Anderson v. Sun Life Assur.Co. of Canada

Anderson v. Sun Life Assur.Co. of Canada, 2012 U.S.Dist.LEXIS 158689 (D.Ariz. November 5, 2012)(Issue: Discovery).). The main question addressed in this ruling is the scope of allowable discovery permitted under a claim governed by the de novo standard of review. The plaintiff had cited to Kappos v. Hyatt, 132 S.Ct. 1690 (2012) and Krolnik v. Prudential Ins.Co., 570 F.3d 841 (7th Cir. 2009) as support for the proposition that since ERISA actions are "civil actions," they should be governed by the same discovery rules and scope of discovery as in any other civil action. The court rejected Kappos due to its relation to patent law and because Ninth Circuit rulings had established a scope of discovery specific to ERISA. However, the court acknowledged that while most ERISA cases limit the scope of review to the "administrative record," in cases governed by the de novo standard, the court is not so limited where "additional evidence is necessary to conduct an adequate review of the benefit decision." (citations omitted). Under the de novo standard, the court "evaluates whether the plan administrator correctly or incorrectly denied benefits. Opeta v. Northwest Airlines Pension Plan for Contract Employees, 484 F.3d 1211, 1217 (9th Cir. 2007)." Under that ruling, additional evidence may be necessary under the following circumstances:

Claims that require consideration of complex medical questions or issues regarding the creditability of medical experts; the availability of very limited administrative review procedures with little or no evidentiary record; the necessity of evidence regarding interpretation of the terms of the plan rather than specific historical facts; instances where the payor and the administrator are the same entity and the court is concerned about impartiality; claims which would have been insurance contract claims prior to ERISA; and circumstances in which there is additional evidence that the claimant could not have presented in the administrative record.

(citing Quesinberry v. Life Ins.Co. of N.America, 987 F.2d 1017 (4th Cir. 1992)). Applying that ruling to the facts of this case, the plaintiff had sought and the court approved discovery into the following areas: (1) a potential bias among the medical reviewers associated with Sun Life; (2) the reasons that alleged critical information was not provided; (3) Defendants' conflict of interest and how that conflict may have affected the handling of Plaintiff's claim; and (4) Sun Life's interpretation of the continuity of coverage provision. (Doc. 30). Although the plaintiff did not allege facts in her complaint specific to those inquiries, the court nonetheless recognized an inherent bias that could encourage insurers to retain doctors who have a greater interest in maintaining their contractual relationship with insurers than in providing objective opinions. The court also found discovery was appropriate in relation to the non-production of critical information. The court further noted:

Plaintiff further alleges that Sun Life has a structural conflict of interest because it is responsible for evaluating benefit claims and paying them. (Doc. 29-1). A conflict of interest exists where the same party evaluates claims for benefits and pays benefits claims. Metropolitan Life Ins. Co. v. Glenn, 554 U.S. 105, 112, 128 S.Ct. 2343, 2348, 171 L. Ed. 2d 299 (2008). An ERISA plaintiff may be permitted to supplement the administrative record with evidence of the Defendant's conflict of interest. Welch v. Metropolitan Life Ins. Co., 480 F.3d 942, 949-950 (9th Cir. 2007) (citing Tremain v. Bell Industries, Inc., 196 F.3d 970, 976-977 (9th Cir. 1999)). As such, discovery into Defendant Sun Life's alleged conflict of interest and how that conflict may have affected the handling of Plaintiff's claim is appropriate.

Finally, the court ruled that discovery into the interpretation of plan terms was also appropriate.

Discussion: This is a significant ruling. Although the court acknowledged its role is to determine whether the insurer correctly or incorrectly denied benefits, the approval of discovery (although the court was clear to point out that admissibility is yet to be determined) implies that the process under which the insurer made its determination remains a relevant area of inquiry. Other cases that have also found it appropriate to take some discovery under the de novo standard into areas involving potential bias include Shepherd v. Life Ins.Co. of North Amer., 2012 U.S.Dist.LEXIS 13453 (N.D.Ill. February 3, 2012)(February 2012), Wise v. Life Ins.Co. of North America, 2012 U.S.Dist.LEXIS 50231 (C.D.Ill. April 10, 2012)(April 2012), Marantz v. Permanent Medical Group Inc. Long Term Disability Plan, 2006 U.S.Dist.LEXIS 87258 (N.D.Ill. 11/29/2006); Wojno v. CIGNA Group Insur., 2011 U.S.Dis.LEXIS 86339 (C.D.Cal. July 21, 2011)(August 2011); Bailey v. American Heritage Life Ins.Co., 2011 U.S.Dist.LEXIS 127211 (E.D.Mo. November 3, 2011)(November 2011); and Sallavanti v. Unum Life Ins.Co. of America, 2012 U.S.Dist.LEXIS 105409 (M.D.Pa. July 26, 2012)(August 2012), where the court permitted discovery of other reports authored by Unum's consultants in an effort to examine potential bias.