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Discovery in ERISA Cases?
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DISCOVERY IN ERISA CASES? HOW FLORIDA FEDERAL COURTS ARE CHANGING THE ERISA LANDSCAPE ONE CASE AT A TIME

Submitted by the Insurance PAC

By: Emilia A. Quesada, Esq., Sanchez-Medina, Gonzalez, Quesada, et al. (SMGQ Law) in Miami, Florida

Review of an administrator’s benefit determination under the Employment Retirement Income Security Act (“ERISA”) when the arbitrary and capricious standard of review applies is ordinarily limited to the administrative record, however, a recent trend in Florida district courts is allowing limited discovery in these cases.  This article sets out the standard of review in ERISA benefits determination cases and analyzes the decisions of Florida district courts that permit discovery. 

I. STANDARD OF REVIEW

In reviewing an ERISA benefits determination, the Eleventh Circuit has established a multi-step framework to guide courts in reviewing an ERISA plan administrator’s benefits decisions.[1]  The first five steps have remained unchanged since the court established the framework in Williams.[2]   But the sixth step, listed below, reflects a more recent change based on the Glenn decision.[3] 

 

In Blankenship, the Eleventh Circuit cited to its opinion in Doyle v. Liberty Life Assurance Co. of Boston to explain how it modified the sixth step’s ‘heightened’ review and shifted the burden of proof regarding the influence of a conflict of interest from the administrator to the prospective beneficiary.[4] 

 

For a court reviewing a plan administrator’s benefits decision, the present Williams test requires:

 

(1) Apply the de novo standard to determine whether the administrator’s benefits-denial decision is “wrong” (i.e., the court disagrees with the administrator’s decision); if it is not, then end the inquiry and affirm the decision.

(2) If the administrator’s decision is, in fact, “de novo wrong,” then determine whether the administrator was vested with discretion in reviewing claims; if not, end judicial inquiry and reverse the decision.

 

(3) If the administrator’s decision is “de novo wrong” and the administrator was vested with discretion in reviewing claims, then determine whether “reasonable” grounds supported the decision (hence, review the administrator’s decision under the more deferential arbitrary and capricious standard).

 

(4) If no reasonable grounds exist, then end the inquiry and reverse the administrator’s decision; if reasonable grounds do exist, then determine if the administrator operated under a conflict of interest.

 

(5) If there is no conflict, then end the inquiry and affirm the decision.

 

(6) If there is a conflict, the conflict should merely be a factor for the court to take into account when determining whether an administrator’s decision was arbitrary and capricious.[5]

 

II. A COURT’S REVIEW OF BENEFITS DETERMINATIONS

A court which reviews a benefits determination under the arbitrary and capricious standard of review is limited to the information the administrator had when the administrator made its decision.

While the Eleventh Circuit has not definitively ruled on the scope of discovery permitted when a court reviews a benefits determination, it has affirmed a lower court’s decision to refuse to permit discovery in the ERISA context.[6]  In Eldridge, the Eleventh Circuit held that discovery was unnecessary because the record was restricted to the evidence that was before the administrators.[7]  This is in line with a string of Eleventh Circuit decisions that hold, in part, that a court’s review of an administrator’s decision is limited to the records and facts before the administrator when the decision was made.  In Townsend v. Delta Family-Care Disability & Survivorship Plan, the Eleventh Circuit turned to the question of what records the court may consider in reviewing the committee’s determination.  The Townsend court determined that a district court may only consider the documents that were before the administrator, and held that the district court properly sustained the defendant’s objection to the plaintiff’s submission of documents outside the administrative record.[8]  Similarly, in Glazer v. Reliance Standard Life Ins. Co. and Richards v. Hartford Life & Accident Ins. Co., the court held that, in ERISA cases, review is confined to the evidence that was before the administrator when the claim for benefits was denied.[9]  This has been the standard since the Eleventh Circuit held that “when conducting a review of an ERISA benefits denial under an arbitrary and capricious standard … the function of the court is to determine whether there was a reasonable basis for the decision, based upon the facts as known to the administrator at the time the decision was made.”[10]  

III. FLORIDA DISTRICT COURTS’ EXPANSION OF DISCOVERY

Nonetheless, despite the Eleventh Circuit’s rulings, a trend has developed in the federal district courts of Florida wherein the district courts are allowing discovery in ERISA cases on a limited basis.  For example, the Middle District of Florida has held that discovery in an ERISA disability case is permissible on a limited basis, with focus on the claim administrator’s decision making and the appropriate standard of review.[11]  This expanded view of discovery was elaborated upon in Cerrito v. Liberty Life Assur. Co. of Boston, where the Middle District of Florida found that “courts have generally permitted discovery, even in instances in which an ‘arbitrary and capricious’ standard applies, in order to assist the court in evaluating certain matters.[12]

 

Defendants in ERISA cases have attempted to equate the Eleventh 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.[13]  However, it is important to note that the district courts in Florida have not adopted this limited definition as the standard.[14]  Despite the recent trend by the Florida district courts in permitting discovery, such discovery is limited.  Although the Florida district courts have allowed limited discovery in order to determine the appropriate standard of review in ERISA cases and in the five areas identified in Cerrito, the discovery is limited.[15]  In Barron, for instance, the Middle District of Florida limited the plaintiff’s proposed discovery, which included ten depositions in five different states, holding it was too broad.[16]        

 

IV. CONCLUSION

ERISA defendants that are facing discovery requests cloaked as ‘conflict discovery’ should argue that any discovery beyond the administrative record is not allowed pursuant to Eleventh Circuit precedent, which limits a court’s review of a benefits decision to only the documents that were before the administrator at the time the decision to approve or disprove the benefit was made.  ERISA defendants, however, must be mindful that, until the Eleventh Circuit issues a definitive ruling on the scope of discovery in ERISA cases, there is a myriad of decisions rendered by Florida federal district courts which have allowed limited discovery in certain areas of inquiry, even under the arbitrary and capricious standard of review.

Emilia A. Quesada, Esq. is a founding partner of Sanchez-Medina, Gonzalez, Quesada, et al. (SMGQ Law) in Miami, Florida, where she practices in the areas of complex commercial litigation, insurance defense including life, health, disability, and ERISA disputes, banking litigation and products liability matters. She is a certified FINRA arbitrator.

 

 

 

 


 

 

 

 


[1] Blankenship v. Metropolitan Life Ins. Co., 644 F.3d 1350, 1354 (11th Cir. 2011); Ray v. Sun Life & Health Ins. Co., 443 Fed. Appx. 529, 532 (11th Cir. 2011).

[2] Blankenship, 644 F.3d at 1354 (referring to Williams v. BellSouth Telecomms., Inc., 373 F.3d 1132, 1137–38 (11th Cir. 2004), overruled on other grounds by Doyle v. Liberty Life Assurance Co. of Boston, 542 F.3d 1352 (11th Cir. 2008)).

[3] Blankenship, 644 F.3d at 1354 (referring to Metro. Life Ins. Co. v. Glenn, 554 U.S. 105 (2008)). 

[4] Id. at 644 F.3d 1355. 

[5] Id. at 1355; Ray, 443 Fed. Appx. at 532.

[6] Eldridge v. Wachovia Corp. Long-Term Disability Plan, 2007 WL 117712 * 2 (11th Cir. 2007). 

[7] Id.

[8] Townsend v. Delta Family-Care Disability & Survivorship Plan, 295 Fed. Appx. 971, 976 (11th Cir. 2008).

[9] Glazer v. Reliance Standard Life Ins. Co., 524 F.3d 1241, 1246 (11th Cir. 2008); Richards v. Hartford Life & Accident Ins. Co., 153 Fed. Appx. 694, 697 n. 1 (11th Cir. 2005).

[10] Jett v. Blue Cross/Blue Shield of Ala., 890 F.2d 1137, 1139 (11th Cir. 1989); see also Ray, 443 Fed. Appx. at 533 (“review of benefits denial is limited to consideration of the material available to the administrator at the time it made its decision”).

[11] Richard v. Intl. Bus. Machs. Corp., 2012 WL 1131996 * 1 (M.D. Fla. 2012); Cerrito v. Liberty Life Assurance Co. of Boston, 209 F.R.D. 663, 664 (M.D. Fla. 2002).

[12] Cerrito, 209 F.R.D at 664; Woodward v. Reliance Stand. Life Ins. Co., 2003 WL 1798519 * 1 (N.D. Fla. 2003) (quoting Cerrito); Rosser-Monahan v. Avon Prods. Inc., 227 F.R.D. 695, 698 (M.D. Fla. 2004) (quoting Cerrito); Crume v. Metro. Life Ins. Co., 388 F. Supp. 2d 1342, 1344-45 (M.D. Fla. 2005) (quoting Cerrito); Fish v. Unum Life Ins. Co. of Am., 229 F.R.D. 699, 701 (M.D. Fla. 2005) (quoting Cerrito) Crume v. Metro Life Ins. Co., 387 F. Supp. 2d 1212, 1213 (M.D. Fla. 2005) (quoting Cerrito); Barron v. Gen. Electric, 2006 WL 905514 * 1 (M.D. Fla. 2006) (quoting Cerrito); Self v. The Prudential Ins. Co. of Am., 2010 WL 996503 * 3 n. 2 (N.D. Fla. 2010) (quoting Cerrito); Richard, 2012 WL 1131996 * 2 (quoting Cerrito); Lake v. Hartford Life & Accident Ins. Co., 218 F.R.D. 260, 261 n. 1 (M.D. Fla. 2003) (citing to Cerrito and holding “[d]iscovery  may be permitted beyond the administrative record when it is relevant to (1) examining whether an administrator fulfilled his or her fiduciary duties, (2) whether proper procedures were followed in compiling the record; (3) whether the record is complete; and (4) whether the administrator had a conflict of interest.”).

[13] Crume, 388 F. Supp. 2d at 1345; Fish, 229 F.R.D. at 701; see also Rosser-Monahan, 227 F.R.D. at 698.

[14] Rosser-Monahan, 227 F.R.D. at 698. 

[15] Barron, 2006 WL 905514 * 1. 

[16] Id. at 2. 

 

 

 

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