Stephan v. Unum Life Ins. Co., No. 10-16840 (9th Cir. 2012)
Annotate this CasePlaintiff, injured in a bicycling accident, disputed Unum Life Insurance Company's calculation of his pre-disability earnings upon which his disability benefits were based. The court agreed with the district court that the applicable standard of review was abuse of discretion. The district court also correctly held that Unum was responsible both for evaluating benefits claims and paying them, it operated under a conflict of interest, which must be weighed as a factor in determining whether there was an abuse of discretion. However, in determining what weight ought to be given the conflict, the district court erred in three ways: First, it failed to apply the traditional rules of summary judgment to its analysis of whether and to what extent a conflict of interest impacted Unum's benefits determination. Second, it incorrectly held that certain internal memoranda between Unum's claims analyst and its in-house counsel were not discoverable. Finally, it did not take into account substantial evidence that Unum's conflict of interest infiltrated the entire decision-making process and therefore ought to be accorded significant weight. Accordingly, the court remanded for further proceedings.
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