United States District Court, N.D. Indiana, South Bend Division
OPINION AND ORDER
MICHAEL G. GOTSCH, SR. UNITED STATES MAGISTRATE JUDGE
February 1, 2016, Plaintiff filed his Motion to Conduct
Standard Discovery Pursuant to Rule 26 of Federal Rules of
Civil Procedure in this case brought pursuant to Employee
Retirement Income Security Act (“ERISA”), 29
U.S.C. § 1001 et seq. Defendants filed a
response to Plaintiff's instant motion to conduct
discovery on March 1, 2016. Plaintiff's instant motion
became ripe on March 11, 2016, when he filed his reply brief.
the Court entered its opinion and order denying
Plaintiff's motion to apply the de novo standard
of review in this case, the undersigned ordered the parties
to complete supplemental briefing on the instant motion for
discovery. [Doc. No. 30]. On October 20, 2016,
Plaintiff timely filed his supplemental brief [Doc. No.
31] along with his proposed interrogatories [Doc.
No. 31-1], his proposed request for production of
documents [Doc. No. 31-2], and a 2007 law review
article discussing the partiality of self-interested
reviewers in claims benefits decisions challenged under ERISA
[Doc. No. 31-3]. Defendants filed their timely
supplemental brief in response [Doc. No. 32] along
with a document entitled “Reliance Standard Claim
Handling Statement of Principles (“the Reliance
Principles”) [Doc. No. 32-1]. In light of the
parties' briefing and the supplemental evidence
presented, the Court now denies Plaintiff's motion for
discovery for the reasons stated below.
opinion and order dated September 26, 2016, the Court
concluded that Defendants substantially complied with the
ERISA regulatory framework in its denial of Plaintiff's
claim for disability insurance benefits. Accordingly, the
Court held that Plaintiff's ERISA claim before this Court
will be reviewed under the arbitrary and capricious standard
typically applied in ERISA cases where a benefit plan
contains a discretionary clause. See Doc. No. 29 at
3 (citing Metro. Life Ins. Co. v. Glenn, 554
U.S. 105, 111(2008) (citing Firestone Tire & Rubber
Co. v. Bruch, 489 U.S. 101, 115 (1989))).
in ERISA cases where the arbitrary and capricious standard is
applied, the reviewing court only considers the
administrative record, or in other words, evidence before the
claims administrator when the claim at issue was denied.
Perlman v. Swiss Bank Corp. Comprehensive Disability
Prot. Plan, 195 F.3d 975, 982 (7th Cir. 1999); see
also Krolnik v. Prudential Ins. Co. of Am., 570
F.3d 841, 843 (7th Cir. 2009). However, the Supreme Court in
Glenn addressed concerns about the effect of
structural conflicts of interest where the claims
administrator both evaluates benefits claims and pays any
benefits awarded. Glenn, 554 U.S. at 112-18. The
Court concluded that such a conflict of interest constitutes
“one factor among many that a reviewing judge must take
into account.” Id. at 116.
Reliance Standard Life Insurance Company
(“Reliance”) is undisputedly both the
administrator and payor of the long term disability benefits
sought by Plaintiff and at issue in this case. Under the
terms of Plaintiff's disability policy, Plaintiff would
have received $1, 250, 000 in disability benefit payments had
Reliance approved rather than denied his claim. Plaintiff
alleges that Reliance hired Dr. John Brusch and Dr. Michelle
Park as record reviewing physicians, both of whom are regular
reviewers in the disability insurance industry, to review and
deny his benefits claim. Additionally, Plaintiff points to
rejections by two courts of Dr. Brusch's opinions finding
claimants not to be disabled. Although not completely clear
from Plaintiff's motions and subsequent briefs, Plaintiff
seems to be suggesting that Dr. Brusch's and Dr.
Park's history with and compensation from Reliance create
a fair inference that a financial conflict existed and
influenced Reliance's denial of his claim.
light of these facts, Plaintiff asks the Court for permission
to conduct discovery in order to determine the extent to
which Reliance's conflict of interest infected his
benefits claim. Specifically, Plaintiff seeks information
regarding financial incentives, bias, or motivations that may
be built into Reliance's claim process that favor denial
of legitimate benefits claims. Plaintiff contends that
information involving the claims management practices and
financial motives of Reliance's employees and agents is
relevant to any analysis of the effect of Reliance's
conflict of interest on his claim. Additionally, Plaintiff
indicates that he is “entitled to purs[u]e discovery to
establish the nature of the relationship between
Reliance” and Drs. Brusch and Park so that the Court
can “competently assess whether they are truly
‘independent.'” [Doc. No. 31 at 8].
Plaintiff also indicates his intent to conduct a Rule
30(b)(6) deposition of individuals most knowledgeable about
Reliance's structural conflict of interest and the
responses to the written discovery requests, if allowed by
however, argue that such discovery is inappropriate in this
case because Plaintiff has failed to show with specificity
any instance of misconduct in the handling of his claim. In
addition, Defendants contend that good cause does not exist
for the belief that discovery would reveal any procedural
defect in Reliance's decision on Plaintiff's claim.
Defendants support their argument with a document entitled
“Reliance Standard Claim Handling Statement of
Principles” (“Principles”). [Doc. No.
32-1]. Reliance's Principles document outlines
Reliance's expectations for claim examiners, appeal
reviewers, third party vendors who provide independent
medical professionals as requested by Reliance, and the
independent medical professionals themselves.
Glenn, Reliance's structural conflict of
interest as both the administrator and payor of
Plaintiff's benefits claim is one of many factors that
this Court must consider in its deferential review of
Reliance's benefits denial. See 554 U.S. at
116-17. The mere existence of the structural conflict also
raises the question of whether discovery should be allowed to
assist in the determination as to the extent to which the
conflict impacted the review process used to assess
Plaintiff's benefits claim. See Id.
However, discovery is not automatic when an insured asserts
that a benefit decision may have been influenced by a
conflict of interest. As stated in this Court's order
dated October 6, 2016, “discovery is normally
disfavored in the ERISA context, ” in keeping with the
application of the deferential arbitrary and capricious
standard. Semien v. Life Ins. Co. of N. Am., 436
F.3d 805, 814 (7th Cir. 2006); see also Barker
v. Life Ins. Co. of N. Am., 265 F.R.D. 389, 393 (S.D.
Ind. 2009) (internal citations omitted).
Glenn, Semien defined a rather strict test
for determining whether limited discovery was justified in
the Seventh Circuit. Under Semien, limited discovery
was only warranted in cases where claimants
“identif[ied] a specific conflict of interest or
instance of misconduct [and made] a prima facie showing that
there [was] good cause to believe limited discovery [would]
reveal a procedural defect in the plan administrator's
determination.” Semien, 436 F.3d at 815.
Glenn brought into question the validity of the
Semien framework without establishing explicit rules
for determining when discovery should be allowed. See
Glenn, 554 U.S. at 116 (“Neither do we believe it
necessary or desirable for courts to create special
burden-of-proof rules, or other special procedural or
evidentiary rules, focused narrowly upon the evaluator/payor
recently, the Seventh Circuit addressed the status of the
Semien standard in Dennison v. Mony Life Ret.
Income Sec. Plan, 710 F.3d 741 (7th Cir. 2013).
Summarizing the effect of Dennison on the
Semien standard, the Northern District of Illinois
In Dennison, the Seventh Circuit made clear that the
Supreme Court's decision in Glenn
“suggests a softening, but not a rejection” of
the requirement established in Semien that a
plaintiff must make a prima facie showing in order
to be entitled to discovery in a case to be decided under the
arbitrary and capricious standard. 710 F.3d at 747. The Court
in Dennison re-affirmed that Semien remains
good law in the Seventh Circuit after Glenn albeit
with a “softening” of the prima facie
showing required as a prerequisite to obtaining discovery.
Accordingly, the Seventh Circuit seems willing to ...