In Newman v. Standard Insurance Co., the plaintiff requested the court to allow discovery beyond the administrative record regarding a potential conflict in defendant's decision to deny plaintiff benefits. Newman v. Standard Insurance Co., 997 F.Supp. 1276, 1280 (C.D. Cal. 1998). The court refused because of practical and policy considerations in ERISA cases.
" Thus, the plain language of the plan confers discretionary authority on Standard to determine benefits eligibility. See Snow v. Standard Ins. Co., 87 F.3d 327, 330 (9th Cir. 1996) (plan granting authority to determine eligibility for benefits inherently confers discretion); Newman v. Standard Ins. Co., 997 F. Supp. 1276, 1278 (C.D.Cal. 1998) (interpreting identical language as providing Standard with discretionary authority). Accordingly, I will review Standard's decision to deny Ms. Stills's short-term disability claim under an abuse of discretion standard.
If the plan does not meet its burden, courts review the decision to deny benefits de novo.Friedrich, 181 F.3d at 1109 (citing Atwood, 45 F.3d at 1323); see also Newman v. Standard Ins. Co., 997 F. Supp. 1276, 1279 (C.D.Cal. 1998). "Only if the administrator does meet its burden is it entitled to the deferential abuse of discretion standard of review."
While generalizations are impossible (and dangerous), it can be said that the courts have searched for a close connection between the information sought and the issues presented. E.g.,Buchanan v. Reliance Standard Life Ins. Co., 5 F.Supp.2d 1172 (D.Kan.1998)(discovery limited to narrow question of the manner in which insurance company made the decision); Newman v. Standard Ins. Co., 997 F.Supp. 1276 (C.D.Cal.1998)(disallowing discovery as to possible conflict of interest); Palmer v. University Medical Group, 973 F.Supp. 1179 (D.Or.1997)(same). The scope of discovery in ERISA cases permitted is simply not the same as the discovery permitted by Fed.R.Civ.P. 26(c).
Several district courts have examined this same question and have declined to allow discovery (when applying an arbitrary and capricious standard of review). In Newman v. Standard Ins. Co., 997 F. Supp. 1276, 1280 (C.D.Cal. 1998), the trial court recognized that the plaintiff did not seek discovery on the merits of the claim, but wanted discovery as to the issue of whether the conflict tainted the administrators decision. The plaintiff, in Newman, argued that the only way to obtain material, probative evidence beyond the mere fact of the apparent conflict was through discovery.
If such a conflict of interest appears to be present, the court still reviews the decision for abuse of discretion — assuming the Plan contains the requisite language conferring discretion upon the plan administrator — but the court's review is a little more searching (depending upon the severity of the conflict) and the court is not as quick to defer to the administrator's discretion.Id; see also Spangler v. Unum Life Ins. Co., 38 F. Supp.2d 952, 955-56 (N.D. Okla. 1999) (denying discovery on conflict of interest relevant to what standard of review applies); Newman v. Standard Ins. Co., 997 F. Supp. 1276, 1280-81 (C.D. Cal. 1998) (same). The approach of the court in Palmer may make sense where the district court is reviewing the record for abuse of discretion, where evidence outside the record simply may not be considered.
Finally, the Court notes that because the evidence Plaintiff seeks to discover pertains to a conflict of interest of a vocational consultant hired by Defendant, permitting discovery requests such as this one would increase both the time and expense involved in reviewing ERISA benefits decisions. See Newman v. Standard Ins. Co., 997 F. Supp. 1276, 1280-81 (C.D.Cal. 1998) (discussing practical problems with opening up discovery to permit plaintiffs to explore motivations of, for example, "claims reviewers, consulting physicians, and corporate officers of plan administrators"); Palmer v. University Med. Group, 973 F. Supp. 1179, 1188 (D.Or. 1997) (opining that permitting broad discovery into conflict of interest issue would "exponentially increase both the complexity and the cost of ERISA litigation"). The Court notes further that it is a fact of litigation that parties routinely hire consultants and experts whose independence can be seriously questioned, and judges are not oblivious to the influence wielded by companies who can afford to provide large amounts of business to consultants who render opinions in their favor.
Plaintiff argues it is entitled to conduct discovery to obtain just this sort of evidence. This identical argument was raised and rejected in Newman v. Standard Ins. Co., 997 F. Supp. 1276, 1280 (C.D. Cal. 1998). The Newman court reasoned,
To allow discovery in every ERISA case involving an administrator who is also the funding source "would involve far-reaching, open-ended, nearly limitless discovery." Newman v. Standard Ins. Co.. 997 F. Supp. 1276,1280 (C.D. Cal. 1998). The tremendous expenses thereby incurred would frustrate the prompt and affordable resolution of benefit claims. Plaintiff cites several Ninth Circuit cases for the proposition that the court is not limited to the administrative record when determining whether an actual conflict of interest has tainted the benefit decision.
In the context of ERISA litigation, for example, judicial review of an administrator's decision to grant or deny benefits is usually restricted to the administrative record. Newman v. Standard Ins. Co., 997 F. Supp. 1276, 1280-81 (C.D. Cal. 1998); and Taft v. Equitable Life Assur. Soc., 9 F.3d 1469, 1471 (9th Cir. 1993)) In sum, it appears the general principles of administrative law suggest that judicial review should limited to the administrative record.