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finding that it was inappropriate to restrict discovery under the de novo standard because the Tenth Circuit may ultimately decide that under de novo review all facts must be examined
Summary of this case from Sells v. Phillips Petroleum CompanyOpinion
Case No. 01-2430-JAR.
March 20, 2002.
MEMORANDUM ORDER
I. Introduction.
This case involves claims pursuant to the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001-1461. Several matters are before the court, including: (1) plaintiff Ashley S. Zack's motion for leave to file a second amended complaint (doc. 41); (2) defendant Medical Group Insurance Services, Inc.'s (MGIS) motion to dismiss plaintiff's first amended complaint (doc. 30); (3) defendant Hartford Life and Accident Insurance Company's (Hartford) motion to dismiss plaintiff's first amended complaint (doc. 32); and (4) Hartford's motion for a protective order limiting discovery to the administrative record (doc. 44). As explained below, plaintiff's motion for leave to file a second amended complaint is granted, Hartford's and MGIS's motions to dismiss are denied as moot, and Hartford's motion for a protective order is denied.
II. Plaintiff's Motion for Leave to File a Second Amended Complaint.
The court will first consider plaintiff's motion for leave to file a second amended complaint (doc. 41), Hartford's corresponding response (doc. 42), and plaintiff's reply (doc. 46). As explained below, plaintiff's motion is granted.
The scheduling order in this case imposed a January 8, 2002-deadline for the parties to seek leave to amend the pleadings (doc. 14). The present motion was not filed until February 13, 2002. Courts in this jurisdiction have consistently held that, when considering a motion to amend filed after the date established in a scheduling order, the court must determine if the Fed.R.Civ.P. 15(a) standards have been satisfied and whether "good cause" within the meaning of Fed.R.Civ.P. 16(b) has been sufficiently demonstrated to justify allowing the untimely motion. See, e.g., Deghand v. Wal-Mart Stores, Inc., 904 F. Supp. 1218, 1221 (D.Kan. 1995) (applying this two-part inquiry) (citing SIL-FLO, Inc. v. SFHC, Inc., 917 F.2d 1507, 1518 (10th Cir. 1990)); Denmon v. Runyan, 151 F.R.D. 404, 407 (D.Kan. 1993) (same).
A. Good Cause.
Rule 16(b) provides that: "A schedule shall not be modified except upon a showing of good cause and by leave of the district judge or, when authorized by local rule, by a magistrate judge." The party that seeks to extend a scheduling order deadline must establish good cause by proving that the deadline could not have been met with diligence. Denmon, 151 F.R.D. at 407 (holding the plaintiff failed to demonstrate the required "good cause" to justify allowing an untimely motion to amend) (citing Pfeiffer v. Eagle Mfg. Co., 137 F.R.D. 352, 355 (D.Kan. 1991); and Fed.R.Civ.P. 16 advisory committee's notes to the 1983 amendments).
In this case, Hartford argues that plaintiff has failed to demonstrate good cause why plaintiff could not have, with diligence, met the January 8, 2002-deadline in the scheduling order for the parties to seek leave to amend the pleadings. The court respectfully disagrees. Plaintiff and Hartford, MGIS, and defendant MSR Benefit Services, Inc. (MSR) were present at the December 4, 2001-scheduling conference in this case. On December 18, 2001, the court granted plaintiff leave to amend his complaint to add his employer, Pediatric Care Specialists, P.A. (PCS), as a defendant. In the present motion, plaintiff states this prior amendment was made "merely to facilitate the mediation" that was scheduled for January 17, 2002. The mediation was unsuccessful, and plaintiff proceeded under the impression that the court would enter a revised scheduling order given PCS's recent joinder as a defendant. Although plaintiff, perhaps, should not have been quite so presumptuous, plaintiff's belief was nevertheless reasonable, as it is not altogether uncommon for the court to enter a revised scheduling order that integrates a new defendant into the case. Accordingly, the court believes plaintiff has shown good cause why he did not seek leave to file a second amended complaint at an earlier date.
B. Rule 15(a) Standards.
Thus, the court will next determine whether the Rule 15(a) standards have been satisfied. Fed.R.Civ.P. 15(a) provides:
A party may amend the party's pleading once as a matter of course at any time before a responsive pleading is served. . . . Otherwise, a party may amend the party's pleading only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires.
Although Fed.R.Civ.P. 15(a) requires that leave to amend "be freely given when justice so requires," whether leave should be granted is within the trial court's discretion. Castleglen v. Resolution Trust Corp., 894 F.2d 1571, 1585 (10th Cir. 1993) (citing Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321 (1971)). The factors considered by the court in determining whether to allow amendment of a pleading are undue delay, bad faith or dilatory motive, failure to cure deficiencies by amendments previously allowed, and undue prejudice to the opposing party or futility of amendment. Foman v. Davis, 371 U.S. 178 (1962); Castleglen, 984 F.2d at 1585.
Hartford argues that plaintiff's attempt to amend his complaint is motivated by a desire to avoid Hartford's motion to dismiss for failure to state a claim upon which relief may be granted (doc. 32). However, this is not one of the factors the court considers in determining whether to allow amendment of a pleading. In fact, "the most common use of Rule 15(a) is by a party seeking to amend in order to cure a defective pleading." 6 Charles Alan Wright et al., Federal Practice Procedure § 1474 (2d ed. 1990).
Hartford also raises what is akin to a futility argument by arguing that plaintiff's proposed second amended complaint does not avoid Hartford's motion to dismiss because it fails to remedy the defects in plaintiff's proposed legal theories against Hartford. In order to justify denying leave to amend based on futility, the proposed amendment must be clearly futile. "If a proposed amendment is not clearly futile, then denial of leave to amend is improper." 6 Charles Alan Wright et al., Federal Practice Procedure § 1487, at 637-43 n. 23 (2d ed. 1990) (emphasis added). The court may deny a motion to amend as futile if the proposed amendment would not withstand a motion to dismiss or otherwise fails to state a claim upon which relief may be granted. Ketchum v. Cruz, 961 F.2d 916, 920 (10th Cir. 1992); Schepp v. Fremont County, 900 F.2d 1448, 1451 (10th Cir. 1990). "Thus, the court must analyze a proposed amendment as if it were before the court on a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6)." Sheldon v. Vermonty, 204 F.R.D. 679, 682 (D.Kan. 2001).
In this respect, a brief history of this case is warranted. Plaintiff's amended complaint seeks recovery of benefits under an ERISA long-term disability (LTD) plan against Hartford and MGIS (Counts I II, respectively), and alleges negligence on the part of MSR and PCS in implementing the LTD plan (Counts III IV, respectively). Hartford and MGIS filed motions to dismiss Counts I and II for failure to state a claim upon which relief can be granted (docs. 30 32). In plaintiff's response to these motions to dismiss (doc. 40), plaintiff did not argue that his amended complaint was sufficient to withstand a motion to dismiss. Instead, plaintiff acknowledged that his amended complaint was "incomplete and inappropriate" and that "[d]efendants' motions are not without merit."
Thus, plaintiff redrafted his complaint, presumably in a manner sufficient to withstand the motions to dismiss, and filed the present motion for leave to file a second amended complaint. Plaintiff's proposed second amended complaint differs from plaintiff's amended complaint in the sense that it modifies the nature of plaintiff's ERISA claims against Hartford and MGIS (Counts I II, respectively), and adds ERISA breach of fiduciary duty claims against Hartford, MGIS, and PCS (Counts III, IV V, respectively). As stated previously, in Hartford's response to the present motion, Hartford argues that plaintiff's proposed second amended complaint does not avoid Hartford's motion to dismiss because it fails to remedy the defects in plaintiff's amended complaint. Notably, plaintiff once again makes no attempt to explain to the court why his proposed second amended complaint is sufficient to withstand a motion to dismiss. Thus, the court does not have the benefit of any briefing from plaintiff that explains why plaintiff believes his claims against Hartford and MGIS can withstand a motion to dismiss.
The court will dismiss a cause of action under Rule 12(b)(6) only when it appears beyond a doubt that the plaintiff can prove no set of facts in support of the theory of recovery that would entitle him or her to relief, Conley v. Gibson, 355 U.S. 41, 45-46 (1957); Maher v. Durango Metals, Inc., 144 F.3d 1302, 1304 (10th Cir. 1998), or when an issue of law is dispositive. Neitzke v. Williams, 490 U.S. 319, 326 (1989). The court accepts as true all well-pleaded facts, as distinguished from conclusory allegations, and all reasonable inferences from those facts are viewed in favor of the plaintiff. Intercon, Inc. v. Bell Atlantic, 205 F.3d 1244, 1247 (10th Cir. 2000). The issue in resolving a motion such as this is not whether the plaintiff will ultimately prevail, but whether he or she is entitled to offer evidence to support the claims. Scheurer v. Rhodes, 416 U.S. 232, 236 (1974), overruled on other grounds, Davis v. Scheurer, 468 U.S. 183 (1984).
1. Facts.
According to the allegations in plaintiff's proposed second amended complaint, plaintiff is the senior pediatrician with PCS, a physican group that specializes in pediatric care. The medical practice was operated by St. Luke's Medical Group until February of 2000, when St. Luke's made a business decision to divest itself of this pediatric medical practice. Plaintiff and his colleagues formed PCS shortly before the divestiture, and consulted MSR, an insurance broker, to secure replacement insurance coverages and benefits, including LTD insurance coverage. MSR recommended that PCS select an LTD policy offered by Hartford and serviced by MGIS because this policy offered a "no-loss/no-gain" provision. "In insurance parlance, `No Loss/No Gain' typically means that a replacement group insurance policy will not impose waiting periods or exclude individuals from coverage who were covered under the policy being replaced." Coyne Delany Co. v. Selman, 98 F.3d 1457, 1461 (4th Cir. 1996). Thus, in this case, the no-loss/no-gain provision meant the plan would accept all participants as they were in their prior plan and that the participants would not be adversely affected by prior existing medical conditions. This provision was important to PCS because the physicians did not wish to lose the LTD benefits provided in their prior plan, and it was particularly important to plaintiff because he had previously been treated for a cancer-related illness that was in remission at the time.
The LTD policy offer was dated March 14, 2000, and the offer implied to plaintiff and PCS that Hartford would backdate the policy to March 1, 2000, in order to ensure that the no-loss/no-gain provision had its desired effect. PCS accepted this offer and forwarded it to MSR. Hartford and MGIS knew the no-loss/no-gain provision was material to plaintiff and PCS, but Hartford and MGIS nevertheless altered the application for the LTD policy to reflect an effective date of April 1, 2000, which effectively eliminated the no-loss/no-gain provision from the policy. Hartford and MGIS did not notify PCS of the altered term but, instead, asked PCS's office manager to acknowledge receipt of the plan documents. Hartford and MGIS knew that MSR was in a better position than PCS to become aware of the alteration, yet they did not provide documents to MSR. MGIS forwarded PCS a group benefits summary form from which MGIS omitted any reference to the fact that the no-loss/no-gain provision had been deleted or that the effective date of the plan had been changed. Meanwhile, Hartford and MGIS deliberately continued to charge PCS the same premium for the no-loss/no-gain policy benefit as if it were part of the plan so that they would not raise the suspicions of plaintiff, PCS, and MSR.
Then, plaintiff sustained a reoccurrence of his preexisting medical condition, and was diagnosed as needing a stem cell transplant and related treatment in order to survive. He was unable to work for an extended period of time and was eligible for LTD benefits. Plaintiff consulted with MSR, which confirmed that the no-loss/no-gain provision was in the LTD policy, and plaintiff applied for LTD benefits. Then, MGIS advised MSR that the no-loss/no-gain provision had been excluded from the policy issued to PCS and, therefore, plaintiff's claim for LTD benefits would be denied because of his prior existing condition.
2. Recovery of Benefits Claims Against Hartford and MGIS.
In Counts I and II of plaintiff's proposed second amended complaint, plaintiff seeks to recover benefits due from Hartford and MGIS pursuant to ERISA. Section 502(a)(1)(B) of ERISA, 29 U.S.C. § 1132(a)(1)(B), provides that a plan participant may bring a civil action "to recover benefits due to him under the terms of his plan." ERISA expressly requires the terms of a benefit plan to be written in a formal plan document. 29 U.S.C. § 1102(a)(1). In this case, based on the allegations in plaintiff's proposed second amended complaint, according to the terms of the formal plan documents, plaintiff was not entitled to LTD benefits because the no-loss/no-gain provision was either not in the policy or else it was a nullity because of the lapse in coverage.
Plaintiff's argument is essentially premised on the notion that the terms of the LTD policy are erroneous because of the parties' informal communications. However, an ERISA plan generally may not be modified by informal communications, whether written or oral. Miller v. Coastal Corp., 978 F.2d 622, 624-25 (10th Cir. 1992) (written communications); Straub v. Western Union Telegraph Co., 851 F.2d 1262, 1265 (10th Cir. 1988) (oral communications). Thus, an ordinary common law estoppel claim is unavailable under ERISA. Miller v. Coastal Corp., 978 F.2d 622, 624-25 (10th Cir. 1992); Straub, 851 F.2d at 1265-66. However, both Miller and Straub left open "the possibility that estoppel might be applied in `egregious' or `extraordinary' circumstances, such as when the evidence demonstrated `lies, fraud, or intent to deceive' on the part of the defendant." Swearingen v. Honeywell, Inc., ___ F. Supp.2d ___, ___, (D.Kan. 2002), available at Case No. 01-2040-GTV, 2002 WL 341635, at *4 (Feb. 15, 2002) (quoting Miller, 978 F.2d at 625; and Kaferly v. U.S. West Techs., 189 F.3d 478 (10th Cir. 1999) (table), text available at No. 98-1165, 1999 WL 679682, at *10 n. 8 (Sept. 1, 1999)).
[T]he Tenth Circuit's opinions appear to indicate that if the court were to uphold a claim for estoppel under ERISA, it would do so only if: (1) the challenged representation concerned an unambiguous term of an employee benefit plan but was based on lies, fraud, intent to deceive or other egregious or extraordinary circumstances; or (2) the representation constituted an interpretation of an ambiguous term of an employee benefits plan.Id. at *4; see also Arocho v. Goodyear Tire Rubber Co., 88 F. Supp.2d 1175, 1184 (D.Kan. 1175) ("The Tenth Circuit . . . does not seem inclined to recognize an equitable estoppel claim unless the circumstances are `egregious' or `extraordinary.'").
In this case, plaintiff has alleged sufficiently egregious and extraordinary circumstances that the court is unwilling to hold, as a matter of law, that it would be clearly futile to allow plaintiff to amend his pleadings. Plaintiff does not clearly allege lies, fraud, or intent to deceive on the part of Hartford or MGIS. However, plaintiff alleges circumstances somewhat akin to gross negligence on the part of Hartford and MGIS because they quoted a policy with a no-loss/no-gain provision, allegedly knew the no-loss/no-gain provision was material to plaintiff and PCS, and yet they either deleted the no-loss/no-gain provision from the LTD plan or selected an effective date that completely deprived plaintiff of the benefit of this provision. Then, on the group benefits summary form, MGIS omitted any reference to the fact that the no-loss/no-gain provision had been deleted or that the effective date of the plan had been changed. Meanwhile, they continued to charge premiums for this provision. Even MSR, the insurance broker, believed the policy contained an effective no-loss/no-gain provision. Admittedly, the initial omission of an effective no-loss/no-gain provision from the policy may have been a mistake on the part of Hartford and MGIS. However, drawing all reasonable inferences in favor of plaintiff, as the court must, it appears that Hartford and MGIS may have taken affirmative actions to prevent plaintiff, PCS, and MSR from ascertaining this mistake in a timely manner that might have allowed them to seek alternative coverage that would have provided this important benefit. This conduct is on the borderline of being egregious and extraordinary, and the more appropriate course of action at this point is to allow plaintiff to have the opportunity to pursue discovery and develop the record to clarify this issue. Thus, the court will allow plaintiff leave to file a second amended complaint that alters the nature of plaintiff's recovery of benefits claims against defendants Hartford and MGIS.
3. Breach of Fiduciary Duty Claims Against Hartford, MGIS, and PCS.
In Counts III, IV, and V of plaintiff's proposed second amended complaint, plaintiff seeks to recover from Hartford, MGIS, and PCS on breach of fiduciary duty theories under ERISA, 29 U.S.C. § 1132(a)(2), (a)(3)(B). ERISA § 502(a)(2), 29 U.S.C. § 1132(a)(2), provides a cause of action for a breach of ERISA's fiduciary duties provisions. However, it is well settled that § 1132(a)(2) "does not authorize a participant or beneficiary to bring a private right of action for damages to redress a breach of fiduciary duty." Alexander v. Anheuser-Busch Cos., 990 F.2d 536, 540 (10th Cir. 1993) (citing Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 138 (1985) (further citations omitted); see, e.g., Swearingen, 2002 WL 341635, at *5 (holding that § 1132(a)(2) would not support the plaintiff's breach of fiduciary duty damage claims); Arocho, 88 F. Supp.2d at 1185 (same). In this case, plaintiff personally seeks to recover, as a plan participant, for the alleged breaches of fiduciary duty, which is exactly what the Supreme Court prohibited in Russell. Thus, plaintiff has failed to state a claim for breach of fiduciary duty under § 1132(a)(2).
The second statutory basis for plaintiff's breach of fiduciary duty claims is § 1132(a)(3)(B), which allows an ERISA plan participant "to obtain other appropriate equitable relief . . . to enforce . . . the terms of the plan." Under § 1132(a)(3), breach of fiduciary duty claims seeking individualized remedies are proper, even though those claims would not be cognizable under § 1132(a)(2). Varity Corp. v. Howe, 516 U.S. 489, 507-13 (1996).
In this case, plaintiff's breach of fiduciary duty claim under § 1132(a)(3) is arguably an equitable, alternative claim to plaintiff's recovery of benefits claim under § 1132(a)(1)(B). Therefore, because plaintiff already has a remedy to recover benefits under § 1132(a)(1)(B), equitable relief under § 1132(a)(3)(B) is arguably not "appropriate." See, e.g., Swearingen, 2002 WL 341635, at *5 (stating that "a participant or beneficiary will not be permitted to seek equitable relief under § 1132(a)(3) if he or she has another adequate ERISA remedy available to him or her"); Arocho, 88 F. Supp.2d at 1185 (holding the plaintiff could not state a claim for breach of fiduciary duty under § 1132(a)(3)(B) because the plaintiff had a § 1132(a)(3)(B) recovery of benefits claim).
However, plaintiff's breach of fiduciary duty claim is not solely a typical recovery of benefits claim. Significantly, in this case, plaintiff alleges that MGIS, acting as Hartford's agent, forwarded a group benefits summary form to PCS from which MGIS omitted any reference to the fact that the no-loss/no-gain provision had been deleted or that the effective date of the plan had been changed. Further, Hartford and MGIS allegedly failed to provide documents to MSR, who they knew was in a better position than PCS to become aware of the alteration. In addition, Hartford and MGIS deliberately continued to charge PCS the same premium for the no-loss/no-gain policy benefit as if it were part of the plan so that they would not raise the suspicions of plaintiff, PCS, and MSR.
Citing Consolidated Beef Indus. v. New York Life Insurance Co., 949 F.2d 960 (8th Cir. 1991), Hartford argues that ERISA's definition of fiduciary does not encompass decisions relating to plan design. The court expresses no view regarding the merits of this argument. Rather, even if the court were to deem this argument persuasive, that would not necessarily preclude plaintiff's breach of fiduciary duty claims against Hartford. This is because at least some of plaintiff's allegations are premised on Hartford's and MGIS's actions in administering the existing LTD plan such as allegedly providing PCS with an incomplete and misleading group benefits summary form. Had PCS had received a complete and accurate group benefits summary form that indicated the policy did not contain the material no-loss/no-gain provision, and that therefore its employees would receive no coverage if prior existing conditions were implicated, then presumably plaintiff and PCS would have known whether to seek alternative coverage that would have provided this important benefit.
Hartford's final argument is that § 1132(a)(3) only authorizes "appropriate equitable relief," and that does not encompass contractual claims for money or compensatory damages. In support of this argument, Hartford cites Great-West Life Annuity Insurance Co. v. Knudson, 122 S.Ct. 708 (2002), and Mertens v. Hewitt Assocs., 408 U.S. 248 (1993). The court has reviewed these two Supreme Court opinions, as well as subsequent interpretive precedent. The court is of the opinion that neither Great-West Life nor Mertens necessarily forecloses plaintiff from seeking monetary relief from Hartford on a breach of fiduciary duty theory under § 1132(a)(3).
The Tenth Circuit has specifically remarked that, while Mertens bars suits under § 1132(a)(3) for monetary damages against nonfiduciaries, it "does not answer whether money damages are available from fiduciaries." Zimmerman v. Sloss Equip., Inc., 72 F.3d 822, 829 n. 2 (10th Cir. 1995). Indeed, some circuits have allowed plaintiffs to recover monetary damages under § 1132(a)(3) on a breach of fiduciary duty theory. See, e.g., Clair v. Harris Trust Sav. Bank, 190 F.3d 495, 498 (7th Cir. 1999); Strom v. Goldman, Sachs Co., 202 F.3d 138, 144 (2d Cir. 1999). Great-West Life admittedly contains broad language that very well may ultimately prevent plaintiff from recovering monetary damages from Hartford on a breach of fiduciary duty theory. See, e.g., Kishter v. Principal Life Ins. Co., No. 00 CIV. 0013(MBM), 2002 WL 257683, at *2-*7 (S.D.N.Y. Feb. 22, 2002) (interpreting Great-West Life and concluding that the plaintiff could not recover monetary relief for a breach of fiduciary duty). However, Great-West Life involved very different circumstances than the present case, and there is not yet, to date, any case law from the Tenth Circuit that applies the Supreme Court's holding in Great-West Life to facts that are analogous to those in the present case.
The court has been unable to locate any precedent on this issue from the Tenth Circuit.
In sum, the court cannot say that allowing plaintiff leave to assert breach of fiduciary duty claims would be clearly futile. Accordingly, the court will grant plaintiff leave to file his proposed second amended complaint.
III. Hartford's and MGIS's Motions to Dismiss.
During a February 26, 2002-telephone status conference in this case, counsel concurred that Hartford's and MGIS's motions to dismiss (docs. 30 32) would be rendered moot if the court granted the plaintiff leave to file a second amended complaint. Accordingly, because the court is granting plaintiff leave to file a second amended complaint, Hartford's and MGIS's motions to dismiss are denied as moot.
IV. Hartford's Motion for a Protective Order.
Finally, the court will consider Hartford's motion for a protective order limiting plaintiff's discovery from Hartford to the administrative record (doc. 44), plaintiff's corresponding response (doc. 48), and Hartford's reply (doc. 50). As explained below, Hartford's motion is denied.
Fed.R.Civ.P. 26(c) provides that the court, upon a showing of good cause, "may make any order which justice requires to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense." Whether to enter a protective order rests within the sound discretion of the court. Thomas v. IBM, 48 F.3d 478, 482 (10th Cir. 1995). "[A] party is entitled to request a protective order to preclude any inquiry into areas that are clearly outside the scope of appropriate discovery." Caldwell v. Life Ins. Co. of N. Am., 165 F.R.D. 633, 637 (D.Kan. 1996). However, the party seeking a protective order has the burden to show good cause for it. Sentry Ins. v. Shivers, 164 F.R.D. 255, 256 (D.Kan. 1996). Thus, in this case, Hartford must show good cause for the requested protective order.
In order to determine whether good cause exists for the protective order, the court must first determine the scope of discovery. This scope is generally governed by Fed.R.Civ.P. 26(b), which provides:
Parties may obtain discovery regarding any matter, not privileged, that is relevant to the claim or defense of any party. . . . Relevant information need not be admissible at trial if the discovery appears to be reasonably calculated to lead to the discovery of admissible evidence.
(Emphasis added.) Thus, in this case, the scope of discovery must be viewed in light of the scope of evidence that is admissible in ERISA cases.
Hartford argues that plaintiff is limited to presenting only evidence contained within of the administrative record. This argument is based on the notion that the court will review the plan administrator's denial of benefits under the "arbitrary and capricious" standard of review because the LTD plan grants Hartford with discretion to determine plaintiff's eligibility for benefits under the plan. "In determining whether the plan administrator's decision was arbitrary and capricious, the district court generally may consider only the arguments and evidence before the administrator at the time it made that decision." Sandoval v. Aetna Life Cas. Ins. Co., 967 F.2d 377, 380 (10th Cir. 1992); see, e.g., Chambers v. Family Health Plan Corp., 100 F.3d 818, 823-24 (10th Cir. 1996) (affirming a motion in limine limiting the evidence in a decision reviewed under the arbitrary and capricious standard of review to the administrative record). However, the court finds this argument unpersuasive because plaintiff's recovery of benefits claim will likely be reviewed under the de novo standard of review.
Plaintiff's recovery of benefits claim against Hartford 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, in which case an arbitrary and capricious standard is appropriate. Firestone Tire Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). In this case, the LTD plan contains a heading entitled "Interpretation of Plan Terms and Conditions," which provides that Hartford has "full discretion and authority to determine Eligibility for benefits and to construe and interpret all terms and provisions of this plan." However, by its plain terms, this discretionary provision only pertains to construction and interpretation of the LTD plan. The parties appear to agree that plaintiff generally met the eligibility criteria, and that Hartford properly denied plaintiff's claim under a literal interpretation of the plan because of plaintiff's pre-existing condition. In this case, the parties dispute the actual terms of the plan, not whether Hartford construed and interpreted them correctly. Thus, although the plan vests Hartford with discretion, it does not vest Hartford with the relevant form of discretion to determine the terms and conditions of the plan. See, e.g., Gust v. Coleman Co., Inc., 740 F. Supp. 1544, 1550 (D.Kan. 1990), aff'd, 936 F.2d 583 (10th Cir. 1991) (table) (noting that discretionary authority must be specifically set forth in the plan before the more deferential arbitrary and capricious standard is invoked). Therefore, the court will likely review plaintiff's claim for recovery of benefits under the de novo standard of review.
Under the de novo standard of review, the evidentiary restrictions are less clear:
Circuit Courts have reached differing conclusions on this issue, with some holding that a de novo standard of review does not permit the consideration of evidence not presented to the administrator, while others have held that a court conducting a de novo review must examine all facts available, not just those considered by the plan administrator at the time of the benefits denial. Some Circuit Courts require a good cause showing before allowing examination of evidence not before the administrator.
James F. Jorden et al., Handbook on ERISA Litigation § 4.04[C], at 4-38 (2d ed. Supp. 2002) (footnotes omitted).
Some case law from this jurisdiction suggests that, even under the de novo standard of review, the court should limit evidence to the record before the plan administrator. See, e.g., Hammers v. Aetna Life Ins. Co., 962 F. Supp. 1402, 1406 (D.Kan. 1997) (limiting its review to evidence before the plan administrator); Caldwell v. Life Ins. Co. of N. Am., 165 F.R.D. 633, 637 (D.Kan. 1996) (citing case law). On the other hand, one case explicitly holds that if the court will likely adopt a de novo standard of review to decide the case, "plaintiff may pursue discovery beyond the administrative record." Penyak v. Unum Life Ins. Co. of Am., Case No. 97-2117-EEO, 1998 WL 608226, at *1 (D.Kan. Sept. 8, 1998) (citing Blair v. Metropolitan Life Ins. Co., 974 F.2d 1219, 1222 (10th Cir. 1992); and Masella v. Blue Cross Blue Shield, 936 F.2d 98, 104 (2d Cir. 1991)). The court has been unable to locate any Tenth Circuit case that sets forth the evidentiary restrictions, if any, that apply when the court applies the de novo standard of review in an ERISA case. Therefore, the possibility certainly exists that the court will ultimately follow the approach that "a court conducting a de novo review must examine all facts available, not just those considered by the plan administrator at the time of the benefits denial" or, alternatively, that the plaintiff will have to make a "good cause showing" before the court will consider evidence that was not before the administrator. Jorden et al., supra. Thus, because the scope of admissible evidence is potentially much broader than the administrative record, it would be inappropriate for the court to restrict the scope of discovery solely on this basis. Accordingly, Hartford has failed to demonstrate good cause for the requested protective order.
V. Conclusion and Order.
In consideration of the foregoing,
IT IS HEREBY ORDERED:
1. Plaintiff's motion for leave to file second amended complaint (doc. 41) is granted. Accordingly, the clerk shall file plaintiff's second amended complaint, and plaintiff shall then proceed in accordance with D. Kan. Rule 15.1.
2. MGIS's and Hartford Life's motions to dismiss plaintiff's first amended complaint (docs. 30 32) are denied as moot.
3. Hartford Life's motion for a protective order limiting discovery to the administrative record (doc. 44) is denied.
4. The clerk shall mail copies of this memorandum and order to all counsel of record.