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Rubino v. Aetna Life Insurance Co.

March 31, 2009


The opinion of the court was delivered by: A. Kathleen Tomlinson, Magistrate Judge



Plaintiff Robert A. Rubino ("Plaintiff" or "Rubino") brings this action pursuant to the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq., against Defendant Aetna Life Insurance Company ("Defendant" or "Aetna") seeking: (i) a declaratory judgment that Aetna is prohibited from taking certain deductions from Rubino's monthly long-term disability ("LTD") benefits pursuant to a long-term group life and accident and health insurance policy (the "LTD Policy") issued to Rubino's former employer; (ii) damages in the amount of Aetna's allegedly impermissible deductions; and (iii) reasonable attorneys' fees and costs. In particular, Plaintiff objects to Aetna's decision to "reduce, decrease or offset" the amount of his monthly LTD benefits by the amount of Social Security Disability Income ("SSDI") benefits he receives. Am. Compl. ¶¶ 14, 17, 19; see also DE 27, Ex. A, D, E.

Plaintiff now moves to compel discovery beyond the administrative record. For the reasons set forth below, the motion is DENIED.


Currently before the Court is Plaintiff's motion [DE 27] to take limited discovery outside the administrative record in this ERISA case. Plaintiff seeks leave to depose the Aetna employee who was involved in Aetna's decision to "offset and reduc[e]" Plaintiff's monthly LTD benefits [DE 27]. Plaintiff asserts that he should be permitted to take this deposition so that he "can then apply to the Court for a determination as to whether the Court will expand the administrative record (which at this time has not been produced)*fn1 to include information that the discovery yielded, the nature of which is not yet known." Id. In addition, Plaintiff maintains that "Aetna is both claim insurer and claim administrator in the case at bar which creates a structural conflict of interest." Id.

Defendant Aetna opposes Plaintiff's motion on the grounds that discovery in this case should be limited to the administrative record [DE 28].*fn2 Specifically, Defendant makes the following points: (1) additional discovery is not needed to determine Aetna's interpretation of the Policy terms at issue because "Aetna has discretionary authority to construe any disputed or doubtful terms of the Policy;" (2) based upon Aetna's discretionary authority, the arbitrary and capricious standard of review applies and thus, the Court's review "is limited to the facts known to the administrator;" (3) Plaintiff has not alleged facts sufficient to show "good cause" to "support the admission of evidence concerning the claim or Aetna's handling of it;" and (4) Plaintiff's allegation regarding Aetna's "structural conflict of interest" is "insufficient to review evidence beyond the administrative record." See DE 28 (internal quotations and citations omitted).

The parties agree that the proper standard of review here is whether Aetna's decision to reduce Plaintiff's benefits was "arbitrary and capricious." See Am. Compl. ¶ 13; DE 26; DE 28; DE 29. The LTD Policy provides that Aetna has complete authority to review all denied claims for benefits under this policy. In exercising such fiduciary responsibility, Aetna shall have discretionary authority to: determine whether and to what extent employees and beneficiaries are entitled to benefits; and construe any disputed or doubtful terms of this policy.

DE 28, Ex. A at AETNA 00004. Because the LTD Policy provides Aetna with full discretionary authority to determine eligibility, the Court agrees that the appropriate standard of review is "arbitrary and capricious." See Trussel v. Cigna Life Ins. Co. of New York,552 F. Supp. 2d 387, 390 (S.D.N.Y. 2008) ("Where the benefit plan grants the fiduciary discretionary authority, a district court 'must review deferentially a denial of benefits.'") (quoting Miller v. United Welfare Fund, 72 F.3d 1066, 1070 (2d Cir. 1995); Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989) ("a denial of benefits challenged under [ERISA] § 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"); see also Lee v. Aetna Life & Cas. Ins. Co., 05 Civ. 2960, 2006 WL 345854, at *2 (S.D.N.Y. Feb. 13, 2006) (noting that "a deferential review (i.e., abuse of discretion) applies to ERISA claims determination cases where the administrator has discretion, even where a structural conflict of interest exists") (citations omitted).


In an ERISA case, in general, under the arbitrary and capricious standard of review, a court's review of the determination of benefits under the applicable plan is limited to the evidence contained in the administrative record. See Schalit v. Cigna Life Ins. Co. of New York, 07 Civ. 0476, 2007 WL 2040587, at *2 (S.D.N.Y. Jul. 12, 2007); Anderson v. Sotheby's Inc. Severance Plan, 04 Civ. 8180, 2005 U.S. Dist. LEXIS 9033, at *9-*10 (S.D.N.Y. May 13, 2005) (quoting Miller v. United Welfare Fund, 72 F.3d 1066, 1071 (2d Cir 1995)). However, courts in the Second Circuit have found that where petitioner seeks to show a conflict of interest, additional discovery may be appropriate under certain circumstances -- namely, where "good cause" has been shown. See Burgio v. Prudential Life Ins. Co. of America, 253 F.R.D. 219, 229 (E.D.N.Y. 2008) (collecting cases); see also Anderson, 2005 U.S. Dist. LEXIS 9033, at *10 (citing Wagner v. First Unum Life Ins. Co., 100 Fed. Appx. 862, 864 n.1 (2d Cir. 2004));

For example, in Locher v. Unum Life Insurance Company of America, 389 F.3d 288 (2d Cir. 2004), the Second Circuit noted that, in deciding to consider facts outside of the administrative record, the district court had taken into account factors in addition to the structural conflict (i.e., the conflicted administrator)." Locher, 389 F.3d at 294-96 (discussed in Lee v. Aetna Life & Cas. Ins. Co., 05 Civ. 2960, 2006 WL 345854, at *3 (S.D.N.Y. Feb. 13, 2006)). These factors included that the defendant "had no written procedures for claims review." The Locher Court concluded as follows:

Where sufficient procedures for initial or appellate review of a claim are lacking, there exist greater opportunities for conflicts of interest to be exacerbated and, in such a case, the fairness of the ERISA appeals process cannot be established using only the record before the administrator. In such circumstances, . . . the district court may assume an active role in order to ensure a comprehensive and impartial review of the case. . . .

Locher, 389 F.3d at 296 (quoted in Lee, 2006 WL 345854, at *3). Moreover, in DeFelice v. American International Life Assurance Co. of New York, 112 F.3d 61 (2d Cir. 1997), the Second Circuit found that "'good cause' existed not merely because the claims reviewer and claims payor were the same entity, but also because the procedures employed in arriving at the claim determination were flawed." Locher, 389 F.3d at 295 (discussing DeFelice, 112 F.3d at 66). Likewise, "good cause" was found to exist where the insurer's claimed reason for denying a claim was not stated in its notices to the claimant. See Juliano v. Health Maint. Org. of New Jersey, Inc., 221 F.3d 279, 289 (2d Cir. 2000). On the other hand, "good cause" for allowing evidence outside the administrative record did not exist where the insurer gave the claimant "ample time to submit ...

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