Opinion
Civil Action No. SA-04-CA-0841-XR.
June 23, 2006
ORDER
On this date, the Court considered Defendant CIGNA Life Insurance Company of New York's ("CLINCY") motion to strike jury demand (docket no. 40), motion to strike Plaintiff Michael A. Burgess' designation of expert and fact witnesses (docket no. 41), motion for leave to late-designate potential witnesses (docket no. 44), motion to limit discovery (docket no. 47), and Plaintiff's motion for leave to file first amended designation of experts and witnesses (docket no. 43).
I. Factual and Procedural Background.
Plaintiff is a former employee of Salomon Smith Barney, a subsidiary of Citigroup Inc. On July 1, 2001, Plaintiff resigned after eleven years of employment as a financial consultant for Salomon Smith Barney. He alleges that his resignation was caused by disabilities due to Multiple Sclerosis, psoriatic arthritis, anxiety, and depression. While employed at Salomon Smith Barney, Plaintiff enrolled in a long-term disability insurance plan. Plaintiff alleges that he applied for, but was denied LTD benefits.
On June 9, 2004, Plaintiff filed this suit in the 45th Judicial District of Bexar County, Texas. In his state court petition, Plaintiff alleged that through his employer he purchased a disability insurance plan, CLICNY represented the disability plan would provide certain benefits, he subsequently became permanently disabled, and CLICNY refused to provide him with benefits. Plaintiff claimed CLICNY's conduct breached the disability plan contract, and violated the Texas Deceptive Trade Practices Act (DTPA) and Texas Insurance Code.
Defendant removed the suit to this Court arguing that Plaintiff's claims were wholly preempted by the Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001, et seq. On January 14, 2005, Plaintiff filed a Second Amended Complaint reasserting his claims of breach of contract and violations of the DTPA and Texas Insurance Code. Plaintiff also alleged his claims fell within ERISA's safe harbor provision because Plaintiff's participation in the disability plan was voluntary, the employer did not contribute any monies to the policy premiums, and the employer merely collected premiums through a payroll deduction.
On November 16, 2005, CLICNY filed a motion for summary judgment seeking a declaration that the safe harbor exemption did not apply and Plaintiff's claims were wholly preempted by ERISA. Docket no. 30. On December 22, 2005, the Court granted CLICNY's motion, holding that ERISA preempted Plaintiff's state law claims. Docket no. 36. Thus, the only issue pending before the Court is whether CLINCY's denial of Plaintiff's claim for disability benefits was arbitrary and capricious.
II. Analysis.
A. CLINCY's motion to strike jury demand (docket no. 40).
CLINCY requests the Court strike Plaintiff's jury demand because this case is governed by the statutory provisions of ERISA, which do not entitle Plaintiff to a jury trial. Under Local Rule CV-7(d), where a motion is opposed, the opposing party must file a response within eleven (11) days of service. Should no response be filed in this time period, the Court may grant the motion as unopposed. Id. Plaintiff did not file a response opposing CLINCY's motion. CLINCY's motion to strike jury demand is granted (docket no. 40) as unopposed. Even if Plaintiff had responded in opposition to CLINCY's motion, the Fifth Circuit has consistently held that "ERISA claims do not entitle a plaintiff to a jury trial." Borst v. Chevron Corp., 36 F.3d 1308, 1324 (5th Cir. 1994).
B. CLINCY's motion to strike Plaintiff's designation of expert and fact witnesses and Plaintiff's motion for leave to file first amended designation of experts and first amended witness list and designation of experts (docket nos. 41 43).
When an employee claims he was wrongfully denied benefits in violation of ERISA, the only issue is whether the plan administrator arbitrarily and capriciously denied the employee's claim. See Sweatmann v. Commercial Union Ins. Co., 39 F.3d 594, 601 (5th Cir. 1994). In such a case, the district court must resolve any disputed factual determinations based on the evidence before the plan administrator. Vega v. Nat. Life Ins. Servs., Inc., 188 F.3d 287, 295 (5th Cir. 1999) ("[W]e reaffirm out longstanding rule that when performing the appellate duties of reviewing decisions of an ERISA plan administrator, the district court may not engage in fact-finding."); Meditrust Fin. Servs. Corp. v. Sterling Chems., Inc., 168 F.3d 211, 215 (5th Cir. 1999).
Our case law also makes it clear that the plan administrator has the obligation to identify the evidence in the administrative record and that the claimant may then contest whether that record is complete. Once the administrative record has been determined, the district court may not stray from it except for certain limited exceptions. To date, those exceptions have been related to either interpreting the plan or explaining medical terms and procedures relating to the claim. Thus, evidence related to how an administrator has interpreted terms of the plan in other instances is admissible. Likewise, evidence, including expert opinions, that assists the district court in understanding the medical terminology or practice related to a claim would be equally admissible. However, the district court is precluded from receiving evidence to resolve disputed material facts — i.e., a fact the administrator relied on to resolve the merits of the claim itself.Vega, 188 F.3d at 299 (citations omitted).
Based on Vega, CLINCY moves to strike Plaintiff's designation of five expert witnesses and fourteen fact witnesses because few, if any, of the witnesses were involved in the plan administrator's decision to deny Plaintiff's disability claim and the expert witnesses testimony goes beyond assisting the Court's understanding of medical terminology related to Plaintiff's claim. Plaintiff initially designated three treating physicians (Drs. Mayanne Flatley, Francis X. Burch, and Elliott Frohman) and an insurance attorney (Thomas H. Veitch) as expert witnesses. In addition to responding in opposition to CLINCY's motion, Plaintiff seeks leave to file a first amended designation of experts and witness list. Plaintiff's proposed first amended expert designations and witness list includes one additional treating physician (Dr. Kathleen Hawkes), but excludes Veitch and the vast majority of fact witnesses. Plaintiff's proposed designations, in an apparent attempt to comply with Vega, state that his treating physicians "will testify regarding the cause and manner of disability of Michael Burgess and the levels of disability he had at all times, prior to and after his diagnosis was detected. Additionally, the witness will provide testimony which will assist the Court in understanding the medical condition and medical terminology used in the records and reports."
Although Plaintiff styles his motion as "unopposed", there is no indication that Plaintiff conferred with CLINCY prior to filing the motion and CLINCY's reply brief clearly indicates its opposition to the motion.
Plaintiff's expert and fact witness designations are impermissibly broad. Any expert testimony "regarding the cause and manner of disability of Michael Burgess and the levels of disability he had at all times, prior to and after his diagnosis was detected" is evidence related to a factual determination solely within the province of the plan administrator. See id. at 300. "[W]ith respect to material factual determinations — those that resolve factual controversies related to the merits of the claim — the court may not consider evidence that is not part of the administrative record." Id. Accordingly, the Court will not allow Plaintiff's treating physicians to testify regarding his disability or medical condition. To the extent necessary, Plaintiff's treating physicians will be allowed to assist the Court's understanding of medical terminology or practice related to Plaintiff's benefit claim. See id. at 299. CLINCY does not object to such expert testimony. Plaintiff's designated fact witnesses will be stricken. Because these witnesses are neither experts nor involved in the interpretation of CLINCY's plan, their testimony is inadmissible. Id.
The Court agrees with CLINCY that to the extent Plaintiff's treating physicians had opinions concerning the cause and manner of his disability and medical condition, such opinions should have been provided to CLINCY during the administrative process or prior to filing suit. The Fifth Circuit has clearly held that "the administrative record consists of relevant information made available to the administrator prior to the complainant's filing of a lawsuit and in a manner that gives the administrator a fair opportunity to consider it." Vega, 188 F.3d at 300.
CLINCY's motion to strike is granted (docket no. 41). Plaintiff's motion for leave to file first amended designation of experts and first amended witness list and designation of experts (docket no. 43) is denied. Plaintiff is ordered and granted leave to file a revised first amended designation of expert witnesses that complies with the Court's limitation regarding the subject-matter of Plaintiff's treating physicians' testimony.
C. CLINCY's motion for leave to late-designate potential witnesses (docket no. 44).
Under the Court's September 27, 2005 amended scheduling order, CLINCY was required to serve its designation of testifying experts and witnesses pursuant to Rule 26(a)(2)(B) by December 16, 2005. Although CLINCY timely designated its counsel as a testifying expert and other potential fact witnesses, it failed to identify Richard Lodi, Charleen Deneen, and Carol Wojdylak as expert and/or fact witnesses. Lodi (CLINCY's corporate representative and Senior Operations Specialist), Deneen (medical nurse case manager), and Wojdylak (behavioral health nurse case manager) were each involved in CLINCY's review and ultimate denial of Plaintiff's disability claim.
CLINCY, four months after its deadline for designating witnesses expired, moves for leave to late-designate Lodi, Deneen, and Wojdylak. With regard to Deneen and Wojdylak, CLINCY asserts that its failure to timely designate resulted from a change in computer systems that caused thirty-seven pages of the administrative record to be omitted. Three of the omitted pages allegedly contained Deneen's and Wojdylak's analysis of Plaintiff's disability claim. As CLINCY acknowledges, Deneen and Wojdylak are truly fact, not expert, witnesses. Any opinions or determinations Deneen and/or Wojdylak made regarding Plaintiff's claim should have been provided to the plan administrator during the administrative process. To the extent Deneen and Wojdylak failed to do so, any such supplementation of the administrative record at this time is impermissible. Vega, 188 F.3d at 300. CLINCY's request for leave to late designate Deneen and Wojdylak is denied.
Despite Lodi being CLINCY's corporate representative for plan interpretation issues and providing verification for its discovery responses, CLINCY alleges that it failed to recognize Lodi was a necessary witness. According to CLINCY, the need for Lodi's testimony arose during mediation (which occurred after the deadline for designating witnesses passed) when Plaintiff raised issue with a plan term that CLINCY did not rely upon in denying his claim, i.e. "whether a 24-month limitation could be placed on Plaintiff's claim relating to whether mental issues have contributed to Plaintiff's alleged disability." Reply, at 3. A party who, without substantial justification, fails to disclose information required by Rule 26(a) is not, unless such failure is harmless, permitted to use as evidence at a trial any witness or information not so disclosed. FED.R.CIV.P.37(c)(1). The Court finds that CLINCY has presented substantial justification for not timely designating Lodi. Because Lodi's testimony, to the extent it is needed, will address plan interpretation issues, it is permissible. Vega, 188 F.3d at 299. CLINCY's request for leave to late designate Lodi is granted.
D. CLINCY's motion to limit discovery (docket no. 47).
CLINCY, relying on Vega, requests the Court limit, or disallow altogether, any further discovery in this case. Plaintiff has sought, without success, to take the depositions of Deneen, Wojdylak, and Chuck Montabon, and discover the degree of CLINCY's conflict of interest as the plan's insurer and administrator. Plaintiff claims it is "imperative that [he] be allowed to take the deposition of the plan administrator and medical personnel to obtain the reason for the denial of Mr. Burgess' claim." Resp., at 6.
The Fifth Circuit has yet to provide a definitive answer as to the breadth of discovery available in an ERISA action. The Fifth Circuit, however, has identified the limited scope of extrinsic evidence admissible in an ERISA action and directed district courts not to engage in fact-finding. Vega, 188 F.3d at 297, 299. Plaintiff's rationale for deposing Deneen, Wojdylak, and Montabon is nothing more than an impermissible attempt to engage in fact-finding and supplement the administrative record. CLINCY's request to disallow the depositions of Deneen, Wojdylak, and Montabon is granted.
In Harris v. J.B. Hunt Transport, Inc., the district court discussed how the limited admissible evidence in ERISA cases affects the breadth of discoverable information:
[T]here surely exists a close correlation between admissible evidence and the range of evidence reasonably calculated to lead to admissible evidence. When the range of admissible evidence is narrow, the range of extrinsic evidence reasonably calculated to lead to discovery of admissible evidence is also narrow. Logically, no discovery whatsoever would be appropriate if the only admissible evidence in an ERISA case were the administrative record. The record is what it is, and no extrinsic evidence would lead to the discovery of other admissible evidence simply because no other evidence would be admissible. 423 F. Supp. 2d 595, 600 (E.D. Tex. 2005) (emphasis in original). The administrative record, however, is not the only admissible evidence. Vega, 188 F.3d at 297, 299.
Plaintiff's request to discover the degree of CLINCY's conflict of interest, however, presents a different issue. While it is clear that the district court must look solely to the administrative record to determine whether the administrator's findings are not arbitrary and capricious, the amount of deference given to the findings varies with the administrator's degree of conflict. Id. at 297 ("The existence of a conflict is a factor to be considered in determining whether the administrator abused his discretion in denying a claim."). "The greater the evidence of conflict on the part of the administrator, the less deferential our abuse of discretion standard will be." Id. (emphasis added). The Fifth Circuit's use of the word "evidence" clearly implies that the extent of a plan administrator's conflict of interest is both discoverable and admissible.
CLINCY concedes it is inherently conflicted as the plan's insurer and administrator, but suggests that "Plaintiff . . . has no basis for suggesting that a further conflict of interest exists, and no further discovery should be allowed on this issue." CLINCY's Reply, at ¶ 4. CLINCY's concession fails to address the most important conflict issue, i.e. the amount of conflict. If the only conflict evidence is that CLINCY fully insures the plan at issue, the Court can assume a minimal basis of conflict, which warrants only a "modicum less deference." Vega, 188 F.3d at 301. "But leaving the plaintiff — and ultimately the court — to merely speculate as to the degree of conflict does not serve interests of justice, and may affirmatively prejudice the plaintiff who, through discovery, might produce evidence of a greater degree of conflict." Harris v. J.B. Hunt Transp., Inc., 423 F. Supp. 2d 595, 601 (E.D. Tex. 2005). CLINCY's conflicted status necessarily permits Plaintiff to discover the extent of the conflict.
The Court agrees with the district courts in Harris and Griffin v. Raytheon Co. Long Term Disability Plan No. 588, No 3:04-CA-2179-D, 2005 U.S. Dist. LEXIS 18720 (N.D. Tex. Aug. 31, 2005), that the breadth of discovery concerning an administrator's possible conflict is limited. Timely and expensive tort litigation discovery is unnecessary. CLINCY, in apparent recognition of this issue, proposes three alternative solutions: (1) responding to interrogatories limited to its conflict of interest, (2) an affidavit in lieu of interrogatories, or (3) a Rule 30(b)(6) corporate representative deposition strictly limited to its conflict of interest. The Court believes a Rule 30(b)(6) deposition provides the most efficient and equitable solution. CLINCY, therefore, is ordered to present a corporate representative for a deposition regarding the following topics: (1) evidence of financial incentives given to CLINCY employees for denial of claims, (2) CLINCY's targeting of ERISA claims for denial, and (3) whether CLINCY has acted inconsistently in determining similar claims by other plan participants under the plan at issue.
Conclusion
CLINCY and Plaintiff, through various motions, seek rulings regarding the scope of discovery and admissible evidence in an ERISA denial-of-benefits case. The limited extrinsic evidence admissible in an ERISA case negates the breadth of discovery and witness testimony generally available in a civil action. Likewise, an ERISA action is tried solely to the bench, not a jury.
For the reasons stated herein, CLINCY's motion to strike jury demand (docket no. 40) is GRANTED; CLINCY's motion to strike Plaintiff's designation of expert and fact witnesses (docket no. 41) is GRANTED, Plaintiff's motion for leave to file first amended designation of experts and first amended witness list and designation of experts (docket no. 43) is DENIED; CLINCY's motion to late-designate witnesses (docket no. 44) is GRANTED in part (as to Lodi), and DENIED in part (as to Deneen and Wojdylak); and CLINCY's motion to limit discovery (docket no. 47) is GRANTED in part, and DENIED in part.
In accordance with the Court's denial of Plaintiff's motion for leave to file first amended designation of experts, Plaintiff is ORDERED to file an amended designation of expert witnesses consistent with this Order no later than June 30, 2006.
It is further ORDERED that Plaintiff is to take the deposition of CLINCY's Rule 30(b)(6) corporate representative no later than July 31, 2006. Based on the testimony of CLINCY's corporate representative, the parties may file supplemental briefing, if necessary, regarding the degree of deference the Court should give the plan administrator's determinations no later than fourteen (14) days after the date CLINCY's corporate representative is deposed.
The Court will defer ruling on CLINCY's motion for summary judgment until the parties have filed their supplemental briefing, if any. If necessary, the Court will entertain an agreed motion from the parties requesting a continuance of the August 14, 2006 trial date.