Tennessee Disability and Life Insurance Blog
In an ERISA disability case, a claimant who challenges a denial of long-term disability benefits by filing a court action is generally not able to present evidence to the court that is not in the administrative record. The administrative record is legalese for all of the medical records, documents and other information obtained by and submitted to the plan administrator during the initial stages of the claim and through the appeal process.
For example, if a claimant in an ERISA long-term disability case has an important affidavit from her supervisor showing that her disability prevented her from performing her job, she will need to submit that affidavit to the plan administrator while her claim is being reviewed and before the final decision on appeal is made by the plan administrator. If she fails to submit the affidavit before the appeal process is concluded, a court likely will not consider her affidavit, no matter how compelling. Rather, the court will only evaluate the materials that the plan administrator reviewed in determining whether the denial of benefits was proper. (This is why it is so crucial to ensure that the administrative record is complete).
Because courts are generally unwilling to consider any evidence which is not in the administrative record, plaintiffs are generally not entitled to discovery from the insurance company.
Some courts in the Sixth Circuit, however, have carved out an exception to the above discovery rule. They allow a claimant to seek discovery into a plan administrator’s alleged bias. This exception can be traced, in part, to the United States Supreme Court’s decision in Metropolitan Life Ins. Co. v. Glenn (2008). In that case, the Court recognized the obvious conflict plan administrators have because, if they determine disability benefits are owed, they must pay them.
The Glenn decision merely focused on the plan administrator’s potential bias. It did not address any related discovery issues. Nevertheless, in the wake of Glenn, several courts in the Sixth Circuit have concluded that discovery beyond the administrative record is allowed to help determine whether a plan administrator’s conflict of interest or bias affected its decision. (In Thornton v. W. & S. Life Ins. Co. Flexible Benefits Plan (W.D. Ky. Jan. 28, 2010), the district court listed several of these cases.)
What is unsettled law in the Sixth Circuit is whether the claimant has to make an initial showing of a conflict of interest, or whether a mere allegation of a conflict of interest is enough to support discovery into the conflict. Here, there is no appellate authority and the district courts are split. In Kinsler v. Lincoln Nat. Life Ins. Co., (M.D. Tenn. 2009), Bird v. GTX, Inc. (W.D. Tenn. 2009) and Mullins v. Prudential Ins. Co. of Am. (W.D. Ky. 2010), for example, the district courts held that the claimants did not need to make an initial threshold showing of bias. All they had to do was to allege the existence of this type of conflict of interest. In Bird, the court allowed discovery into the following areas:
- Incentive, bonus or reward programs or systems, formal or informal, for any employee(s) involved in any meaningful way in reviewing disability claims.
- Contractual and financial connections between the plan administrator and the reviewers utilized in plaintiff’s claim.
- Statistical data regarding the number of claims files sent to the reviewers and the number of denials which resulted.
- Number of times the reviewers found claimants able to work in at least a sedentary occupation or found that claimants were not disabled.
- Documentation of administrative processes designed only to check the accuracy of grants of claims.
Not all Sixth Circuit district courts have allowed additional discovery like the above courts did, however. In Kennard v. Means Indus., (E.D. Mich. 2012), the district court expressly rejected the holdings set out in Kinsler line of cases and held that general allegations of procedural defects, without any factual support, did not permit discovery in ERISA benefits litigation. This appears to be the minority rule, however. An informal survey of the relevant case law indicates that most Sixth Circuit district courts that have considered the issue take the Kinsler, Bird and Mullins approach and allow for discovery without any initial threshold showing of bias. As the Kinsler court noted, without sufficient discovery, plaintiffs in ERISA disability cases will be “handcuffed” in their ability to explore adequately what may be a critical issue to the just outcome of the action.