In this short but fascinating ruling, a federal court in Florida analyzed defendant Unum Life Insurance Co.'s motion for a protective order after the plaintiff issued notices to depose Unum claims employees and one of the insurer's doctors.

The claimed basis for the protective order was Unum's contention that the depositions would not lead to relevant evidence because the court could consider only the ''administrative record.'' Unum also objected on the basis that the depositions could lead to inquiry into the thought processes of Unum's decisionmakers.

The plaintiff responded by arguing that it was unclear what standard of review applied; and that even if the standard of review was deferential, the discovery would relate to conflict of interest and the reasonableness of the insurer's decision. Fish v. Unum Life Insurance Co. of America, 2005 WL 1994426 (M.D.Fla. Aug. 19, 2005).

Relying on Rosser-Monahan v. Avon Products Inc., 227 F.R.D. 695, 698 (M.D.Fla. 2004): Lake v. Hartford Life & Accident Insurance Co., 209 F.R.D. 260, 663 (M.D.Fla. 2002); and Cerrito v. Liberty Life Insurance Co., 209 F.R.D. 663 (M.D.Fla. 2002), the court noted that discovery has been permitted even under a deferential standard of review in order to evaluate:

''1. The exact nature of the information considered by the fiduciary making the decision;

''2. Whether the fiduciary was competent to evaluate the information in the administrative record;

''3. How the fiduciary reached its decision;

''4. Whether given the nature of the information in the record it was incumbent upon the fiduciary to seek outside technical assistance in reaching a 'full and fair review' of the claim; and

''5. Whether a conflict of interest exists.''

Since the discovery related to those issues, the court denied the request for a protective order and found that discovery is appropriate to ''assist the court in determining whether there is a reasonable basis for Unum's decision to deny benefits.'' The court then made the following significant observation:

''Defendant equates the 11th Circuit's decree limiting the court's review to the 'facts known to the administrator' to be synonymous with the information contained in the administrative record. Although the administrative record certainly will contain 'facts' known to the administrator, it does not, by necessity, contain all of the facts known to the administrator. This information can be obtained only through reasonably limited discovery.''

The court similarly determined that the court's review of a claim under the federal Employee Retirement Income Security Act is not analogous to appellate review because:

''ERISA appeals are not ordinary administrative appeals. For example, in Social Security appeals, which involve review of the same kind of medically related administrative record as is present here, the court reviews the decision of a trained and neutral administrative law judge. In an agency proceeding, the court reviews the decision of a board or other agency tribunal that has been authorized by Congress to make such decisions after appropriate administrative proceedings. None of the neutrality or hearing-type protections in those cases is present here.''

Accordingly, the court ruled:

''Plaintiff should be permitted, within the limited scope set forth in this order, to explore whether Unum had a conflict of interest, a reasonable basis for its determination, and if other facts were known to Unum at the time it considered plaintiff's claim. As set forth by the United States Supreme Court in Motor Vehicle Manufacturers Association v. State Farm Mutual Automobile Insurance Co., 463 U.S. 29, 43 (1983), a decision is arbitrary and capricious if the decision-maker 'entirely failed to consider an important aspect of the problem [or] offered an explanation for its decision that runs counter to the evidence.' ''

This is a very succinct but important ruling. For too long, insurers have been able to persuade federal judges to mischaracterizing ERISA cases as ''review'' proceedings. An example is the 7th Circuit's ruling in Perlman v. Swiss Bank Corp., 195 F.3d 975, 981-82 (7th Cir. 1999), where the court ruled:

''It follows from the conclusion that review of Unum's decision is deferential that the district court erred in permitting discovery into Unum's decision-making. There should not have been any inquiry into the thought processes of Unum's staff, the training of those who considered Perlman's claim, and in general who said what to whom within Unum — all of which Perlman was allowed to explore at length by depositions and interrogatories, and on some of which the district judge relied. Deferential review of an administrative decision means review on the administrative record.''

However, as 7th Circuit Judge Richard A. Posner pointed out the following year in Herzberger v. Standard Insurance Co., 205 F.3d 327, 332 (7th Cir. 2000), ERISA claims differ markedly from Social Security cases:

''The Social Security Administration is a public agency that denies benefits only after giving the applicant an opportunity for a full adjudicative hearing before a judicial officer, the administrative law judge. The procedural safeguards thus accorded, designed to assure a full and fair hearing, are missing from determinations by plan administrators.''

Thus, the district court in Fish recognized the error inherent in applying an administrative law paradigm to ERISA claims. Even more important, though, the judge pointed out the fallacy inherent in denying discovery — the plaintiff cannot demonstrate the reasonableness of the insurer's decision without being able to take discovery. We applaud the court's interjection of common sense into the resolution of this dispute.