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Reittinger v. Verizon Communications Inc.

November 15, 2006

LINDA R. REITTINGER, PLAINTIFF,
v.
VERIZON COMMUNICATIONS INC. AND METROPOLITAN LIFE INS. CO., DEFENDANTS.



The opinion of the court was delivered by: Randolph F. Treece United States Magistrate Judge

MEMORANDUM-DECISION and ORDER

Because the parties do not seem to grasp the scope of the limited discovery in Employment Retirement Income Security Act ("ERISA") cases, we begin this Memorandum-Decision and Order with a discussion of the law.

I. STANDARD OF REVIEW

In reviewing benefit plan determinations made by administrators or fiduciaries under the ERISA, a federal district court will apply one of two judicial standards of review: (1) a de novo standard or (2) an arbitrary and capricious standard.

In the first instance, a denial or termination of benefits challenged under ERISA receives a de novo review of all aspects, including factual issues, "in the absence of a clear reservation of discretion to the plan administrator" or fiduciary. Kinstler v. First Reliance Stand Life Ins. Co., 181 F.3d 243, 245 (2d Cir. 1999). Where an employee "benefit plan gives the [plan] administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan[,]" an arbitrary and capricious standard will be applied. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989).

The Second Circuit has ruled that "[t]he plan administrator bears the burden of proving that the arbitrary and capricious standard of review applies" and held that "though . . . no one word or phrase must always be used to confer discretionary authority, the administrator's burden to demonstrate insulation from de novo review requires either language stating that the award of benefits is within the discretion of the plan administrator or language that is plainly the function equivalent[.]" Kinstler v. First Reliance Standard Life Ins. Co., 181 F.3d at 249 & 252. Under the arbitrary and capricious standard of review, a district court must review the administrative decision of a fiduciary or plan administrator "deferentially" and may only reverse the decision if there was an "abuse of discretion." Miller v. United Welfare Fund, 72 F.3d 1066, 1070 (2d Cir. 1995) (quoted in Mitchell v. First Reliance Standard Life Ins. Co., 237 F.R.D. 50, 53 (S.D.N.Y. 2006)).

Since the "arbitrary and capricious standard of review is highly deferential to a plan administrator[,]" a denial of a claim challenged under ERISA will be considered arbitrary and capricious "[if] there has been a clear error of judgment," Jordan v. Ret. Comm. of Rensselaer Polytechnic Inst., 46 F.3d 1264, 1271 (2d Cir. 1995), "that is, if the decision was 'without reason, unsupported by substantial evidence or erroneous as a matter of law,'" Miller v. United Welfare Fund, 72 F.3d at 1072 (citations omitted); Kinstler v. First Reliance Standard Life Ins. Co., 181 F.3d at 249 (quoting Pagan v. NYNEX Pension Plan, 52 F.3d 438, 442 (2d Cir. 1995)); see also O'Shea v. First Manhattan Co. Thrift Plan & Trust, 55 F.3d 109, 112 (2d Cir. 1995). Substantial evidence is "evidence that a reasonable mind might accept as adequate to support the conclusion reached by the [decision maker and] . . . requires more than a scintilla but less than a preponderance." Miller v. United Welfare Fund, 72 F.3d at 1072 (internal quotation marks and citation omitted) (alteration in original).

II. SCOPE OF REVIEW

When applying either a de novo or arbitrary and capricious standard, a district court is limited in the scope of its review, and thus, may only look to the administrative record (i.e., the claim file) before the plan administrator or fiduciary when its decision was made regarding ERISA benefits. See Nagele v. Elec. Data Sys. Corp., 193 F.R.D. 94, 101 (W.D.N.Y. 2000) ("[U]nder either the de novo or arbitrary and capricious review standards[,] a court is not permitted to consider evidence not presented to the plan administrator whose decision is subject to judicial review[.]"); Miller v. United Welfare Fund, 72 F.3d at 1071 (noting that "the district court's review under the arbitrary and capricious standard is limited to the administrative record"). However, the court may consider additional evidence outside the administrative record upon a finding of good cause. See DeFelice v. Am. Int'l Life Assurance Co. of New York, 112 F.3d 61, 66-67 (2d Cir. 1997); see also Paese v. Hartford Life and Accident Ins. Co., 449 F.3d 435, 441 (2d Cir. 2006) (citing the holding in DeFelice for the proposition that even where the district court exercises de novo review of the plan administrator's determination, the district court ought not to accept additional evidence absent good cause shown).

A. Good Cause Shown

The Second Circuit has found "good cause" to exist where there was a demonstrated conflict of interest and the procedures employed in arriving at the claim determination were flawed. Locher v. Unum Life Ins. Co. of Am., 389 F.3d 288, 295 (2d Cir. 2004) (citing DeFelice, 112 F. 3d at 66 for the proposition that the court in DeFelice "based [its] holding not only on a demonstrated conflict of interest [in the administrative reviewing body], but also upon the procedural problems with the plan administrator's appeals process . . . [as] the appeals committee had no established criteria for determining an appeal and had a practice of destroying records within minutes after the hearing"); see also Nagele v. Elec. Data Sys. Corp., 193 F.R.D. 94. "Good cause" has also been found where an administrator's reason for denying a claim was not stated in its notices to claimants, Locher v. Unum Life Ins. Co. of Am., 389 F.3d at 295 (citing Juliano v. Health Maint. Org. of New Jersey, Inc., 221 F.3d 279, 289 (2d Cir. 2000)), and where an administrative record was incomplete, Paese v. Hartford Life and Accident Ins. Co., 449 F.3d at 441 (stating that "good cause existed for the admission of the [physician's] report because it was highly probative and written by a disinterested party who had actually examined [the claimant], and because [the claimant] was not at fault for the report's initial absence from the record.").

The Second Circuit, however, has held that "good cause" did not exist where "an insurer gave the claimant 'ample time to submit additional materials' and had already discussed the claimant's case with the two treating physicians whose testimony was to be introduced" Locher v. Unum Life Ins. Co. of Am., 389 F.3d at 295 (quoting Muller v. First Unum Life Ins. Co., 341 F.3d at 125-126).

Further, this Circuit has ruled that a conflicted administrator or fiduciary does not per se constitute good cause shown and cautioned district courts "that a finding of a conflicted administrator alone should not be translated necessarily into a finding of good cause." Id. at 296 (emphasis in original).

B. Discovery Outside of the Administrative Record

Consistent with a recognition that evidence outside the administrative record may be considered in a de novo or an arbitrary and capricious review upon good cause shown, federal district courts have permitted discovery in ERISA cases to assist the courts in determining whether the plan administrator's or fiduciary's "decision was based upon a consideration of the relevant factors and whether there has been a clear error of judgment."*fn1 Jordan v. Ret. Comm. of Rensselaer Polytechnic Inst., 46 F.3d at 1271 (citation omitted); see also, e.g., Zervos v. Verizon New York, Inc., 252 F.3d 163, 174 (2d Cir. 2001) (finding that the district court would "not be confined to the administrative record" in determining whether the plan administrator's "decision to deny [the claimant's] coverage request was tinged by a conflict of interest"); Liston v. Unum Corp. Officer Severance Plan, 330 F.3d 19, 23 (1st Cir. 2003) (noting that "certain kinds of claims--e.g., proof of corruption--may in their nature or timing take a reviewing court to materials outside the administrative record"); Wildbur v. ARCO Chemical Co., 974 F.2d 631, 638 (5th Cir.1992) ("[d]etermining whether the administrator has given a uniform construction to a plan[,] . . . whether an interpretation results in unanticipated costs . . . [and] the factual background of the [administrator's] determination and any inferences of a lack of good faith, may . . . require the court to review evidence that was not presented to the administrator"); Perlman v. Swiss Bank Corp. Comprehensive Disability Prot. Plan, 195 F.3d 975, 982 (7th Cir. 1999) (acknowledging that some courts have allowed discovery to determine whether an administrator conducted a "genuine evaluation" of the record); Buchanan v. Aetna Life Ins. Co., 2006 WL 1208069, at *3 (6th Cir. May 3, 2006) (review confined to the administrative record except where there is 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"). Indeed, district courts have allowed discovery on issues such as the completeness or actual "parameters" of the administrative record, whether the administrator or fiduciary of the plan had a conflict of interest, and other issues relating to the procedures employed by a plan administrator or fiduciary to adjudicate a benefit claim. Mitchell v. First Reliance Standard Life Ins. Co., 237 F.R.D. 50, 53 (S.D.N.Y. 2006) (citations omitted).*fn2 "While it is possible that unbridled discovery could conceivably delay unreasonably the time required to complete judicial review in contravention of ERISA's goal of speedy adjudication, . . . court[s] ha[ve] ample power[] . . . to balance a plaintiff's need for discovery against the fiduciary's [or administrator's] interest in prompt closure of the dispute in keeping with ERISA's overall policy." Nagele v. Elec. Data Sys. Corp., 193 F.R.D. at 105 (citing FED. R. CIV. P. 16(a)(1) & 16(b)(1)). "In many instances[,] it is likely that the issues regarding whether information upon which the decision makers relied is accurately and completely reflected in the administrative record can be ascertained through limited [discovery], thereby avoiding unduly burdening busy administrators and facilitating expeditious judicial review. Moreover, discovery unessential to [p]laintiff's ability to effectively challenge the adverse ruling may be limited by the court for good cause [shown]." Id. (citing FED. R. CIV. P. 26(c)).

III. CASE DISCOVERY HISTORY

The Court's travail with the discovery disputes in this case commenced on October 3, 2006, when Defendants sought a telephonic conference. Dkt. No. 15, Defs.' Lt.-Mot., dated Oct. 3, 2006. Departing from our normal practice of asking Plaintiff to provide a response, this Court acted, sua sponte, by issuing a Text Order to give guidance to the parties. See Text Order, dated Oct. 3, 2006. Cognizant that this is an ERISA case, the Court also knows that the discovery process can be overly engaged and wrought with abuse. By Text Orders, dated October 3 and 4, 2006, the Court directed the parties to meet and confer consistent with the directives of this District Court's Local Rules and to weigh the impact of two precedents and the Federal Rules upon their conference.*fn3 Apparently the Court's directive to meet and confer was either ignored or considered blithely because the parties did not meet and confer before another Letter-Motion was filed with the Court. This time the Letter-Motion was filed by Plaintiff. Dkt. No. 17, Pl.'s Lt.-Mot., dated Oct. 12, 2006. With patience wearing thin, this Court issued another Text Order demanding the parties to identify dates and times when they may be available for a telephonic conference. Dkt. No. 18, Text Order, dated Oct. 12, 2006. Immediately after this demand, the Plaintiff filed a Letter-Brief and a telephonic conference was convened for October 17, 2006. Dkt. No. 19, Pl.'s Lt.-Br., dated Oct. 16, 2006, & Text Notice, dated Oct. 16, 2006.

The telephonic conference was long and contentious. We were addressing Plaintiff's extensive discovery demands and considering only those good cause bases persuasively proffered by Plaintiff.*fn4 Several rulings were made on the Record: (1) discovery in ERISA cases is limited and discovery in this case will be adjusted accordingly; (2) the scoring sheets would be provided to Plaintiff; (3) the summary plan descriptions to the applicable disability plans, if they exist, would be provided to Plaintiff; (4) demands numbered 1-31, which may actually be interrogatories, would be withdrawn by Plaintiff so that she may review and possibly limit the number of demands; (5) the only depositions, along with their curriculum vitae, that would be permitted would be of the final decision makers. Those decision makers would be composed of Helen Scherer, the vocational specialist, Donna Chillfriller, the ultimate decision maker, Barbara Barry, the in-house nurse, peer review physicians (some of which are non-parties), and the medical director; (6) Defendants agreed to provide responses and documents to demands number 32-85; and (7) all other discovery was deemed either irrelevant or Plaintiff failed to establish good cause for the ...

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