Palmiotti v. Metropolitan Life Insur.Co.

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Palmiotti v. Metropolitan Life Insur.Co., 2005 U.S.Dist.LEXIS 3626 (S.D.N.Y. 3/9/2005)(Issue: Discovery). In this case, the plaintiff requested a copy of MetLife's Claim Management Guidelines which was turned over on an "attorney's eyes only" basis subject to a confidentiality agreement. When the parties could not reach an agreement, MetLife moved for a protective order which the court denied. Although the court found the MetLife claim manual could constitute confidential business information, and MetLife made efforts to keep the material secret, the court rejected defendant's request for a protective order based on the ERISA claim regulations which require production on request of "all documents, records and other information relevant to the claimant's claim for benefits." 29 C.F.R. §2560.503-1(h)(2)(iii). The regulations go further, as the court explained, in defining

as relevant any document that "demonstrates compliance with the administrative process and safeguards required pursuant to paragraph (b)(5) of this section in making the benefit determination." 29 C.F.R. § 2560.503-1(m)(8)(iii). And paragraph (b)(5) requires that "the claims procedures contain administrative processes and safeguards designed to ensure and to verify that benefit claim determinations are made in accordance with governing plan documents and that, where appropriate, the plan provisions have been applied consistently with respect to similarly situated claimants." 29 C.F.R. § 2560.503-1(b)(5). In short, the adequacy of claims processing procedures is relevant to whether the denial of a claim is arbitrary and capricious, and, because the procedures are relevant, claimants are entitled to have access to them. Under these circumstances, the Claims Manual is required to be made widely available outside MetLife; the company's efforts to maintain secrecy are necessarily futile; and the claim of competitive harm is negated because each of MetLife's competitors is subject to the same regulations. *4-*5.

Although the court considered several earlier cases, the court distinguished those rulings since they did not consider the effect of the ERISA claim regulations which the court deemed binding.

Discussion: This decision, coupled with the First Circuit's ruling in Glista v. Unum Life Insur.Co. of America, 378 F.3d 113 (1st Cir. 8/11/2004)(August 2004), which found the claim manual significant in establishing the insurer's interpretation of its pre-existing condition clause, and Egert v. Connecticut. General Life Insurance.Company, 900 F.2d 1032 (7th Cir. 1990), which relied on internal documentation to show whether infertility was considered an illness under a health benefit policy, will virtually assure production of such documentation in future cases.

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