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January 16, 2001


The opinion of the court was delivered by: Swain, Judge


In this action, brought pursuant to the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), to recover disability benefits allegedly denied improperly under an employee benefit plan, defendant UNUM Life Insurance Company of America ("UNUM") and plaintiff Marianne Locher ("Plaintiff" or "Locher") seek rulings in limine precluding the use of certain evidence at the non-jury trial of the action. UNUM seeks a determination restricting the evidence at trial to the record developed in administrative proceedings under the employee benefit plan. UNUM also argues that, even if the admissible evidence is not so restricted under applicable law, the additional material proffered by Plaintiff should be excluded as irrelevant and!or incompetent. Locher opposes UNUM's attempt to preclude the introduction of additional evidence, and seeks an order precluding UNUM's use of prior testimony of one of the physicians consulted by Plaintiff.

The parties' respective applications are granted in part, denied in part and reserved for decision at trial, as set forth in detail below.


This case arises out of UNUM's decision to deny disability benefits to Locher pursuant to an insurance policy providing benefits under a long-term disability plan maintained by Locher's former employer (the "Disability Plan"). The parties agree that the Disability Plan is governed by ERISA, 29 U.S.C. § 1001 et seq. (1997). Locher challenges UNUM's denial of benefits pursuant to 29 U.S.C. § 1132(a)(1)(B); she asserts claims pursuant to sections 1132(a)(3)*fn1 and 29 U.S.C. § 1132(g) for attorneys fees as well. The Court has jurisdiction of this action pursuant to 29 U.S.C. § 1132(e) and 28 U.S.C. § 1331, 2201 and 2202.

The parties' agreed statement of facts indicates that on or about July 28, 1993, Locher applied for benefits under the Disability Plan, claiming that she had ceased work on April 8, 1993, because she had by that point become disabled by Chronic Fatigue Syndrome ("CFS"). UNUM, which is both the insurer and the claims administrator under the Disability Plan, denied the claim. Locher thereafter appealed the denial pursuant to Disability Plan procedures; UNUM issued its decision upholding the original denial on March 4, 1994. UNUM's denial was based on its finding that Plaintiff had not established that she was disabled as of the date her employment terminated. It is undisputed that UNUM'S review of Locher's claim and appeal was performed entirely by persons, including physicians, employed by UNUM. See Reply Affidavit of Evan L. Gordon, sworn to October 3, 2000, Exhibit A (Defendant's Contentions, ¶¶ 10 through 15 and 17 through 22). Locher commenced this action on May 21, 1996. information elicited in the course of discovery indicates that UNUM maintains no written procedures, other than the terms of the Disability Plan and the summary description of the terms of that plan, for evaluating and processing appeals. See Elizabeth Koob's Declaration Regarding Pre-Trial Issues, dated August 23, 2000, Exhibit 6 (Deposition of Sandy Kasserman, at 9).

Prior to the instant application, both parties had interposed summary judgment motions, which were denied. In denying the motions, the Court (Jones, J.) determined, inter alia that UNUM's denial of benefits is subject to de novo review and that there were material questions of fact concerning whether Locher was disabled as of the relevant date within the meaning of the Disability Plan. Locher v. UNUM, No. 96 Civ. 3828, slip op. (S.D.N.Y. Sept. 8, 1999) ("Locher I").

UNUM seeks to limit the trial evidence to the record developed and considered in the course of the Disability Plan's administrative proceedings on Locher's claim. Locher contends that UNUM had a conflict of interest in reviewing her claim that, under applicable case law, warrants the Court's consideration of evidence outside the administrative record.

In addition, UNUM specifically objects to Plaintiff's proffers of her own live testimony; testimony and a report from Dr. Richard N. Podell, who examined Plaintiff and her medical records only within the past year and is tendered as an expert witness; testimony and reports from Dr. Susan Levine, a physician whose reports were tendered in connection with the administrative proceedings*fn2 and testimony from Cynthia D'Niaye, a former co-worker who would speak to her observations of Plaintiff's capabilities at the time of the termination of her employment. UNUM also objects to the admission of Plaintiff's Exhibits 3, 10 and 10.1 through 10.5, which are records of Locher's former employer, to extent such records were not part of the administrative record below; Exhibits 5 through 7, 12 and 13, which are medical reports allegedly prepared subsequent to the administrative proceedings below; Exhibit 4, a report prepared by the National Institutes of Health ("NIH") concerning chronic fatigue syndrome; Exhibit 14, consisting of correspondence from Dr. Levine that was submitted to UNUM in connection with disability applications by persons other than Plaintiff; and Exhibit 15, a document that Plaintiff asserts is a UNUM policy document concerning chronic fatigue syndrome.*fn3 UNUM asserts that the foregoing proposed additional evidence is not relevant or that it is not competent.


Evidentiary Scope of De Novo Review

With respect to Plaintiff's entitlement to Disability Plan benefits, the issue that will be before the Court at trial of this action is whether Plaintiff was disabled, within the meaning of the applicable provisions of the Disability Plan, and therefore entitled to receive benefits under that plan, as of the date of termination of her employment. "[A] denial of benefits challenged under Section 1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary 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). The Disability Plan does not grant UNUM discretionary claims review authority. The de novo standard of review thus applies to this Court's consideration of Locher's entitlement to benefits under the Disability Plan. Locher I, at 3-4. The evidentiary scope of that review is a threshold question for this Court. UNUM contends that the Court should review only the record developed during the Disability Plan's administrative proceedings; Locher argues that she should be permitted to supplement the administrative record with evidence she contends is relevant to the disability determination.

In DeFelice v, American international Life Assurance Company of New York, 112 F.3d 61 (2d Cir. 1997), the United States Court of Appeals for the Second Circuit held that, where de novo review of a decision rendered under an ERISA-governed plan is appropriate because the plan's decision maker did not have the requisite discretionary authority, the federal court has discretion to consider evidence outside the administrative record. Such discretion "ought not [,however,] to be exercised in the absence of good cause." DeFelice, 112 F.3d at 66. The DeFelice court held that a "demonstrated conflict of interest in the administrative reviewing body is an example of 'good cause' warranting the introduction of additional evidence." DeFelice, 112 F.3d at 67; see also Parker v. Reliance Standard Life Insurance, 2000 WL 97362 at *2 (S.D.N Y Jan. 27, 2000); O'Rourke v. Pitney Bowes, Inc., 1997 WL 431091, at *6 n. 6 (S.D.N.Y. July 31, 1997) (noting that a district court may consider additional evidence where the decision maker is conflicted).

In DeFelice, the Second Circuit found such a conflict based on the fact that the administrative committee that had reviewed the claim at issue in that case "was comprised entirely of [the insurer's] employees — hardly a neutral decision-making body." DeFelice, 112 F.3d at 66. Where such a structural conflict exists, "the plaintiff need not demonstrate that the conflict caused her actual prejudice in order for the court to consider the conflict to be `good cause.'" Id. at 67. The DeFelice court found aggravating factors as well:

[S]everal members of [the insurer's review] Committee testified that there existed no established criteria for determining an appeal. To add insult to injury, the Committee apparently had a practice of destroying or discarding all records within minutes after hearing an appeal.

Id. at 66. The DeFelice court held that, "[u]pon remand, . . . the district court should not limit its consideration to matters previously appraised in the administrative proceedings." Id. at 67.

When faced with the question of whether a plan administrator is conflicted within the meaning of DeFelice, courts have focused on whether the plan administrator both determines eligibility for benefits and pays the benefits itself, without reimbursement. Parker v. Reliance Standard Life Insurance, 2000 WL 97362 at *3. Conners v. Connecticut General Life Insurance Company, 1999 WL 1211831, at *3 (S.D.N.Y. Dec. 16, 1999) (limiting review to the record where the employer, not the plan administrator, ultimately pays all amounts due under the plan, and finding that, therefore, there is no conflict of interest); MacMillan v. Provident Mutual Life Insurance Company of Philadelphia, 32 F. Supp.2d 600, 615 (W.D.N.Y. 1999) (allowing plaintiff to submit additional evidence because defendant was conflicted in the same way as defendant in DeFelice — because the claims administrator paid the benefits, it had an obvious interest in denying benefits); Janas v. Continental Casualty Company, 1999 WL 31006, at *4 n. 1 (N.D.N.Y. Jan. 15, 1999) (holding that plan administrator was operating under a conflict of interest where benefits would be paid directly by the plan administrator).

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