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WAGGENER v. UNUM LIFE INSURANCE COMPANY OF AMERICA

November 6, 2002

SUSAN WAGGENER, PLAINTIFF
V.
UNUM LIFE INSURANCE COMPANY OF AMERICA, DEFENDANTS



The opinion of the court was delivered by: Anthony J. Battaglia, Magistrate Judge

Order Granting in Part and Denying in Part Defendant's Motion for Protective Order [Doc. No. 10]

Defendant Unum Life Insurance Company of America moves the Court for a Protective Order precluding Plaintiff Susan Waggener from conducting any discovery outside the administrative record in this ERISA case. Waggener has filed an opposition. Unum Life has filed a reply. This motion is appropriate for submission on the papers and without oral argument pursuant to Local Rule 7.1(d)(1). For the reasons set forth herein, Unum's motion is GRANTED IN PART AND DENIED IN PART.

Background

Waggener was a partner in the real estate department of the Los Angeles law firm of Gibson, Dunn & Crutcher until October of 1989. In November 1989, Waggener was diagnosed with chronic fatigue syndrome. Based upon that diagnosis, Waggener applied for and began receiving disability benefits under the firm's group disability benefits policy with Unum Life.

Over the course of the next ten years, Waggener saw more than a dozen different doctors complaining primarily of debilitating fatigue and cognitive impairment. Unum Life continued to pay benefits to Waggener. The administrative record includes records from many of these physicians including a cardiologist, rheumatologist, psychologist, chiropractor, endocrinologist, internist, and sleep disorder specialist. The administrative record also contains information from "independent medical examiners" and surveillance videotapes of Waggener.

On October 25, 2000, Unum Life notified Waggener that it had reevaluated her claim and was discontinuing benefits. Unum Life claims that it discontinued benefits because independent examinations have failed to substantiate Waggener's claims of impairment, and because her self-reported limitations lack credibility in light of surveillance it has conducted. After Unum Life denied Waggener's administrative appeal of its benefits termination decision, Waggener filed the current case.

Both parties acknowledge that the District Judge will review Unum Life's decision de novo. The parties dispute, however, the extent to which the court may consider evidence outside the administrative record in conducting its de novo review. Waggener contends that the court must, in order to conduct a full and fair review, consider evidence outside the administrative record. In particular, Waggener contends that the court should consider that Unum Life's decision was biased and inherently wrought with conflict because Unum is both the plan administrator and the insurer.

To further its argument in this regard, Waggener has propounded discovery seeking to expand upon the conflict of interest posed as a result of Unum Life's position as both administrator and insurer. Through interrogatories, Waggener seeks to discover, among other things, (1) the identity of each person "who participated in any way in the evaluation or handling of Plaintiff's claims and/or appeal and who is not a current employee," (2) for each of those persons who was an independent contractor "the number of times [Unum has] employed that person to participate in evaluating or handling a claim . . . [and] the total amount of compensation paid on each occasion," (3) the identity of "every attorney who provided claims advice" regarding Waggener, (4) the identity of "every attorney who provided legal advice" regarding Waggener, (5) the identity and position of "every person who participated in the decision to terminate Susan Waggener's benefits," (6) the similar identification of persons involved in evaluating Waggener's appeal, (7) "all other lawsuits against UNUM from 1998 to the present where the parties disputed whether or not the insured was disabled on account of chronic fatigue, CFS, CFIDS, or cognitive dysfunction," and (8) "all other lawsuits against UNUM from 1998 to the present where the plaintiff contended you improperly made use of surveillance or an independent medical examination." Declaration of Kira Schlesinger, Exhibit B.

Waggener also propounded document requests. Waggener sought the following types of documents: (1) "[a]ll documents that reflect, refer or relate to surveillance of plaintiff," (2) "[a]ny other documents that refer or relate to Plaintiff not contained in your administrative file, including any email," (3) "[a]ll documents that reflect claim guidelines" from 1992 to the present that refer or relate in any way to topics such as CFS, cognitive impairment, mental or psychological illness, surveillance, self-reported illness, the occupation of "attorney", social security disability, investigation of job duties, secondary gain, compromise offers, and independent medical examinations, (4) documents from January 1998 to the present reflecting "general selection of physicians for Independent Medical Examinations," (5) documents from January 1977 regarding the definition of "disability" in the Gibson, Dunn insurance policy, (6) any communications with Gibson, Dunn, from 1977 to the present, regarding many of the topics listed in (3) above, (7) communications with any insurance regulatory authority from January 1992 to the present on the same subjects, (8) documents from January 1992 to the present that "refer or relate to" twenty different physicians who examined Waggener, (9) documents from January 1992 to the present regarding plans to toughen claims practices, (10) documents from January 1992 to the present reflecting discussions to or from shareholders or prospective acquisition companies regarding the topics listed at (3) above, (11) documents from 1998 to the present of similar communications with claims departments serving insureds of the former Provident or Paul Revere companies, (12) documents from 1998 to the present reflecting complaints or criticisms made by any current or former employee regarding unfair claims practices, use of surveillance, self-reported illness, CFS, use of compromise offers, or independent medical examinations, and (13) similar documents relating to complaints made by any court concerning Unum's claims practices, use of surveillance, self-reported illness, CFS, use of compromise offers, independent medical examinations, or definition of the occupation of attorney. Schlesinger Decl., Exhibit C.

Unum Life did not respond to any of this discovery, but instead brought the current motion for protective order to bar any discovery in this case.

DISCUSSION

Although Unum focuses almost exclusively upon whether the information sought by Waggener is admissible at the time of summary judgment or trial in this matter, the question posed by the current motion is not the admissibility of the information sought. Instead, this Court must determine whether the information sought in discovery "is relevant to the claim or defense of any party." Fed.R.Civ.P. 26(b)(1). Waggener argues that the discovery she propounded is relevant to demonstrate that Unum Life was not acting as a neutral administrator, but instead was acting under a conflict of interest. Waggener argues that the conflict of interest resulting from Unum's position as both administrator and insurer implicates the adequacy of the administrative record in this case. Waggener also argues that the information it seeks is relevant to the credibility and qualifications of Unum's medical examiners.

A plan administrator's alleged conflict of interest is relevant to the district court's review of an ERISA claim in two ways. First, it is well established that evidence of an administrator's conflict of interest is relevant to the determination of what standard of review the district court should apply when evaluating the propriety of the benefits denial decision. Regula v. Delta Family-Care Disability survivorship Plan, 266 F.3d 1130, 1145 (9th Cir. 2001). Ordinarily, the district court reviews de novo the decision of a plan administrator to deny benefits "unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). Where the plan confers discretion upon the administrator, the district court will apply an abuse of discretion standard unless the administrator is "operating under a conflict of interest." Regula, 266 F.3d at 1145. Where the plan beneficiary plaintiff provides "material, probative evidence of a conflict," such evidence creates a rebuttable presumption that the administrator's decision denying benefits "was in fact a dereliction of its fiduciary responsibilities." Id. (citing Lang v. Long-Term Disability Plan, 125 F.3d 794, 798 (9th Cir. 1997)). If the plan fails to produce evidence to show that the conflict of interest did not, in fact, affect the decision to terminate benefits, then the district court will review the decision de novo. Id. (citing Tremain v. Bell Industries, Inc., 196 F.3d 970, 976 (9th Cir. 1999)). In this case, however, both parties agree that the de novo standard of review applies. Thus, the evidence Waggener seeks is not relevant to the standard of review issue.

Nonetheless, an administrator's conflict of interest is also relevant to the question of what, if any, evidence the district court will consider outside of the administrative record. Where the district court is reviewing a plan administrator's decision for abuse of discretion, such review is strictly limited to the evidence in the record. Taft v. Equitable Life Assurance Society, 9 F.3d 1469, 1472 (9th Cir. 1993). In addition, in most cases where the district court is reviewing the plan administrator's decision de novo, "additional evidence is not necessary for adequate review of the benefits decision, [and] the district court should only look at the evidence that was before the plan administrator . . . at the time of the determination." Mongeluzo v. Baxter Travenol Long Term Disability Benefit Plan, 46 F.3d 938, 944 (9th Cir. 1995) (quoting Quesinberry v. Life Ins. Co. of North America, 987 F.2d 1017, 1025 (4th Cir. 1993)). In order to enable the district court to come to a fully informed and independent judgment regarding the question of whether the plaintiff is entitled to benefits, however, the Ninth Circuit has held that a district court has the discretion to consider evidence outside the record when conducting a de novo review of a benefits decision. Mongeluzo, 46 F.3d at 943-44. The district ...


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