:: Post-Glenn Template For Analysis Of Permissible Discovery
In sum, limited discovery beyond the administrative record will be allowed but controlled. Such discovery must focus on the Defendants’ structural conflict of interest.
Dandridge v. Raytheon Co., 2010 U.S. Dist. LEXIS 5854 (D.N.J. 2010)
This recent district court opinion addresses the scope of discovery in a claim for benefits case determined under an arbitrary and capricious standard of review. The court take a comprehensive survey of the law and, as a result, the opinion provides a helpful template for analysis of the issue.
Relevance Of The Standard Of Review
The Court noted that parties agreed that the proper standard of review was the arbitrary and capricious standard.
The Third Circuit has consistently held that a court’s review of a claim for benefits under the arbitrary and capricious standard is “limited to that evidence that was before the administrator when it made the decision being reviewed.” Mitchell v. Eastman Kodak Co., 113 F.3d 433, 440 (3d Cir. 1997); Abnathya, 2 F.3d 40, 48 n.8 (3d Cir. 1993); see also Johnson v. UMWA Health & Ret. Funds, 125 Fed. Appx. 400, 405 (3d Cir. 2005) (”This Court has made clear that the record for arbitrary and capricious review of ERISA benefits denial is the record made before the Plan administrator, which cannot be supplemented during the litigation.”).
Here, the administrative proceeding analogy is invoked:
The concept of limiting a court’s review to the administrative record derives from the nature of an ERISA review proceeding and the administrative appeal process, which is meant to encourage internal and inexpensive resolution of benefit claims. See Grossmuller v. Int’l Union, 715 F.2d 853, 857 (3d Cir. 1983).
This administrative law paradigm is buttressed by an ancillary requirement:
. . . the Third Circuit has required that parties prior to bringing ERISA benefit disputes exhaust their administrative remedies, i.e., administrative appeals, prior to bringing suit.. . The purpose in limiting the evidential scope of judicial review is to encourage the parties to resolve their dispute at the administrative level.
Thus, drawing from the deference implicit in the administrative law analogy and with a tip of the hat to the notion of judicial economy, the court settles into the default position that no discovery is ordinarily permissible.
Three Questions
The court analyzes the discovery issue in terms of three questions.
#1 Is discovery permissible on the merits of claims adjudication?
#2 Is discovery permissible as to the plan fiduciary’s structural conflict of interest?
#3 Is discovery permissible on perceived bias and irregularity in the review of the benefit claim?
Three Answers
The Court answered the questions as follows:
#1 Merits of Defendants’ claim determination?
No. This answer was predictable from the “closed administrative record” default position on discovery.
. . . to the extent Plaintiff seeks discovery into the merits of the Defendants’ claim determination, it is clear that such discovery is prohibited. . . . The Court is not aware of any Third Circuit precedent, pre or post-Glenn, which permits discovery into the pure merits of a claim determination.
#2 Defendants’ structural conflict of interest?
Yes, with limitations – discovery beyond the administrative record is permissible if such discovery is directed toward uncovering the extent to which a structural conflict record has morphed into an actual conflict that could have influenced the administrator’s discretionary decision.
#3 Perceived bias and irregularity in the review of the claim?
Yes, with limitations – some discovery into alleged procedural irregularities is permitted in ERISA cases, but only when the party seeking discovery has made at least some minimal showing of bias or irregularity that could have impacted the administration of the claim.
The Case At Bar
The foregoing analysis rendered the Plaintiff’s discovery permissible in part but also beyond the pale in part. The Court concluded that:
Plaintiff in this case seeks the following discovery: 23 interrogatories; 17 requests for admissions; 7 document requests; and 2 depositions. This discovery seeks information beyond the effect of any structural conflict of interest or any perceived bias, and encroaches on the merits of the underlying claim.
If permitted, the discovery would transform this action from a review proceeding to an evidentiary proceeding with full discovery. Moreover, it would undercut the discretionary authority of the plan administrator in rendering the Plaintiff’s pension benefit determination and would effectively change the standard of review the Court must apply to a benefit determination conducted under ERISA.
Discovery substantially more limited than that currently sought is, however, permissible. Defendants concede that they suffer from a perceived structural conflict of interest in this case. Thus, based upon Glenn, discovery is appropriate and will be permitted into the scope and impact of any conflict of interest that could have impacted Defendants’ evaluation of Plaintiff’s claim.
Note: The court observed a post-Glenn split in authority over whether discovery beyond the administrative record is permitted in ERISA benefit cases.
Cases that have concluded that Glenn does open the door to discovery beyond the administrative record include:
Denmark v. Liberty Life Ins. Co., 566 F.3d 1, 10 (1st Cir. 2009) (”The majority opinion in Glenn fairly can be read as contemplating some discovery on the issue of whether a structural conflict has morphed into an actual conflict.”); Kalp v. Life Ins. Co. of N. Am., No. 08-1005, 2009 WL 261189 (W.D. Pa. Feb. 4, 2009); Burgio v. Prudential Life Ins. Co. of Am., 253 F.R.D. 219 (E.D.N.Y. 2008); and Hogan-Cross v. Metro. Life Ins. Co., 568 F. Supp. 2d 410, 414 (S.D.N.Y. 2008).
Courts that have concluded that Glenn does not alter the pre-existing rules with respect to discovery include:
Weiss v. Unum Life Ins. Co., No. 02-4249, 2008 WL 518857, at *4 (D.N.J. Dec. 10, 2008); Sanders v. Unum Life Ins. Co., No. 08-421, 2008 WL 4493043, at **3-4 (E.D. Ark. Oct. 2, 2008); and Christie v. MBNA Group Long Term Disability Plan, No. 08-44, 2008 WL 4427192, at *2 (D. Me. Sept. 25, 2008).
