McDonnell v First Unum

The casenote of the month is from the Disability E-News Alert! a monthly newsletter describing new disability insurance developments. For subscription information, e-mail Mark DeBofsky or visit www.disabilityenewsalert.com .

McDonnell v. First Unum Life Ins.Co., 2011 U.S.Dist.LEXIS 127290 (S.D.N.Y. November 3, 2011)(Issue: Discovery).

The plaintiff, a former managing director at Morgan Stanley, alleged disability due to Lyme disease; however, Unum disputed both the diagnosis and the disability. However, after McDonnell appealed the decision, Unum agreed to pay benefits after finding her disabled on account of a mental disorder. Since benefits were limited to a maximum of 24 months for mental disorders, Unum refused to pay additional benefits and plaintiff filed suit. This ruling dealt with the plaintiff's motion to compel Unum to produce two of its employees for depositions, to provide performance evaluations and bonus/compensation information as to those employees, and to produce claims determination statistics under the plan. The court granted the motion, finding that "good cause" would permit the admission of evidence beyond the claim record and that discovery is allowed so long as the plaintiff demonstrate "a reasonable chance that the requested discovery will satisfy the good cause requirement." *7 (citing Anderson v. Sotheby's Inc. Severance Plan, No. 04 Civ 8180, 2005 WL 6567123, *7 (S.D.N.Y. May 15, 2005) and Trussel v. Cigna Life Ins. Co. of NY, 552 F. Supp. 2d 387, 390-91 (S.D.N.Y. 2008)).

The court accepted the plaintiff's argument that Unum's finding of a "somatization disorder" was contrary to accepted medical criteria that disallow the use of such a diagnosis where an underlying physical condition accounts for the patient's symptoms. The plaintiff thus argued that the only explanation for Unum's finding, since there was abundant evidence of a physical disorder, was that the insurer was acting pursuant to its self-interested bias. The court noted Unum's past "checkered" history of "abusive procedures" where denials were based on "financial goals." The court thus permitted depositions of two of Unum's claim adjusters, but limited to "ascertaining facts relating to the issue of whether the bases for their determinations were affected by a conflict of interest, as this information is unlikely to be found in the administrative record." The court also found performance evaluations and bonus/compensation information was relevant "to investigate a potential conflict of interest." Finally, the court permitted discovery of claims determination statistics "as they relate to LTD benefit terminations and denials and potentially show a variance once UNUM no longer could expect additional premium payments from Morgan Stanley to offset its awards of benefit payments."