Does an insurer’s litigation history dating back 10 years justify overbroad discovery in an ERISA case? It might… (See below for a strategy to combat this from occurring in your cases).

Also, in each case you should reassess whether or not to argue for the arbitrary and capricious standard. Consider the adverse effects of pushing for application of the abuse of discretion standard… versus stipulating to the de novo standard. This can help limit discovery.

This new case highlights these concerns…

Here’s the case of Black v. Hartford Life Ins. Co., 2018 WL 3872113 (D. Or. August 14, 2018).

FACTS. Plaintiff sought and received ERISA-governed disability benefits for nine years as a result of “Atypical Parkinson’s Disease.” An Independent Medical Exam, which relied in part on surveillance video concluded Plaintiff did not have Atypical Parkinson’s, and Hartford terminated benefits. The abuse of discretion standard of review could apply to the case. Hartford operated under a conflict of interest because it served as both the claims administrator and insurer.

Plaintiff brought suit and sought broad discovery regarding: (1) financial relationships between insurer and vendors; (2) performance evaluations of key employees of insurer.

DISTRICT COURT HELD: Discovery GRANTED.

  1. “District courts are generally limited to the administrative record unless a so-called structural conflict of interest exists.” Op. at 4.
  2. “[W]hether to permit ‘conflict’ discovery is well within the discretion of the Court….” Op. at 6.
  3. In this case, Hartford operated under a conflict of interest because it is the claims administrator and insures the claim. Op. at 6.
  4. “[I]n other ERISA cases within the Ninth Circuit, Hartford has used [certain investigator vendors] to conduct biased investigations.” Op. at 6. Remarkably: the Court cited cases that went back 10 years, 6 years and 4 years ago.
  5. “Given that Hartford operates under a conflict of interest and has a history of biased claims administration, the Court exercises its discretion to allow Plaintiff to obtain the discovery he seeks.” Op. at 6-7.
  6. The Court allowed discovery of vendor agreements because the Court “is particularly persuaded by the fact that Hartford has used the same vendors in this case as were used in [the 2012 and 2014 cases].” Op. at 7.
  7. “Hartford’s performance reviews ‘may reveal a structural incentive for individual claims adjustors to deny disability claims.’” Op. at 7.

KEY TAKE AWAYS to Limit Overbroad Discovery:

In discovery motions, most courts consider only the case at hand, and will not accept arguments tainting the insurer that rely on ten year old court rulings against the insurer in other cases.

  1. In discovery battles, consider agreeing to de novo review (which all but eliminates discovery) versus the abuse of discretion standard which allows the court greater discretion to order overbroad discovery. Where, as here, the district court reviews de novo the denial of benefits, that review is limited to the administrative record unless “circumstances clearly establish that additional evidence is necessary to conduct an adequate de novo review of the benefit decision.” Mongeluzo v. Baxter Travenol Long Term Disability Benefit Plan, 46 F.3d 938, 944 (9th Cir. 1995) (quoting Quesinberry v. Life Ins. Co. of N. Am., 987 F.2d 1017, 1025 (4th Cir. 1993)).
  2. For future discovery battles, create a list now of court decisions upholding your insurer claims decisions. Each insurer should develop a “case win list” that can be made as an exhibit and submitted to the court to combat Plaintiff’s briefing cherry-picking adverse decisions.