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Gail Mcdonnell v. First Unum Life Insurance Company

November 3, 2011

GAIL MCDONNELL, PLAINTIFF,
v.
FIRST UNUM LIFE INSURANCE COMPANY, DEFENDANT.



The opinion of the court was delivered by: Robert P. Patterson, Jr., U.S.D.J.

OPINION & ORDER

On October 27, 2010, Plaintiff Gail McDonnell ("McDonnell") commenced this action against First Unum Life Insurance Company ("UNUM") and Morgan Stanley & Co. Incorporated Disability Plan (the "Plan") under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001, et seq., alleging wrongful termination of Plaintiff's long term disability benefits under the Plan. On December 28, 2010, Defendants filed an Answer. On January 19, 2011, McDonnell dismissed the action against Morgan Stanley pursuant to Federal Rule of Civil Procedure (" Fed. R. Civ. P.") 41(a)(1)(A)(i). On July 7, 2011, Plaintiff moved to compel discovery pursuant to Fed. R. Civ. P. 37(a) and Local Rule 37.2. On August 3, 2011, Defendant responded in opposition to the motion. On August 10, 2011, Plaintiff submitted reply papers in further support of its motion. For the following reasons, Plaintiff's motion to compel discovery is granted.

I. Background

Plaintiff was employed by Morgan Stanley as a Managing Director earning over $4 million per year from until January 31, 2007. (Compl. ¶¶ 8, 11; Pl.'s Mem. in Supp. of Mot. to Compel Disc. ("Pl.'s Mem.") at 1 .) Plaintiff alleges that she was rendered disabled as a result of Lyme disease, Babesiosis (a tick-borne, malaria-like disease), cognitive impairment, chronic fatigue syndrome, and pain. (Id. ¶ 10.) In June 2008, Morgan Stanley contacted UNUM about Plaintiff's potential long term disability ("LTD") claim. (Def.'s Mem. in Opp'n to Pl.'s Mot. to Compel ("Def.'s Mem.") at 8.) UNUM responded that a claim "likely would not" be timely under the terms of Morgan Stanley's disability plan, but to submit it for review to determine if McDonnell was contractually eligible. (Id. at 8.) UNUM then informed Morgan Stanley that the claim was indeed untimely, that there was no legitimate excuse for the delay, and that it would be closing her claim. (Id.) UNUM informed Plaintiff that while the claim remained closed, it would review her medical records and make a decision on her claim for benefits. (Id.) UNUM asserts that based on that review using the Center for Disease Control and Prevention (CDC) guidelines, that Plaintiff's diagnosis of Lyme disease was not supported by the medical evidence submitted. (Id. at 9-10.) The medical doctors reviewing the evidence for UNUM concluded that "she had not proved her Lyme disease diagnosis" and that her disability was due to a mental or nervous condition-not Lyme disease. (Id. at 11.) After UNUM determined that the Lyme disease diagnosis was not supported, it then considered whether Plaintiff's complaints might result from another illness that would qualify her for benefits. (Id. at 10.) After reviewing testing reports by Dr. Leo Shea, Plaintiff's neuropsychologist, and the reports of three neuropsychologists, UNUM Senior Disability Specialist Elizabeth Cleale ("Cleale") concluded that Plaintiff was disabled as a result of mental illness. (Id. at 10--11; Compl. ¶ 17.)

Since the twenty-four month maximum benefit period for a mental or nervous condition had elapsed, UNUM paid Plaintiff a lump sum of $459,600. (Id. at 11.) The payment covered the period from July 31, 2007, to July 30, 2009. (Compl. ¶ 12.) Plaintiff did not receive benefits thereafter. (Id.) In a letter dated November 11, 2009, Cleale informed Plaintiff that her benefits had terminated subject to the two year policy limitation for mental illness. (Compl. ¶ 13; Pl.'s Mem. at 1.) On October 1, 2010, UNUM upheld this determination after review by Denise J. Laverriere ("Laverriere"), Lead Appeals Specialist for UNUM. (Id. at 1; Compl. ¶ 26.)

Plaintiff alleges that Defendant's inherent conflict of interest as administrator and payor of claims influenced UNUM's discontinuation of her benefits. (Compl. ¶ 28-47.) Plaintiff argues that (1) UNUM focuses its employees on claim outcomes and financial goals rather than the merits of each individual case and provides monetary incentives to terminate or deny claims, (id. ¶¶ 35-40); (2) employees were more likely to be involved in UNUM's bonus programs if they terminate or deny claims, (id. ¶¶ 41-42); and (3) UNUM has failed to take steps to reduce potential bias to "promote the accuracy of its benefit determinations." (Id. ¶ 43.) Plaintiff also points out that the Plan gave UNUM the right to have Plaintiff submit to a physical examination of which it did not avail itself. (Id. ¶ 44.) Plaintiff contends that a physical examination with a full file review, as opposed to medical file review alone, provides the evaluator with more information to make a more accurate claims assessment. (Id. ¶ 45.)

Plaintiff seeks to compel: (1) depositions by Plaintiff of Cleale and Laverriere, (2) production of performance evaluations and bonus/compensation information for 2008 through 2010 pertaining to Cleale and Laverriere, and (3) production of UNUM's claims determination statistics under the Plan. (Pl.'s Mem. at 1--2.) UNUM argues that the district court's review is limited to the administrative record, making further discovery unwarranted. (Def.'s Mem. at 2.)

II. Standard of Review

In Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989) the Supreme Court held that "a denial of benefits . . . is to be reviewed under a de novo standard unless the benefit plan gives the administrator . . . authority to determine eligibility for benefits or to construe the terms of the plan." Where an administrator has such authority, the administrator's interpretation is reviewed for an abuse of discretion. See Metropolitan Life Insurance Co. v. Glenn, 554 U.S. 105, 111 (2008) (where plan administrator operates as both decider and payor, the de novo review is not appropriate); Pepe v. Newspaper and Mail Deliveries'-Publishers' Pension Fund, 559 F.3d 140, 146 (2d Cir. 2009) ("Since the terms of the Plan grant the [administrator] discretionary authority to interpret the Plan, the standard governing the district court's review, and accordingly our review here, is the arbitrary-and-capricious standard."); Kruk v. Metropolitan Life Insurance Co., 3:07-CV-01533, 2009 WL 1481543, *2 n.1 (D. Conn. May 26, 2009) ("The term 'arbitrary and capricious' is used interchangeably with the phrase 'abuse of discretion,' and either describes the deferential standard applied when an ERISA plan reserves discretion.") (internal citations omitted)).

Even under this deferential standard of review, "a court may not overturn the administrator's denial of benefits unless its actions are found to be . . . without reason, unsupported by substantial evidence or erroneous as a matter of law." McCauley v. First Unum Life Insurance Co., 551 F.3d 126, 133 (2d Cir. 2008). A district court's discretionary power to admit evidence outside of the administrative record is subject to a showing of "good cause." Krauss v. Oxford Health Plans, Inc., 221 F.3d 279, 289 (2d Cir. 2000). However, where such evidence is sought at the discovery stage, the plaintiff need only demonstrate "a reasonable chance that the requested discovery will satisfy the good cause requirement." Anderson v. Sotheby's Inc. Severance Plan, No. 04 Civ 8180, 2005 WL 6567123, *7 (S.D.N.Y. May 15, 2005). "The good cause standard required to obtain evidence beyond the administrative record [at the discovery stage] is therefore less stringent than when requesting that the court . . . consider such evidence in its final determination." Trussel v. Cigna Life Ins. Co. of NY, 552 F. Supp. 2d 387, 390-91 (S.D.N.Y. 2008)

III. Discussion

Plaintiff argues that UNUM has a conflict of interest "because it serves a dual role of being both claim decider and claim payor," and thus Plaintiff should be entitled to discovery materials beyond the administrative record. (Pl.'s Mem. at 3.) In situations where the plan administrator is both the decider and the payor, the Supreme Court has held that the administrator operates under a conflict of interest. Glenn, 554 U.S. at 114. Where the issue is a potential conflict of interest, as opposed to challenging the reasonableness of the decision, the district court's review is not confined solely to the administrative record. See Trussel, 552 F. Supp. 2d at 390.

Plaintiff Has Demonstrated a Reasonable Chance That the Discovery Sought Will Satisfy the Good Cause Requirement

The limited discovery Plaintiff seeks is proper because Plaintiff has shown that there is a reasonable chance she will satisfy the "good cause" requirement to obtain evidence outside the administrative record. Plaintiff states that her disability benefits were improperly terminated as a result of a finding of mental illness by the claim administrators, despite the fact that she was never diagnosed as suffering from a mental disease by her treating doctors and has never been treated by a mental health provider. (Pl.'s Mem. at 1.) Plaintiff states that UNUM's decision to terminate her benefits was based solely on the outdated and incomplete reports of the reviewing doctors employed by UNUM, and that additional contradictory medical evidence, including a Residual Functional Capacity questionnaire by a renowned Lyme Disease expert, Dr. Steven Phillips, provided during her ...


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