In ruling on an action to recover ERISA benefits, a court generally considers only the evidence contained in the administrative record. However, in certain circumstances, a plaintiff in an ERISA case may be able to introduce evidence outside of the administrative record either by way of discovery or a motion to augment the administrative record.The Ninth Circuit has established guidelines for when the admission of new evidence is appropriate. “[T]he district court should exercise its discretion to consider evidence outside of the administrative record ‘only when the circumstances clearly establish that additional evidence is necessary to conduct an adequate de novo review of the benefit decision.’” Opeta v. Nw. Airlines Pension Plan for Contract Emp., 484 F.3d 1211, 1217 (9th Cir. 2007) (emphasis in original).
Recently, in the matter of Kip Jones v. Life Insurance Company of North America, et al., 2020 WL 2126498 (D. Ariz.May 5, 2020), an Arizona District Judge granted the plaintiff’s request to conduct discovery related to the potential bias of the plan administrator’s medical experts that were utilized during the underlying claims review process. In Jones, the plaintiff filed a lawsuit against Life Insurance Company of North America (“LINA”) after it determined that he no longer met the policy’s definition of “disabled” and, as a result, terminated his life insurance waiver of premium benefit. LINA’s decision relied entirely on paper reviews from its reviewing experts. The plaintiff sought discovery into LINA’s relationships with the vendors that provided the reviewing experts and its history with the experts themselves.
In permitting the requested discovery, the Court recognized that the outcome of the case turned on the credibility of the experts and that “where an expert or the third-party vendor who supplies that expert has a long-standing relationship with or receives substantial compensation from a carrier or industry, and overwhelmingly renders opinions in their favor, such evidence might be important in accessing that expert’s bias and credibility.”
The Court also found that the plaintiff’s unchallenged representations about LINA’s relationship with its vendors and their experts raise a concern regarding the fairness of LINA’s claims handling and that this concern warranted discovery into LINA’s relationships with those vendors and the experts who rendered opinions upon which the decision to terminate plaintiff’s claim was based. In addition, the Court rejected LINA’s argument that the requested discovery was not proportional to the needs of the case because the plaintiff would neither win a large amount of money, nor vindicate vitally important personal or public values. The Court found that the life insurance waiver of premium benefit was a valuable benefit and that the plaintiff’s qualification for the benefit was an important issue at stake in the action.
Ultimately, the Court found that discovery into the potential bias of experts rendering opinions was relevant and met the high burden for discovery in an ERISA case. The Court explained:
LINA will be required to respond to discovery that delves into the number of times it retained and the amount of money it paid to third-party vendors in disability and LWOP claims and medical reviewers utilized here, LINA-generated performance evaluations of these vendors and medical reviewers, the number of times they concluded that a claimant could perform work, LINA-generated performance evaluations for LINA employee Mary Faltaous, and any guidelines and manuals used by LINA in evaluating this claim . . .. The Court finds that LINA has the resources to respond to the discovery requests and is the only party with access to the requested discovery. The Court further finds that the discovery ordered herein is relevant and proportional to the needs of the case and that the burden or expense of the discovery does not outweigh its likely benefit.Id. at *5.
The plaintiff in Jones also sought to supplement the administrative record with a letter from his treating physician responding to LINA’s doctors’ record reviews. The plaintiff asserted that LINA had not provided him the opportunity to respond to the record reviews during the appeal process. LINA argued, among other things, that ERISA regulations do not contemplate the disclosure of reviewing doctors’ opinions prior to the appeal being decided. The Court rejected this argument and granted the plaintiff’s motion to supplement the administrative record. In granting the motion, the Court relied on Salomaa v. Honda Long Term Disability Plan, 642 F.3d 666 (9th Cir. 2011), which found that failing to furnish medical reports violated ERISA by denying the claimant’s physicians the opportunity to submit written comments and perform additional examinations.
Although discovery in ERISA cases is generally limited, the Jones case establishes an important trend that, in certain circumstances, courts will permit discovery in de novo review cases to uncover insurance company bias. ERISA claimants seeking to conduct discovery into this issue can look to the Jones case as excellent support for allowing such discovery.