VERME-GIBBONEY v. THE HARTFORD INSURANCE COMPANY et al, No. 1:2011cv03796 - Document 51 (D.N.J. 2013)
Court Description: MEMORANDUM OPINION AND ORDER Denying 42 Motion to Compel. Signed by Magistrate Judge Joel Schneider on 12/16/13. (js)
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[Doc. No. 42] IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY CAMDEN VICINAGE CATHERINE VERME-GIBBONEY, Plaintiff, Civil No. 11-3796 (RMB/JS) v. THE HARTFORD INSURANCE COMPANY, et al., Defendants. MEMORANDUM OPINION AND ORDER This matter is before the Court Motion to Compel Discovery. [Doc. No. 42]. on plaintiff s The Court received defendant s response [Doc. No. 44], plaintiff s reply [Doc. No. 48], and held oral argument. The issue to be addressed generally concerns the scope of discovery plaintiff is entitled to in this ERISA case. For the reasons to be discussed, plaintiff s motion is DENIED. Background Defendant benefit plan, insured which plaintiff provides through long term an employee welfare disability ( LTD ) benefits to participants. In July 2008, plaintiff was placed on disability by her treating physician and sought LTD coverage. Defendant initially accepted plaintiff s claims and provided LTD benefits but on January 14, 2010, 1 defendant terminated the benefits. See Amended Compl. ΒΆΒΆ 7, 8 [Doc. No. 11]. Plaintiff filed a claim with defendant to have her LTD benefits reinstated but defendant decision. denied After the the request. appeal was Plaintiff denied appealed plaintiff filed the this action in the Superior Court of New Jersey seeking damages and reinstatement of her LTD benefits. Defendant subsequently removed the case to this Court. This is plaintiff s second Motion to Compel Discovery. On October 24, 2012 [Doc. No. 33] the Court denied plaintiff s first motion which asked the Court to Order defendant to respond to her notice. plan interrogatories, documents requests and deposition In its Order the Court found that since plaintiff s granted determine discretionary eligibility authority benefits, to the administrator defendant s decision to to terminate plaintiff s LTD benefits must be reviewed under an arbitrary and capricious standard. Order at 4. The Court, therefore, denied plaintiff s request that defendant respond to her de novo discovery directed to the merits of defendant s decision to terminate plaintiff s benefits. The Court ruled: [P]laintiff may conduct limited discovery to determine the scope of defendant s conflict and the extent to which the conflict may have affected the administrator s determination about plan eligibility.... However, discovery should only be permitted to fill gaps in the administrative record. If the administrative record adequately explains the 2 also procedures used to prevent or mitigate a conflicts problem, limited discovery is not permissible. Order at 6. Following up on the Court s October 24, 2012 Order, plaintiff served defendant with interrogatories and a corporate designee deposition notice. Defendant served objections and responses to the interrogatories, and objected to the deposition notice. 1 Plaintiff argues her discovery is designed to fill in the gaps of the administrative record to determine whether or not the potential conflict of the arbitrator, and/or what and how said individual insulated and/or isolated themselves. March 3, 2013 Letter Brief ( LB ) at 2. Defendant argues it provided information plaintiff required to produce. with all the relevant it was Defendant s Brief states: In brief, Hartford explained that the initial termination was made in the claims department while the final determination was made in a wholly separate appeals unit. Personnel in the claims and appeals units do not have access to or knowledge of financial information regarding any policyholder, nor is the information regarding the profitability or any other financial information regarding a policyholder provided to, or accessible by, those people. Rather, the people deciding initial claims or making determination on appeal have been effectively walledoff from Hartford s finance department by ensuring that their compensation is not determined by reference to their record in approving or denying claims. Additionally, claims personnel are separate from and not involved with the persons responsible for 1 Defendant s objections and responses to interrogatories are attached as Exhibit C to defendant s Declaration. [Doc. No. 44-2 at 14-41]. Defendant s objection to plaintiff s deposition notice is attached as Exhibit B. [Id. at 8-11]. 3 Hartford s financial operations or decisions and they do not have any role or responsibility for management, reporting, or other functions regarding Hartford s finances. They are not required to interact in any way with employees involved in underwriting or other financial concerns when making benefit decisions. Response Brief at 4-5. to provide any According to defendant, it does not have further information or produce a witness for deposition because the additional requested information is not needed to fill in any gaps in the administrative record. 3. Id. at In response plaintiff argues: Pursuant to relevant case law, plaintiff is and has always been entitled to inquire into how, if at all defendant was able to elect a firewall to prevent the inherent conflict associated with making a determination as to whether or not one would be entitled to ongoing benefits from one s own insurance company, despite representing and working for the company in question. April 15, 2013 LB at l. Plaintiff also argues she is entitled to a determination as to whether or not defendant created a firewall sufficient conflict. to avoid prejudice and any inherent Id. at 2. Discussion There are several problems with plaintiff s motion. First, although plaintiff asks the Court to Order defendant to serve supplemental discovery answers, she did not specifically identify the relevant information she requested that was not produced. Further, plaintiff 4 asks the court to order defendant s designee to appear for what is presumably a Fed. R. Civ. P. 30(b)(6) deposition, but she did not attach the notice to her moving papers. The Court has a copy of defendant s objection (Response at Exhibit B), but not a copy of plaintiff s notice. The most significant substantive problem with plaintiff s motion is that discovery in established it the that does not present the appreciate context. Federal the proper It of Rules is, of Civil scope course, Procedure of well allow broad and liberal discovery. See Pacitti v. Macy s, 193 F.3d 766, 777 (3d Cir. 1999). ERISA context. However, this does not apply in the In a situation such as this where the arbitrary and capricious standard of review applies, the review is limited to the administrative ordinarily permitted. record and as such discovery is not Mitchell v. Eastman Kodak Co., 113 F.3d 433, 437-38 (3d Cir. 1997); Irgon v. Lincoln Nat. Life Ins. Co., C.A. No. 13-4731 (FLW), 2013 WL 6054809, at *3 (D.N.J. Nov. 15, 2013)( Under the arbitrary and capricious standard of review, courts must limit their review of the plan administrator s denial of benefits to only the evidence that was before the administrator when the decision was made. ). The Court previously permitted regarding discovery is a held structural limited. Order 5 that even if discovery is conflict of interest, the at In fact, the 6. if administrative record adequately explains the procedure used to prevent or mitigate permissible. Id. a conflicts problem (citations omitted); no discovery is Shvartsman v. Long Term Disability Income Plan for Choices Eligible Employees of Johnson & Johnson, C.A. No. 11-03643 (JAP), 2012 WL 2118126, at *10 (D.N.J. June 11, 2012). As noted in the case law, discovery in the ERISA context is limited by the statute s goal of a speedy, inexpensive, and efficient resolution of claims. Irgon at *4. Courts latitude deciding have wide discretion whether discovery administrative record is and considerable outside appropriate. the scope Irgon at in of the *4. This discretion includes a ruling denying any discovery beyond the administrative record. Id. at *7. See also Stevens v. Santander Holdings USA, Inc., C.A. No. 11-7473 (PGS), 2013 WL 322628, at *9. (D.N.J. Jan. 28, 2013)(denying discovery in ERISA action because plaintiff s broad allegations lacked a factual basis that did not raise a reasonable suspicion of misconduct by defendants or the administrator); Reed v. Citigroup, Inc., C.A. No. 12-2934 (JAP)(DEA), 2013 WL 2761132, at *2 (D.N.J. July 16, 2013)(denying discovery in ERISA action because plaintiff did not present evidence that a structural conflict or procedural irregularity existed). Plaintiff cites to Metro Life Ins. Co. v. Glenn, 554 U.S. 105 (2008), for the proposition that she is entitled to broad discovery. Plaintiff misreads Glenn. 6 As this this Court wrote in its October 24, 2012 Order, Glenn does not specifically address discovery issues. Order at 5. In addition, as discussed herein, numerous courts support the discovery in this context is non-existent or limited. view that Plaintiff has not cited to any contrary authority. To be sure, discovery in this context is not completely out of bounds. Discovery outside the administrative record may be permitted if it is directed to an administrator s structural conflict of interest or procedural irregularities that occurred during the reviewing process. Irgon at *3. The structural inquiry focuses on the financial incentives created by the way the plan is organized. Post v. Hartford Ins. Co., 501 F.3d 154, 162 (3d Cir. 2007). The structural analysis does not ask about the administrator s behavior. Id. at 164. The Third Circuit has held that a structural conflict arises when the Administrator has a non-trivial financial incentive interests of the beneficiaries. to Id. at 162. act against the Thus, a conflict of interest may exist if an employer funds and evaluates claims. A conflict may also exist if an employer pays an independent insurance company to both evaluate claims and pay plan benefits. Irgon at *5. (citations omitted). A conflict does not exist if an employer funds a benefits plan but an independent third-party is paid to administer the plan. Also, no conflict exists if an employer establishes a plan and creates an internal benefits 7 committee vested with the discretion to interpret the plan and administer benefits. Id. As to the inquiry into procedural irregularities, it focuses on how the administrator treated the particular claimant. (citation Id. omitted). Procedural irregularities occur where the administrator has given the court reason to doubt its fiduciary neutrality. Id.; see also Post, 501 F.3d at 165 ( In considering procedural factors, the focus is whether, in [the] claimant s case, the administrator has given the court reason to doubt its fiduciary neutrality. ) Plaintiff has not cited to any procedural irregularity in the record. Instead, plaintiff focuses on defendant s alleged structural conflict of interest. The Court s October 24, 2012 Order granted plaintiff leave to conduct limited discovery to address the inherent defendant s group eligibility and benefit pays (citation omitted). has a copy of structural the plan claims conflict because under the of interest defendant plan. in determines Order at 7. However, despite the fact that plaintiff administrative record and it received defendant s interrogatory answers, plaintiff does not point to any gaps in the administrative record. Although plaintiff says she wants to fill in the gaps, she does not cite to any deficiency that she wants to address. 2 2 In fact, the Court reads The Court will not address plaintiff s arguments raised for the first time at oral argument that were not mentioned in her moving papers. Defendant did not have an opportunity to address the arguments. 8 plaintiff s briefs as acknowledging she does not presently know of any gaps because she wants to determine decision maker was insulated or isolated. 2. whether the March 3, 2013 LB at In addition, plaintiff does not question whether defendant s firewall existed but just whether it was sufficient. April 15, 2013 LB at 2. Simply because plaintiff raises the specter of a conflict of interest blanche does not conflict give of her the right interest to conduct discovery carte beyond the administrative record. Irgon at *5. Before plaintiff can conduct the discovery she requests she must establish a reasonable suspicion of misconduct. Id. Stated another way, plaintiff must allege a good faith basis of conflict of interest to warrant discovery. Plaintiff Id. did Plaintiff not cite to has any not satisfied portion of the record to support her request for discovery. her burden. administrative She also did not cite to any evidence of an irregularity to show there is a good faith belief that misconduct occurred. In its response to interrogatory 3 (Doc. No. 44, Exhibit C, pp. 19-21) defendant provided a detailed explanation regarding the steps it took to insulate claims decisions from the company s financial matters, and the steps it took to prevent or mitigate a conflicts problem. Defendant explained that plaintiff s initial termination was made by a Claims Specialist 9 and approved by a Team Leader, both of whom were part of the claims department. Defendant further explained that plaintiff s appeal was denied by the separate appeals unit. In addition, defendant explained how it walled-off claims examiners and appeals specialists, and that its claims and appeals decisions are insulated from the financial and underwriting departments. Further, defendant cited to the portion of the administrative record (HLI 70-74, 28-35) where it identified the factors it relied upon to uphold the termination of plaintiff s claim for benefits. Defendant also identified in the record the health care professionals it consulted with regarding plaintiff. These professionals whose C.V. s were produced included Sergio Loaiza, M.D., Board Certified in Neurology with the added qualification in Clinical Neurophysiology by the American Board of Psychiatry and Neurology, and Thomas Klein, Otolaryngology. Id. at 29-30, 35-39. interrogatories defendant incentive program Id. at 27-28. also M.D., Board Certified in In response to plaintiff s explained that there is no regarding the denial of disability claims. And, that the decision makers are paid fixed salaries and performance bonuses that are wholly unrelated to the number of claims paid or claims denied. Id. at 28. This detailed response does not evidence a lack of thoroughness on the part discovery. of the administrator Irgon at *5. 10 that justifies additional It appears to the Court that plaintiff served generic interrogatories asking for information such as how many claims were presented for appeal, how many were denied and accepted, how was the appeal decision made, was the decision maker influenced by outside factors, was there an incentive program, was the decision maker reprimanded, and the person s training. Presumably topics. plaintiff s Unfortunately demonstrated that any deposition for notice plaintiff, additional covered however, discovery is the she same has not appropriate or necessary. Defendant represents it produced the administrative record to certainly plaintiff had enough on December time to 20, 2011. identify Plaintiff irregularities in has the record that might justify additional discovery. Plaintiff has not done so and, therefore, plaintiff s motion will be denied. As discussed, discovery in the ERISA context is limited. In effect, if the Court granted plaintiff s motion then any time the arbitrary and capricious standard of review applied a claimant denied disability benefits would be entitled to serve detailed interrogatories and take a corporate designee deposition. This position is not supported in the case law and is inconsistent with ERISA s goals. Before plaintiff is permitted to embark on detailed discovery to pursue an alleged structural conflict she must identify 11 a good faith basis to believe an irregularity has occurred. Since plaintiff has not done this her motion is denied. Conclusion Accordingly, for all the foregoing reasons, it is hereby ORDERED this 16th day of December, 2013, that plaintiff s Motion to Compel Discovery is DENIED. s/Joel Schneider JOEL SCHNEIDER United States Magistrate Judge 12
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