lsfi lns. Co. ofAm., 2013
U.S. Dist LEXIS 105067 (N.D Ill. July 26,
"2013).
Id
IIL 2009).
Ho+man v Sara Lee Corp., 2012 U.S. Dist.
LEXIS 15277 (N D. Ill Feb. 8, 2012)
(N.D.
's Warner,
2013 U.S. Dist. LEXIS 105067 at
*10
's Huis v IBM Med. ck Dental Plan, 2009 U.S.
Dist. LEXIS 22588 (N.D. Ill. Mar. 20, 2009).
's Hall v. Life Im. Co. N. Am., 265 FR.D. 356
of
si Nnmtz,
2013 U S. Dist. LEXIS 106850 at
*33-34.
's Warner,
2013 U.S. Dist. LEXIS 105067 at
*10.
(N.D. Ind. 2010); Garvey, 264 F.R.D. 394;
Hughes, 257 FR.D. 176; Fischer, 2009 U.S.
Dist. LEXIS 22487.
's Garvey 264 F.R.D. 394 Hughes 257 F.R.D.
176; Fischer, 2009 U.S. Dist. LEXIS 22487;
Hws, 2009 U.S. Dist. LEXIS 22588.
's Garvey, 264 FR.D. 394; Furhsr, 2009 U.S.
Dist. LEXIS 22487.
265 FR.D. 356; Hughes, 257 FR.D.
176.
Garvry, 264 FR.D. 394; Hughes, 257 FR.D.
176; Fischer, 2009 U.S. Dist. LEXIS 22487.
Garvey, 264 FR.D. 394; Fischer, 2009 U.S.
Id. at *17
4'ld at*if.
4'emi tz, 2013 U.S. Dist. LEXIS 106850 at
ss
" r35
Ia'.
si Grbert,
2013 U S Dist. LEXIS 181658 at
*6, 12.
'all,
u ld. at *6.
ss
Boxell, 2013 U.S. Dist. LEXIS 131621 at
16.
"
"
4'sl
at
"20.
I".I
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