Long Term Disability Insurance Lawyer Blog
The Eastern District of Michigan federal court recently granted my motion for discovery in a long term disability insurance ERISA case without requiring a predicate showing.
In Back v Hartford I had submitted a limited number of questions to Hartford Insurance Company to try and investigate any potential bias on the part of Hartford and the doctors it hired to review the records. Hartford objected and refused to answer a single question. We filed a motion to compel which the Court granted with one small exception.
The Court found:
The Plaintiff in this case has shown, pursuant to Rule 26(b)(1), that the information she seeks is relevant to her claim that the Defendant’s decision to terminate her LTD benefits was procedurally deficient, and “appears reasonably calculated to lead to the discovery of admissible evidence.” Moreover, with one exception discussed below, her discovery requests are narrowly tailored to the extent that any burden or expense to the Defendant does not outweigh their likely benefit. See Rule 26(b)(2)(C).
First, Plaintiff has shown an apparent conflict of interest arising out of Defendant’s dual role as both payor of benefits and plan administrator. “The need for discovery increases where the insurance company serves as plan administrator as well as payor of benefits.” Meyers, supra, 581 F.Supp.2d at 914. See also Glenn, supra.
Secondly, the effect of this conflict is illuminated by the short shrift the Defendant gave to Plaintiff’s receipt of Social Security Disability benefits. It is true that “an ERISA plan administrator is not bound by an SSA disability determination when reviewing a claim for benefits under an ERISA plan.” Whitaker v. Hartford Life and Acc. Ins. Co., 404 F.3d 947, 949 (6th Cir. 2005); Black & Decker Disability Plan v. Nord, 538 U.S. 822, 832-33, 123 S.Ct. 1965, 155 L.Ed.2d 1034 (2003)(Unlike the rule in Social Security disability cases, treating physicians are not given deference in ERISA review). However, “[t]his is not to say . . . that the SSA determination is meaningless and should be entirely disregarded.” Calvert v. Firstar Finance, Inc., 409 F.3d 286, 294 (6th Cir. 2005). In DeLisle v. Sun Life Assur. Co. of Canada, 558 F.3d 440 (6th Cir. 2009), the Sixth Circuit set forth a three-part inquiry for assessing the effect of Social Security Disability payments:
“‘[i]f the plan administrator (1) encourages the applicant to apply for Social Security disability payments; (2) financially benefits from the applicant’s receipt of Social Security; and then (3) fails to explain why it is taking a position different from the SSA on the question of disability, the reviewing court should weigh this in favor of a finding that the decision was arbitrary and capricious.'” Id., 558 F.3d at 446 (citing Bennett v. Kemper Nat’l Servs., 514 F.3d 547, 554 (6th Cir.2008).
As to the third factor, Defendant did not adequately explain why it was taking a position contrary to the SSA’s determination that Plaintiff was disabled from all work. In fact, in their original 8-page termination letter of November 10, 2008, Defendant did not even mention the Social Security decision.
In support of her claim of conflict of interest and bias, the Plaintiff has also raised a claim of financial bias on the part of Defendant’s reviewing physicians to justify further inquiry. Exhibit A to her reply brief [Docket #21] shows, for example, that Dr. Syrjamaki is affiliated with Reliable Review Services, which proclaims a vision “to provide employers, third party administrators and disability insurers with professional case review resources focused on the disability industry.” RRS also states in its literature that it is “focused exclusively on meeting the needs of the disability industry,” and boasts of a nationwide clientele. Exhibit A also contains promotional material from another medical review company that Defendant used in this case, MCMC, which claims to perform over 50,000 independent medical reviews (i.e., file reviews) and 18,000 IMEs annually.2 MCMC states that it “provides assistance in resolving disability claims questions in a effort to manage risk, control claim costs and increase productivity.” (Emphasis added).
The medical review companies used in this case derive a tremendous financial benefit in service to the insurance industry. The degree to which those benefits lead to bias in their disability opinions is fair game for discovery.
Thus, Plaintiff has presented much more that “a mere allegation” of bias. Indeed,
even under the “predicate showing” test of Likas and Putney, Plaintiff has more than met her burden of justifying the need for discovery. As the Myers court noted, “discovery into alleged procedural defects must be strictly and carefully circumscribed to the needs of the particular case.” 581 F.Supp.2d at 914. Further, Rule 26(b)(2)(C) directs the court to weigh the potential benefit of discovery against its cost and burden to the producing party. With these precepts in mind, I find that with the exception of Interrogatory No. 2, Plaintiff’s discovery requests are sufficiently and narrowly focused on the relevant issues of bias and conflict of interest.