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holding that "[Knudson] has not changed the law . . . regarding jury trials in ERISA actions. . . ."
Summary of this case from Winnett v. Caterpillar Inc.Opinion
CV 04-0025 (JS) (WDW).
February 11, 2005
ORDER
Before the court in this ERISA action is a motion by the defendants to preclude discovery and to strike the plaintiff's jury demand in this action, which seeks review of a long term disability benefits claim determination. See Brown Letters dated 7/22/04 and 8/20/04. The plaintiff opposed the original motion on several grounds, and sought permission to supplement the administrative record and to conduct discovery. See Gissoni Letter dated 8/13. The court construes the opposition as a cross motion.
After reviewing the original letter motion and opposition/cross motion, the parties were instructed that additional briefing would be necessary to help the court determine, inter alia, who the administrator of the long term disability plan was and what standard of review would apply. The parties, after receiving an extension of time, submitted their supplemental briefs in December 2004, with oral argument scheduled for January 14, 2005. That date was adjourned on the request of the plaintiff to April 5, 2005, but the court, after consideration of the written submissions, has determined that oral argument is not necessary and issues this order.
For the reasons set forth herein, the undersigned makes the following rulings/findings, as explained more fully infra:
1.) The Administrative Record must be revised and refiled as detailed infra.
2.) The relevant Long Term Disability Plan documents are those indicated by the defendants, that is, the Policy between Computer Associates ("CA") and First Unum, the Certificate of Insurance issued by First Unum, and the LTD Summary Plan Description ("SPD"), which appears in the Computer Associates Employee Handbook.
3.) The LTD Plan Administrator was CA and the LTD Claim Administrator was First Unum.
4.) The SPD conferred discretion on CA, as Plan Administrator, to interpret the benefit programs, but CA did not interpret the long term disability benefit plan and did not determine the plaintiff's claim. Nor do the SPD, the policy or the certificate give First Unum discretion, either expressly or implicitly. Thus, the court's review will be subject to a de novo, and not an arbitrary and capricious, standard.
5.) The court cannot determine whether the 687 pages submitted by Allison to First Unum in October 2003 to "supplement" the record were ever considered by First Unum, and requires additional submissions from the parties as to this issue if the parties cannot agree on it.
6.) Allison's medical records from dates after October 2003 will not be added to the administrative record.
7.) Discovery will be permitted, as detailed infra.
8.) The defendants' motion to strike the jury demand is granted.
THE ADMINISTRATIVE RECORD
The court notes, as a threshold issue, that some of the following factual information was pieced together with great difficulty from the three volume Administrative Record ("AR") filed by the defendants under seal. It consists of 788 pages arranged in apparently random order. The last page of Volume 3, which is dated 11/10/99, is stamped 00001, and the first page of Volume 1, which is dated July 16, 2002, is stamped 00788. The pages in between, which contain documents dated as late as July 2003, follow no fixed chronological pattern, and the record is extremely difficult to use. The plaintiff claims, moreover, that the record is incomplete. That claim is discussed in detail infra at section B(1).After all of the issues regarding the contents of the Administrative Record have been resolved, either by the parties or the court, the defendants shall submit a revised Administrative Record that will save the district judge from the excess expenditure of time that was required in determining this motion.
BACKGROUND
The plaintiff, Carol Allison, was formerly employed by CA. While Allison was employed at CA, defendant UNUM Life Insurance Company ("First Unum") issued a Group Long Term Disability Insurance Policy under which CA was the policyholder. See Pl's Ex. B. Allison participated in the First Unum Long Term Disability Income Plan ("the Plan" or "the LTD Plan"). Compl. ¶ 12. From December 13, 1999 through June 25, 2002, she was paid some combination of short and long term disability benefits. See 8/13/04 Gissoni Letter at 1. First Unum terminated Allison's benefits on or around June 26, 2002, finding that she was no longer disabled under the terms of the disability policy. Id. at 2; AR at 00744.
The defendants note that the correct corporate name is "First Unum," not "First Unum Life Insurance Company." See 7/22/04 Brown Letter at 1, n. 1 Answer at p. 1. If so, the parties should take the appropriate steps to correct the caption. The court will accept defense counsel's representation for purposes of this motion and refer to the defendant as "First Unum."
All page numbers in the AR are preceded by "FULCL." That designation is omitted in citations to the AR in this Order.
Allison requested that First Unum further review the denial, and, by letter dated July 24, 2002, First Unum notified Allison that the denial was being upheld. AR 00726-00723. Further appeal followed, based on additional medical information submitted by Allison, and, by letter dated December 26, 2002, denial of Allison's claim was once again upheld. AR 00712-00710. Neither First Unum's file nor the plaintiff's submissions evidence any activity over the next few months, but Allison apparently retained counsel during that time period. On May 8, 2003, Allison's current counsel, Eve-Lynn Gisonni, wrote to CA's Benefits Department requesting certain documents. See Pl's Ex. A. A request for 18 different sets of documents was sent to First Unum on May 22, 2003. See id. (The court could not locate a copy of this letter in the Administrative Record, although it may be there somewhere.) Several more letters renewing the document requests followed, including one to CA's counsel, David Lagasse, who apparently was overseeing Allison's request to CA for documents. See id.
First Unum apparently interpreted the document request as an appeal, but Allison corrected that impression by letter dated June 24, 2003. See id. By letter dated July 18, 2003, First Unum responded to Allison's letter of May 22, and also confirmed that the request was not an appeal. AR 00708. Mr. Lagasse wrote to Ms. Gissoni on August 4, 2003, outlining his progress in responding to her request for documents and other information. Both CA and First Unum sent documents to Allison, and, on October 17, 2003, counsel for Allison submitted 687 pages of documents to First Unum, indicating that they were intended to supplement the Administrative Record. Pl's Ex. I. It is unclear whether First Unum considered those 687 pages and also unclear whether Allison's claim was expressly reconsidered during this period of time. In any event, by letter dated December 23, 2003, counsel for Allison confirmed that First Unum was not interested in resolving Allison's claim "without resort to litigation." Pl's Ex. J.
This action to reinstate Allison's disability benefits and to recoup unpaid benefits followed on January 6, 2004, pursuant to ERISA, 29 U.S.C. § 1132. See Complaint. The parties agree that the defendant Computer Associates International, Inc. Long Term Disability Income Plan is an employee benefit plan as that term is defined under ERISA, but agree on little else, and the court turns now to some of the areas of disagreement.
DISCUSSION
A.) Standard of Review:
This lawsuit presents a claim arising from an employee benefit plan subject to ERISA, challenging the denial of benefits. "`ERISA does not set out the applicable standard of review for actions challenging benefit eligibility determinations.'" Fay v. Oxford Health Plan, 287 F.3d 96, 103 (2d Cir. 2002) (quoting Zuckerbrod v. Phoenix Mut. Life Ins. Co., 78 F.3d 46, 49 (2d Cir. 1996)). "The Supreme Court has held, however, that `a denial of benefits challenged under [ERISA] § 1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan.'" Id. at 103-04 (quoting Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989)). If such discretion is given, a district court must review the administrator's denial of benefits deferentially, and may reverse only if the administrator's decision was arbitrary and capricious. Id. at 104. When a plan does not grant discretionary authority, a district court "reviews all aspects of an administrator's eligibility determination, including fact issues, de novo." Krizek v. Cigna Group Ins., 345 F.3d 91, 98 (2d Cir. 2003). Because the standard of review is relevant to issues before the undersigned, the threshold determination must be what standard will apply, a determination that requires examination of the language in the plan documents.
1.) What documents comprise the LTD Plan?
The defendants here argue that the relevant LTD Plan documents give the administrator of that plan the requisite discretion, and that an arbitrary and capricious standard thus applies. The defendants state that the plan documents are (1) the policy between CA (the "Policyholder") and First Unum (Pl's Ex. B); (2) the Certificate of Insurance, presumably given to Allison and other "insureds" by First Unum (Def's Ex. B; Pl's Ex. C); and the Summary Plan Description contained in the Employee Handbook ("Handbook/SPD") distributed by CA to its employees (Def's Ex. A; Pl's Ex. F). The plaintiff does not agree with the defendants' labeling of the relevant documents. She argues that the document called the "SPD" by the defendants, that is, a section of the Employee Handbook, is not the SPD at all, and that the document called "the Certificate" by the defendants is the controlling SPD. Pl's Mem. in Opp. at 6-8. The court finds that the defendants' designation is accurate.
Allison claims that she was not given certain documents, as required by ERISA. See Compl. at ¶¶ 65-71. The court need not address that claim at this time.
The section of the CA Employee Handbook captioned "Benefits," which the defendants claim contains the long term disability insurance SPD, refers to "the Summary Plan Descriptions in this section of your handbook . . ." and goes on to summarize the various benefit plans. It also states that if there is "any conflict between the Summary Plan Descriptions and the wording of the corresponding text of the particular Plan source document, the Plan text will govern." Def's Ex. A Pl's Ex. F at p. 26. Despite this language, the plaintiff argues that the Employee Handbook does not contain the SPD. The SPD, she says, is the document referred to by the defendants as the "Certificate," a document that was prepared by First Unum for distribution to the insureds under the LTD policy. That document is labeled, on its cover page, "Computer Associates International Inc./Your Policy Number: 453818-011/Long Term Disability Income Plan." Def's Ex. B; Pl's Ex. C. It tells the insureds, on page one, under the heading "Certificate of Coverage," that "[t]his is your certificate of coverage . . ." and uses that term twice more on the first page alone. Id.
Despite the clear labeling of the SPD in the Handbook prepared by CA and equally clear labeling of the Certificate of Coverage in the document prepared by First Unum, the plaintiff maintains that the First Unum document is actually the SPD that controls. She bases her argument on a letter from David R. Lagasse, an attorney for CA. Allison had requested documents from CA's counsel, and counsel, forwarding documents, called the Certificate "UNUM's relevant summary plan description," with a separate reference to "the company's [i.e., CA's] employee handbook." Pl's Ex. A, 8/4/03 Lagasse Letter at 1. The court will not parlay Lagasse's reference to the document plainly intended to be a Certificate of Coverage as "UNUM's . . . summary plan description" into a finding that the Certificate of Coverage should assume the status of the employer's summary plan description. As discussed in greater detail infra, Computer Associates, as the employer, was required by ERISA to distribute an SPD to all employees, and that document is the relevant SPD in this ERISA action. The Certificate of Coverage prepared by First Unum, while it is in fact a summary description of the LTD Plan, is not the SPD for ERISA purposes.
Moreover, the court notes that CA's counsel, at page two of the letter relied on by plaintiff for her argument, plainly states that CA's employee handbook was being used as a summary plan description in 1999. Id. at 2. Indeed, plaintiff's counsel herself referred to "the Computer Associates Summary Plan Description (or employee handbook)" in an earlier letter. Pl's Ex. A, 6/23/03 Gisonni Letter at 1. Thus, the court finds that the documents listed by the defendants comprise the plan documents, and that the relevant pages in the Handbook comprise the long term disability SPD.
2.) Who was the Plan Administrator?
The defendants state that CA was the LTD Plan Administrator, basing that allegation on the plain statement in the Employee Handbook's "General Information" section that "Computer Associates is the Plan sponsor, Plan administrator and agent for service of legal process, except as otherwise indicated in this Handbook." Def's Mem. in Supp. at 3 (quoting Def's Ex. A Pl's Ex. F at 76). The court finds no indication elsewhere in the Handbook that CA was not the LTD plan administrator, and accepts the straightforward designation of CA as the LTD Plan Administrator.
The plaintiff argues that there is no designation in the SPD of a Plan Administrator relating to long term disability benefits. Pl's Mem. in Opp. at 8. Of course, when the plaintiff refers to "the SPD," she is referring to the Certificate of Coverage, which does not indicate an LTD Plan Administrator. See Def's Ex. B; Pl's Ex. C. She concludes that "pursuant to a group insurance contract with UNUM, Computer Associates sponsored the long term disability benefit plan and UNUM administered claims under the group insurance contract." Id. The defendants agree that UNUM was the Claim Administrator, distinguishing between Plan Administrator and Claim Administrator. Def's Mem. in Supp. at 5-6. The court finds, based on the plain language in the Handbook, that CA was the LTD Plan Administrator, and, based on the way in which Allison's claim was determined, that First Unum acted as the Claim Administrator.
3.) Does the Plan confer discretion on the Plan or Claim Administrators?
The defendants argue that the Plan confers discretion on the Plan Administrator, thus triggering the deferential standard of review. As noted earlier, the deferential standard applies if "the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan.'" Fay, 287 F.3d at 103-04 (quoting Bruch, 489 U.S. at 115). The Plan Administrator bears the burden of establishing that the arbitrary and capricious standard applies. Id. at 104.
The Handbook/SPD states, in relevant part, that CA retained the right to "interpret . . . the benefit programs described in this handbook, without advance notice, in its sole discretion." Def's Ex. A Pl's Ex. F at 26. CA's reservation of discretion to "interpret . . . the benefit programs" is close enough to "the right to construe the terms of the plan," the language used in Bruch, to trigger a deferential standard of review of any interpretation of the benefit programs that CA, as Plan Administrator, conducted. The question arises, however, as to whether CA in fact interpreted any part of the plan. It did not, and any discretion reserved to it was thus never exercised.
The parties agree that First Unum determined Allison's claim. The defendants state that First Unum's authority to decide claims derives from the policy and the certificate, and that CA, "in purchasing the Policy to be part of the LTD Plan, appointed First Unum claim administrator, with full authority from CA to decide plaintiff's claim." Def's Mem. in Opp. at 5-6. The defendants' suggestion is either that the language in the policy/certificate directly gives discretion to First Unum, or that the discretion reserved to CA in the SPD was transferred to First Unum as "claim administrator," or perhaps that First Unum somehow acted as CA's agent, exercising the discretion given to CA in the SPD. In any event, the defendants argue, an arbitrary and capricious standard applies to First Unum's benefit denial.
To the extent that the defendants intend this argument, the court rejects it. It is, at best, implicit in their papers, and no direct support for it is offered.
While the court does not dispute First Unum's authority to decide the claim, it does not agree that any discretion was given or transferred to First Unum so as to trigger a deferential standard of review, for two reasons. First, the SPD, and not the policy or certificate, is the controlling document, and it does not confer discretion on First Unum or transfer CA's discretion to First Unum. Second, even if considered, the language in the policy and certificate is insufficient to confer or transfer discretion. The court looks first to the SPD, which is the controlling document regarding ERISA plans.
a.) The SPD
Employers are required to distribute SPDs describing plan benefits to their employees. Burke v. Kodak Retirement Income Plan, 336 F.3d 103, 110 (2d Cir. 2003) (citing 29 U.S.C. §§ 1022(a) and 1024(b)). Employers must file their benefit plan SPDs with the Secretary of Labor. See 29 U.S.C. § 1021(b)(2); see also Heidgerd v. Olin Corp., 906 F.2d 903, 905 (2d Cir. 1990). The SPD "must be written in a manner calculated to be understood by the average plan participant and must be sufficiently accurate and comprehensive to apprise participants and beneficiaries of their rights and obligations under the plan." Burke, 336 F.3d at 110 (citing 29 U.S.C. § 1022(a)). The SPD must contain "the plan's eligibility requirements for benefits as well as `the circumstances which may result in disqualification, ineligibility or denial or loss of benefits.'" Id. (quoting 29 U.S.C. § 1022(b) citing 29 C.F.R. § 2520.102-3(l)).
Here, the SPD nowhere states that First Unum will have sole discretion to determine eligibility for benefits. Indeed, it does not even expressly state that First Unum will determine eligibility at all. Under the heading "Filing a Claim," the SPD provides that "[i]f, at any time, you become eligible for benefits under the LTD plan, you should immediately contact Human Resources. You will be provided complete instructions on filing your claim. When you file your claim, you must also file for Social Security benefits." Def's Ex. A at 58. There is no mention in this section of First Unum by name or of the existence of a claim administrator separate from CA, or of what role the "claim administrator" might play in a determination of eligibility for benefits. The only mention of the existence of a claim administrator is in a section captioned "Future of The Plans," which notes that if a plan is terminated, claims submitted to the "claims administrator" within a reasonable period of time will be considered, the reasonable period of time to be established by the "Plan Administrator." Id. at 58-59.
Nor does the SPD expressly give CA discretion to determine eligibility for benefits, only to "interpret . . . benefit programs." The court does not need to determine whether that language is sufficient to grant discretion to CA in determining eligibility for benefits, because, as explained infra, no discretion of any kind was transferred to First Unum.
First Unum is mentioned by name at page 75 of the Handbook, which states that "Your Short-Term and Long-Term Disability Plans are insured through a contract with UNUM Life Insurance Company, Portland, ME."
The defendants do not point to language in the SPD that confers discretion on First Unum, but instead suggest that discretion is conveyed by the terms of the Plan itself, as set forth in the Certificate and the Policy. The Plan explains that claims must be presented to First Unum, who retains the right to have claimants examined by a physician of First Unum's choosing and/or interviewed by a First Unum representative. Def's Mem. in Supp. at 6. However, even if these terms could somehow be interpreted to give First Unum sole discretion in determining claims (which it cannot, as explained infra), the SPD, and not the Plan, would control. While it may be true, as the defendants argue, that "a reservation of discretion in an SPD . . . triggers the arbitrary and capricious standard of review even if discretion is not reserved in other plan documents," it is not established that a reservation of discretion in another plan document suffices where the SPD does not confer such discretion. See Def's Mem. in Supp. at 4 (citing numerous cases); and see discussion, infra, at section A (3)(b).
Where "the terms of a plan and those of a plan summary conflict, it is the plan summary that controls," because ERISA "contemplates that the summary will be an employee's primary source of information regarding employment benefits, and employees are entitled to rely on the descriptions contained in the summary." Heidgerd, 906 F.3d at 907-908. Here, although there is no "conflict" in the sense of differing, express statements, there is a difference in the outright grant of discretion to CA in the SPD, as discussed infra, and the absence of any language reserving discretion, either to CA or to First Unum, in the other plan documents. The court turns now to a closer investigation of those documents.
The court notes the claim in the SPD that if "there is any conflict between the Summary Plan Descriptions and the wording of the corresponding text of the particular Plan source document, the Plan text will govern." Def's Ex. A and Pl's Ex. F at p. 26. The court need not resolve the issue of whether this provision is of any effect, given the prevailing view that it is the SPD, and not other plan documents that control, because, like the SPD, the other plan documents do not give First Unum discretion.
b.) The Plan language
Courts have considered the presence of discretionary language in one part of the plan documents, but not in others. As noted earlier, a reservation of discretion in an SPD may trigger the arbitrary and capricious standard of review even if discretion is not reserved in other plan documents, because the SPD is the controlling document. The Second Circuit has also considered whether the absence of language delegating discretionary authority in an SPD, where clear discretionary authority is set forth in the Plan itself, requires application of a de novo or arbitrary and capricious standard. See Mario v. PC Food Mkts, Inc., 313 F.3d 758, 764 (2d Cir. 2002). The Court recognized the requirement that an SPD must include all circumstances that may result in denial of a claim, and considered the argument that "the giving of discretion to the plan administrator . . . is one such circumstance." Id. On the other hand, the Court recognized, an argument can be made that the "standard of judicial review is not such a circumstance because it simply fixes the procedure to be followed after a denial has occurred, and therefore a plan participant cannot be prejudiced by a lack of knowledge about that procedure." Id. (italics in original). The Second Circuit did not decide the issue, however, because on the record before it, the benefit determination survived under either standard of review. Id. at 765. Nor need this court decide the issue, because the language in the policy/certificate cannot be construed as giving discretion to First Unum for benefit determinations so as to trigger the deferential standard of review.
Although First Unum had the right to require physical examinations or interviews with claimants, the language granting that right does not amount to a "clear reservation of discretion to the . . . administrator." Kinstler v. First Standard Life Ins. Co., 181 F.3d 243, 245 (2d Cir. 1999) (de novo standard applies to all aspects of denial of ERISA claim, including fact issues, in absence of clear reservation of discretion to plan administrator). Even though the Second Circuit has recognized that "magic words such as `discretion' and `deference' may not be `absolutely necessary' to avoid a [de novo] standard of review," when the arbitrary and capricious standard has been found to apply, "policy language reserving discretion has been clear." Id. at 251. "[T]he administrator's burden to demonstrate insulation from de novo review requires either language stating that the award of benefits is within the discretion of the plan administrator or language that is plainly the functional equivalent of such wording." Id. at 252.
Clear language, the court noted, can be "readily drafted and included in policies, [and] courts should require clear language and decline to search in semantic swamps for arguable grants of discretion." Id. One need only compare the language used in other policies to the language relied on here to recognize the inadequacy of the language urged by First Unum as conferring discretion. In Scannell v. Metropolitan Life Ins. Co., for example, the long term disability SPD stated: "To receive long-term benefits you must first file a claim with the insurance company, which makes the final decision on all claims." 2003 U.S. Dist LEXIS 20749, at *17 (S.D.N.Y. Nov. 18, 2003). The reservation of discretion in Couture v. Unum Provident Corp. was even more plain, providing that "[t]he employer is the Plan Administrator, unless otherwise noted. The Paul Revere Life Insurance Company, as claims administrator, has the full, final, binding and exclusive authority to determine eligibility for benefits and to interpret the policy under the plan as may be necessary in order to make claims determinations. The decisions of claims administrator shall not be overturned unless arbitrary and capricious or unless there is no rational basis for a decision." 315 F. Supp. 2d 418, 426 (S.D.N.Y. 2004) (italics in original). The policy/certificate language relied on by the defendants here does not even come close to reaching the requisite level of clarity.
In her August 13, 2004 letter, counsel for Allison states that the defendants are relying on an endorsement to the Policy as the basis for the reservation of discretion to First Unum and the arbitrary and capricious standard. The defendants do not, however, point to any such endorsement.
Here, then, the reservation of discretion is plainly set forth in the SPD, but the entity with the discretion — CA — did not exercise it, and the entity that decided the claim — First Unum — is not plainly given discretion to do so. Under these circumstances, the court will not find that the claim denial is entitled to deferential review. "The consequences of an inaccurate SPD must be placed on the employer" ( Burke, 336 F.3d at 113), who bears the burden of demonstrating entitlement to the arbitrary and capricious standard. See Fay, 287 F.3d at 104. Although the defendants have demonstrated the reservation of discretion to interpret benefit programs to CA as Plan Administrator, there is no decision by the Plan Administrator to defer to. Moreover, the defendants have not demonstrated the transfer of any discretion to First Unum so as to satisfy ERISA standards. Although the Second Circuit has stated its reluctance "to see district courts burdened with the obligation to give de novo review to decisions resolving routine fact disputes in section 1132(a)(1)(B) cases," such review is indicated where the plan administrators have not availed themselves of the "relative ease with which ERISA plans may be worded explicitly" to "insulate all aspects of their decisions from de novo review." Kinstler, 181 F.3d 243, 251 (2d Cir. 1999).
Thus, review of the eligibility determination herein should be governed by a de novo standard. With this standard in mind, the court now turns to the issues of whether the plaintiff is entitled to supplement the administrative record and/or to conduct discovery.
B.) What the Court will consider on de novo review:
Two issues arise in regard to what the court will consider on its de novo review. First, the parties do not agree on what comprises the Administrative Record ("AR"); second, the plaintiff wants the district court to consider information outside the AR, including information that will be gleaned from discovery that she seeks. The court first considers the AR.
1.) What constitutes the Administrative Record?
An administrative record properly consists of the evidence before the entity that decided the claim when that decision was rendered. The plaintiff claims that the record here consists of 1,619 pages, including documentation that the plaintiff received after communicating with First Unum and with counsel for CA from May to October 2003 and documentation that she sent to First Unum in October 2003. The defendants claim that it consists of 788 pages and have produced three volumes of pages stamped and assembled, haphazardly, in reverse numerical and chronological order. Allison argues that the pages missing from the defendants' version consist, in large part, of 687 pages that she submitted to First Unum prior to its final claim determination. It is not clear what the other 144 pages included in the plaintiffs' version of the AR (which has not been submitted) consist of.
a.) The 687 pages submitted by Allison in October 2003
Allison seeks to add documents that she compiled from May 2003 to August 2003. Pl's Mem. in Supp. at 5. These documents, consisting of 687 pages, included plan documents as well as additional medical records, Social Security records, a "Memorandum prepared by Provident Life and Casualty Insurance Company of 1995," an affidavit from former First Unum employee Linda Nee, and a summary of a deposition of Fergal McSharry, M.D., a former First Unum medical consultant. Pl's Ex. K. They were submitted to First Unum by Allison on October 17, 2003, purporting to supplement the existing administrative record and stating that a lawsuit would be filed if a substantive reply was not received from First Unum within ten days of the date of the letter. Pl's Ex. I.
It is unclear, however, whether First Unum ever considered the 687 pages. If First Unum did consider them in its final denial of Allison's claim, then they are part of the administrative record of Allison's claim. The documents in the defendants' version of the administrative record suggest that Allison's claim was finally denied in December 2002, almost a year before the purported addition to the administrative record by Allison. Evidence submitted by Allison suggests, however, that further review of her claim was conducted in late 2003.
In a letter dated December 23, 2003, counsel for Allison confirmed that First Unum was not interested in resolving Allison's claim "without resort to litigation." Pl's Ex. J. In the December 23 letter, Allison's counsel referred to her "supplementation of the administrative record on October 17, 2003," and to a post-October 17, 2003 representation by Peter Pellenz, Settlement Specialist at First Unum, that Allison's "file was again reviewed by personnel who were familiar with Ms. Allison's claim," but that First Unum was "upholding the adverse benefit determination of June 2002." Id. The implication is that First Unum may have considered some or all of the additional 687 pages of documents in its final review of Allison's claim, and Allison's position appears to be that they are thus part of the original administrative record. The defendants' position seems to be that the record consists only of those documents in the First Unum file as of December 2002 and that it does not include the documents submitted by Allison in October 2003, although, as noted earlier, the precise contents of the defendants' AR are difficult to ascertain.
While the mere submission of additional documentation by Allison in October 2003 cannot, in and of itself, serve to supplement the administrative record, which by definition consists only of those documents before the administrator that determined the claim, it would make a difference if the administrator in fact considered the additional documentation before its final denial. That determination cannot be made on the record now before the court. Thus, the parties must either agree on whether some or all of the 687 pages, as well as the unidentified additional 144 pages, are part of the AR, or must submit additional briefing and affidavits on whether or when First Unum considered the documents and what the legal import of such consideration would be. Because it is the plaintiff's application that underlies this issue, she must serve her briefs and supporting affidavit(s) regarding this issue within three weeks of the date of this order, with the defendants serving their opposition three weeks after that, with reply papers, if any, to be served two weeks later. When the papers are complete, the plaintiff shall electronically file them and send a courtesy copy to the undersigned.
The court notes defense counsel's representation, in his letter dated 8/20/04, that he and plaintiff's counsel could meet and resolve differences as to how many pages are in the record. An attempt at this resolution should be made before additional briefing is done.
The court understands that plaintiff's counsel, for personal reasons, may require an extension of these dates, and one will be granted if requested. Counsel for both sides shall confer on an alternative briefing schedule if one is necessary, and shall notify the court of their request.
b.) The plan documents
The defendants' version of the AR excludes the Certificate and the Handbook/SPD. Def's Mem. in Supp. at 2 n. 3. These documents were apparently among those that the plaintiff received when she requested documents following the initial denial of the claim, and her version presumably includes those documents. Whether the plan documents were actually considered by First Unum and are thus part of the AR, or whether they were not considered by First Unum, they still must be considered by the court in its de novo review.
When a district court conducts a de novo review of a plan administrator's determination, as the court will do here, it can consider limited evidence outside the administrator's record. It may, for example, consider "evidence outside the administrator's record on issues of plan interpretation." Sheehan v. Metropolitan Life Ins. Co., 2002 WL 1424592, *3 (S.D.N.Y. June 28, 2002) (citing Masella v. Blue Cross Blue Shield of Conn., 936 F.2d 98, 104 (2d Cir. 1991)). Because the court must, inter alia, interpret the terms of the plan, the plan documents that are not now in the Administrative Record must either be added to it, or they must be considered by the court as evidence outside the AR.
2. Considering evidence outside the administrative record:
In addition to expanding the defendants' version of the AR, Allison also wants the court to consider certain evidence outside the administrative record. Some of the evidence is already in her possession, and some of it will be obtained through discovery that she wants the court to allow.
a.) Post-October 2003 medical records:
The plaintiff seeks to have the court consider medical records of Allison's "continuing and deteriorating condition, including records relating to continued medical treatment and attendance at physical therapy" that were not available to First Unum in December 2003. 8/13/04 Gissoni Letter at 2. The plaintiff phrases this as a request to supplement the record, but it is more properly considered as a request that the district court consider evidence outside the AR.
The "presumption is that judicial review is limited to the record in front of the claims administrator unless the district court finds good cause to consider additional evidence . . ." Muller v. First Unum Life Ins. Co., 341 F.3d 119, 125 (2d Cir. 2003). Although the district court, in a de novo review of a plan administrator's determination, may consider evidence outside the administrator's record on issues of plan interpretation, the post-October 2003 medical records do not relate to issues of plan interpretation, but to issues of fact. As regards factual issues, "the decision whether to admit additional evidence is one which is discretionary with the district court, but which discretion ought not to be exercised in the absence of good cause." DeFelice v. American Int'l Life Assurance Co. of New York, 112 F.3d 61, 66 (2d Cir. 1997).
Allison has shown no good cause for the consideration of post-October 2003 medical records. The court must evaluate Allison's physical condition at the time she was denied benefits, not her physical condition after that date. Medical records that refer to dates after the final claim determination are irrelevant to that determination and should not be considered, no good cause having been shown for their consideration.
b.) Discovery and consideration of information outside the record gleaned from discovery:
Allison also asks to conduct discovery and to supplement the record with information gleaned from new discovery. Like the post-2003 medical records, any such information would not, strictly speaking, supplement the AR, but would be evidence outside that record. The court notes that the decision as to whether to allow discovery is distinct from the decision as to whether to allow consideration of additional evidence. If discovery is allowed, the plaintiff can then apply to the district judge for a determination as to whether she will expand the record to include information that discovery yielded, the nature of which is not yet known.
With that in mind, the court turns to the plaintiff's application. She seeks: (1) the deposition of Dr. Steven Schwartz, the medical consultant used by First Unum in denying her claim; (2) documents regarding Dr. Schwartz's qualifications and experience as a First Unum consultant; (3) depositions of 30(b)(6) witnesses from CA regarding amendments and endorsements to the plan and the standard of review to be applied to the plan; and (4) depositions of 30(b)(6) witnesses from First Unum regarding First Unum's medical review procedures, First Unum's adherence to ERISA document requirements, post-October 17, 2003 procedures, and the composition of the administrative record. See 8/13/04 Gisonni Letter at 2.
The court notes that the parties have already been directed to confer on what review, if any, was conducted by First Unum after October 17, 2003 and the contents of the administrative record. Discovery regarding those issues, whether informal or formal, may be pursued so that the parameters of the administrative record can be determined. The standard of review has already been determined by the court, and discovery regarding that issue is now moot. The court must determine whether discovery about Dr. Schwartz, First Unum's medical review procedures, and First Unum's adherence to ERISA requirements should be allowed.
Some of the areas of inquiry that Allison wishes to pursue concern a conflict of interest that First Unum allegedly had in determining her claim. Allison asserts that First Unum both funded the LTD Plan and determined eligibility for benefits, making it a "conflicted decision maker as that term is described in DeFelice v. American International Life Assurance Co. of N.Y., 112 F.3d 61 (2d Cir. 1997)." 8/13/04 Gisonni Letter at 3. And, Allison argues, based on the district court's decision in Locher v. Unum Life Ins. Co. of Am., 126 F. Supp. 2d 769, 773 (S.D.N.Y. 2001), such a conflict of interest is per se "good cause" for allowing additional evidence upon a de novo review of factual issues.
The existence of a conflict in the decision making entity and that conflict's impact on discovery, standard of review and expansion of the record has been much studied in ERISA cases in this Circuit, most recently in Locher v. Unum Life Ins. Co., 389 F.3d 288 (2d Cir. 2004). In Locher, the Second Circuit reviewed its position on consideration of evidence outside the administrative record in de novo reviews of benefits determinations, clarified its holding in the earlier DeFelice case, and corrected a misstatement of the law in the district court's Locher decision. 389 F.3d 288, 293-96 (2d Cir. 2004). The Second Circuit had earlier held that a district court may also consider evidence outside the administrative record upon a de novo review of issues of plan interpretation. 389 F.3d at 293 (citing Masella v. Blue Cross, 936 F.2d 98, 103-05 (2d Cir. 1991)). In DeFelice, the Second Circuit had addressed the question of whether a district court may consider evidence outside the administrative record upon a de novo review of factual issues, but declined to issue a broad ruling on that question, holding only that additional evidence was warranted on the facts then before the court. Id. (citing DeFelice v. American Int'l Life Assurance Co. of New York, 112 F.3d 61, 65-66 (2d Cir 1997)).
The facts in DeFelice that contributed to that holding included: (1) the appeals committee that reviewed the claim was comprised entirely of employees of the administrator; (2) there were no established criteria for determining an appeal; and (3) the committee apparently had a practice of destroying all records within minutes after hearing an appeal. Id. Under those facts, the Locher court explained, DeFelice "set forth the principle that the decision `whether to admit additional evidence is one which is discretionary with the district court, but which discretion ought not to be exercised in the absence of good cause.'" Locher, 389 F.3d at 294 (quoting DeFelice, 112 F.3d at 66). Applying that principle, DeFelice held that "`upon de novo review, even purely factual interpretation cases may provide a district court with good cause to exercise its discretion to admit evidence not available at the administrative level if the administrator was not disinterested,' and, `in this situation, the district court may assume an active role in order to ensure a comprehensive and impartial review of the case.'" Id.
Following DeFelice, several district courts in the Second Circuit, including the district court in Locher, interpreted that case as holding that "an administrator's dual status as claims reviewer and claims payor is per se `good cause' for allowing additional evidence upon a de novo review of factual issues." Locher, 389 F.3d at 294 (citing Locher v. Unum Life Ins. Co. of Am., 126 F. Supp. 2d 769, 773 (S.D.N.Y. 2001); Keiser v. CDC Inv. Mgmt. Corp., 2003 U.S. Dist. LEXIS 25383 (S.D.N.Y. Mar. 25, 2003)). The Second Circuit, in Locher, disagreed with this view, and, although it upheld the district's ruling on the denial of benefits to Ms. Locher, took the opportunity to clarify its holding in DeFelice, and "make plain that a conflict of interest does not per se constitute `good cause' to consider evidence outside of the administrative record upon a de novo review of factual issues bearing on an administrator's denial of ERISA benefits." Id.
These principles suggest that Allison should be entitled to discovery about whether First Unum and/or Dr. Schwartz had a conflict when the claim was determined, and whether that conflict influenced the determination. As to First Unum, there is little doubt that there was a conflict, inasmuch as First Unum was both the payor and the entity that determined entitlement, but the plaintiff may conduct appropriate discovery to determine whether First Unum was in fact influenced by the conflict. As to Dr. Schwartz, it is not clear whether he operated under a conflict of interest or if such conflict affected his decision. Thus, the plaintiff may depose Dr. Schwartz as to those issues and seek relevant documents from him. The plaintiff is also entitled to discovery on issues relating to the procedures used by First Unum in determining her claim, including the identities of the people who made the decision, the criteria used by First Unum in making decisions and determining appeals, and its practice in regard to maintenance of the appeal records, all factors that were significant to the court in DeFelice and noted in Locher.
The court reiterates that allowing discovery is not tantamount to a ruling that the information gleaned from discovery will be considered by the court in its de novo review. That determination will be made by the district judge at her discretion. The discovery is intended only to give the plaintiff an opportunity to show that good cause exists for going outside the administrative record.
C.) Right to Jury Trial in this ERISA Case:
The defendants' motion to strike the plaintiff's jury demand is granted. As a matter of law, there is no right to a jury trial in a suit brought to recover ERISA benefits. See Sullivan v. LTV Aerospace and Defense Co., 82 F.3d 1251, 1257-59 (2d Cir. 1996). The plaintiff argues that the ruling in Sullivan is superceded by Great West v. Knudson, 534 U.S. 204 (2002). 8/13/04 Gisonni Letter at 4. The plaintiff notes that, in Great West, the Supreme Court did not directly address the right to jury trial under ERISA, but "delineated the difference between legal and equitable damages and made clear that suits under ERISA 502(a)(1)(B) seeking payment of monies due a party were legal claims." Id. The gravamen of the plaintiff's argument is that she is seeking legal, and not equitable relief in this action, and is thus entitled to a jury trial.
This court finds that Great West has not changed the law in this District regarding jury trials in ERISA actions. See, e.g., DePace v. Matsushita Elec. Corp. of America, 257 F. Supp. 2d 543, 574 (E.D.N.Y. 2003). DePace reiterated, post- Great West, that "[n]o jury trial right attaches" in ERISA cases because "`cases involving ERISA benefits are inherently equitable in nature, not contractual.'" Id. (quoting DeFelice, 112 F.3d 61, 64 (2d Cir. 1997)); see also Muller, 341 F.3d at 124 (applying Sullivan post- Great West); Couture, 315 F. Supp. 2d at 426-27 (same); but compare Bona v. Barasch, 2003 U.S. Dist. LEXIS 4186 (S.D.N.Y. Mar. 20, 2003) (finding right to jury trial in ERISA claims for legal relief, including claims for damages under § 502(a)(2) of ERISA). Thus, the defendants' motion to strike the plaintiff's jury demand is granted.
SO ORDERED.