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Santos v. Quebecor World Long Term Disability Plan

May 13, 2009

GUADALUPE SANTOS, PLAINTIFF,
v.
QUEBECOR WORLD LONG TERM DISABILITY PLAN, DEFENDANT.



The opinion of the court was delivered by: Anthony W. Ishii, Chief United States District Judge

ORDER ON DEFENDANT'S MOTION FOR PARTIAL RECONSIDERATION OF MAGISTRATE JUDGE'S DISCOVERY RULINGS

This is an Employee Retirement Insurance Security Act ("ERISA"), 29 U.S.C. § 1001 et. seq., case brought by Plaintiff Guadalupe Santos ("Santos") against Defendant Quebecor World Long Term Disability Plan ("Quebecor"). Santos was employed by Quebecor World and was insured under a long term disability plan ("the Plan"). The Plan was insured and administered by Hartford Insurance Company ("Hartford"). See Court's Docket Doc. No. 20 at p.2. The Plan also gives Hartford discretion to interpret Plan terms and determine benefit eligibility. See id.

Santos filed a motion for discovery and sought to conduct a Rule 30(b)(6) deposition of Hartford, and perhaps RRS and MES (two claims review services utilized by Hartford). The proposed Rule 30(b)(6) deposition notice is divided into several areas of inquiry, with each area having several questions and subquestions. The deposition notice*fn1 also requested that various documents be produced. On January 16, 2009, the Magistrate Judge issued an order that granted in part and denied in part Santos's motion. See Docket Doc. No. 32. On January 26, 2009, Quebecor filed a request for partial reconsideration of eight of the Magistrate Judge's rulings. See Docket Doc. No. 34. For the reasons that follow, the Court will grant in part and deny in part Quebecor's request for reconsideration.

LEGAL STANDARDS

Review of a Magistrate Judge's Ruling

A district court may refer pretrial issues to a magistrate judge under 28 U.S.C. § 636 (b)(1). See Bhan v.NME Hosp., Inc., 929 F.2d 1404, 1414 (9th Cir. 1991). If a party objects to a non-dispositive pretrial ruling by a magistrate judge, the district court will review or reconsider the ruling under the "clearly erroneous or contrary to law" standard. Fed. R. Civ. Pro. 72(a); Osband v. Woodford, 290 F.3d 1036, 1043 (9th Cir. 2002); Grimes v. City of San Francisco, 951 F.2d 236, 240-41 (9th Cir. 1991). A magistrate judge's factual findings are "clearly erroneous" when the district court is left with the definite and firm conviction that a mistake has been committed. Security Farms v. International Bhd. of Teamsters, 124 F.3d 999, 1014 (9th Cir. 1997); Green v. Baca, 219 F.R.D. 485, 489 (C.D. Cal. 2003). However, the district court "may not simply substitute its judgment for that of the deciding court." Grimes, 951 F.2d at 241. The "contrary to law" standard allows independent, plenary review of purely legal determinations by the magistrate judge. See Osband, 290 F.3d at 1043; Haines v. Liggett Group, Inc., 975 F.2d 81, 91 (3rd Cir.1992); Green, 219 F.R.D. at 489. "An order is contrary to law when it fails to apply or misapplies relevant statutes, case law, or rules of procedure." Knutson v. Blue Cross & Blue Shield of Minn., 254 F.R.D. 553, 556 (D. Minn. 2008); Rathgaber v. Town of Oyster Bay, 492 F.Supp.2d 130, 137 (E.D. N.Y.2007); Surles v. Air France, 210 F.Supp.2d 501, 502 (S.D. N.Y. 2001); see Adolph Coors Co. v. Wallace, 570 F.Supp. 202, 205 (N.D. Cal. 1983). A magistrate judge's pre-trial discovery orders are generally considered non-dispositive orders. See Osband, 290 F.3d at 1043; Thomas E. Hoar, Inc. v. Sara Lee Corp., 900 F.2d 522, 525 (2d Cir. 1990); Rockwell Intern., Inc. v. Pos-A-Traction Industries, Inc., 712 F.2d 1324, 1325 (9th Cir. 1983).

Discovery Under ERISA

In reviewing the benefits decision of an ERISA plan administrator under the abuse of discretion standard, a court must weigh any conflict of interest under which the plan administrator labors. Nolan v. Heald College, 551 F.3d 1148, 1153 (9th Cir. 2009); Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955, 970 (9th Cir. 2006) (en banc). As part of the weighing process, the district court may consider evidence outside of the administrative record to decide the conflict's "nature, extent, and effect" on the plan administrator's decision making process. Nolan, 551 F.3d at 1153; Abatie, 458 F.3d at 970. The nature, extent, and effect of the conflict on the decision making process "may be unmasked through discovery." Wilcox v. Wells Fargo & Co. Long Term Disability Plan, 287 Fed.Appx. 602, 604 (9th Cir. 2008). However, "[w]hether to permit discovery into the nature, extent, and effect of the Plan's structural conflict of interest is also a matter within the district court's discretion." Burke v. Pitney Bowes, Inc. Long Term Disability Plan, 544 F.3d 1016, 1028 n.15 (9th Cir. 2008). In other words, the Ninth Circuit "does not mandate such discovery in all circumstances, but leaves the matter to the district court's discretion." Baldoni v. Unum Provident, 2009 U.S. App.LEXIS 4897, *2 (9th Cir. Mar. 11, 2009). Any discovery that is allowed should be narrowly tailored to illuminate the "nature, extent, and effect" of a conflict of interest on a decision making process and should not be so broad as to constitute a fishing expedition. See Mazur v. Pacific Telesis Group Comprehensive Disability Bens. Plan, 2008 U.S. Dist LEXIS 28208, *6 (N.D. Cal. Feb. 28, 2008); Toven v. Metropolitan Life. Ins. Co., 517 F.Supp.2d 1174, 1176 (C.D. Cal. 2007); Groom v. Standard Ins. Co., 492 F.Supp.2d 1202, 1205 (C.D. Cal. 2007); see also Bartholomew v. Unum Life Ins. Co., 579 F.Supp.2d 1339, 1342 (W.D. Wash. 2008); cf. Schoettler v. Wachovia Corp./Wachovia Corp. Long Term Disability Plan, 2008 U.S. Dist. LEXIS 47096, *10-*11 (E.D. Cal. May 23, 2008).

CHALLENGED RULINGS

1. Documents Relating To Procedures Used In Determining The Claim ("Ruling One")

The Ruling

The Magistrate Judge ruled: Plaintiff is entitled to the production of documents relating to the procedures used in determining her claim, including the criteria used in making decisions.

However, to the extent this area of inquiry is directed at the underlying rationale for deviation, if any, from the claims manual and not the structural conflict of interest, it is not appropriate for discovery.

Defendant's Argument Quebecor argues that the order is vague and not narrowly tailored. The area of inquiry is entirely directed at the underlying rationale for any deviation from the decision making criteria. Deviation from criteria might pertain to the reasonableness of the decision, but it would not establish that the deviation was because of a conflict of interest. This area is irrelevant to the issue of conflict.

Plaintiff's Response

Santos argues that the ruling is neither vague nor overly broad. The ruling requires Hartford to produce certain categories of documents (identified in the first six questions of Attachment B of the deposition notice) regarding its standards and procedures in making benefit determinations. The ruling prohibits Santos from asking Hartford to explain the underlying rationale for the decision.

Resolution

Ruling One and the first six questions of Attachment B are overly broad and not sufficiently tailored. Santos is attempting to obtain the entire claims manual and to determine Hartford's compliance with the various requirements of 29 C.F.R. 2560.503-1.

The Court may consider procedural irregularities in reviewing the claims decision, and, if the irregularities are sufficiently severe or flagrant, evidence outside the administrative record may be considered or the standard of review may be altered. See Abatie, 458 F.3d at 972-73. Such procedural irregularities should be apparent based on the administrative record and the express dealings with Santos (for example failing to perform an adequate investigation or relying on a new ground of denial in the final decision letter). Santos has listed various provisions of the C.F.R. that she argues appear to have been violated. However, for most of the identified sections, if there was a violation, it should be apparent from the record. For those that may not be apparent, without a more concrete indication that the C.F.R. provisions have been violated, the request is a fishing expedition.*fn2 The Court will be able to examine any procedural irregularities from the administrative record, and discovery in this area is not appropriate.

With respect to the claims manual or the other documents utilized in reviewing the claim, such documents must be able to shed light on the nature, extent, and effect of Hartford's inherent conflict of interest. The documents that would be relevant to such an inquiry are documents that emphasize cost savings in reviewing a claim, encourages denials, requires denials as a matter of course, emphasizes that denying claims saves the administrator money, or explain how to view certain symptoms, conditions, or evidence. The Court is aware of no automatic right to the plan administrator's claims manual in an ERISA case. Providing all internal rules or the entire claims manual or all protocols is simply too broad.

Ruling One and the corresponding deposition notice is too broad and not sufficiently tailored to shed light on Hartford's structural conflict of interest. Reconsideration is granted in that discovery into violations of 29 C.F.R. 2560.503-1 will not be permitted and Hartford need not produce "all documents" relating to the review and determination of Santos's claim or its claims manual. Instead, Santos may seek to discover documents by Hartford that were utilized or that had application to Santos's claim and that emphasize cost savings in reviewing a claim, encourages denials, requires denials as a matter of course, emphasizes that denying claims saves the administrator money, or explains how to view certain symptoms, conditions, or evidence.

2. Information Regarding Claims Granting History ("Ruling Two")

The Ruling The Magistrate Judge ruled: The fourth area of inquiry . . . seeks statistics regarding long-term disability claims. Plaintiff is entitled to information regarding the claims granting history. Defendant's Argument Quebecor argues that this portion of the order is vague and overly broad. It does not specify what statistics should be included and does not limit the area of inquiry in any way, such as in time, geography, or type of claim. Further, there is no evidence that statistics or summaries exist or are readily available. Statistical data on claims granting does not establish that the claim in this case was terminated due to a conflict of interest. There is no explanation how this ruling is narrowly tailored to show the effect of the conflict.

Plaintiff's Response

Santos argues that the ruling is neither vague nor overly broad. The ruling directly relates to Area of Inquiry IV of the deposition notice and has caused ...


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