Court Allows Discovery Into Hartford’s Bias in ERISA Case
In a Kentucky lawsuit involving disability benefits denied by Hartford Life and Accident Insurance Company under an employer’s group plan, a federal judge has allowed discovery into whether Hartford’s conflict of interest impacted its decision to deny the claim. “Discovery” is the legal term for deposition testimony and document requests used to investigate facts in a lawsuit. In this ERISA lawsuit, the plaintiff who had been denied benefits sought discovery into Hartford’s bias, because Hartford both insures the employer’s plan, but also decides and pays the claims which it insures. The federal judge held that the plaintiff was entitled to discovery into Hartford’s conflict of interest.
Limited Discovery is Permitted in Kentucky ERISA Lawsuits
Kentucky’s federal courts sit within the Sixth Circuit, a region of federal courts that covers states from Tennessee to Michigan. The Sixth Circut Court of Appeals and courts within it have held that
Generally, in an ERISA action, a “claimant may not seek discovery outside the administrative record.” Kasko v. Aetna Life Ins. Co., 33 F. Supp. 3d 782, 785 (E.D. Ky. 2014) (citing Wilkins v. Baptist Healthcare Sys., Inc., 150 F.3d 609, 618 (6th Cir. 1998)). However, while discovery is ordinarily confined to the administrative record, limited discovery outside of the record is permitted when it is “offered in support of a procedural challenge to the administrator’s decision, such as an alleged lack of due process afforded by the administrator or alleged bias on its part.” Johnson v. Conn. Gen. Life Ins. Co., 324 Fed. Appx. 459, 466 (6th Cir. 2009) (citing Wilkins, 150 F.3d at 619 (Gilman, J., concurring)). Therefore, the Sixth Circuit limits discovery in ERISA actions but does not prohibit it. Gluc v. Prudential Life Ins. Co. of Am., 309 F.R.D. 406, 411-12 (W.D. Ky. 2015).
The “administrative record” referred to above is basically the insurer’s claim file. ERISA cases are often decided without trials, based solely on the paper and electronic records that were submitted during the claim.
Court Rules That Depositions of Hartford Employees Must Take Place Where the Employees Work
Citing to other judge’s decisions in the Sixth Circuit, the Kentucky federal judge ruled that the Plaintiff would have to take depositions of the Hartford employees in the cities where they worked: Minneapolis, Minnesota; Alpharetta, Georgia; and Hartford, Connecticut. Having to travel to take depositions of insurance company employees is not uncommon in ERISA cases. The court ruled that absent some special circumstances, Hartford does not have to produce its employees where the lawsuit was filed (in this case, Louisville, Kentucky), and Hartford’s ERISA claim handlers must be deposed where they work.
Court Limits Depositions To Topics Related to Conflict of Interest
The judge found that some broad topics which the Plaintiff’s attorney listed for the depositions did relate to conflict of interest. Included in the areas of questioning the court allowed in this ERISA case were:
- Hartford’s training practices of its claims personnel to comply with ERISA’s claim regulations; and
- Hartford’s incentive, bonus, or reward programs or systems that Hartford has for its disability claims personnel.
The court was trying to “narrowly tailor” the discovery it was allowing to those areas which could be related to Hartford’s bias or conflict.
TAKEAWAY: Courts allow limited discovery in many ERISA cases, and conflict of interest is one area that courts will permit to be included in discovery to an ERISA plan administrator or ERISA insurance company.
CASE: Richard Davis v. Hartford Life & Accident Insurance Company, Civil Action No. 3:14-CV-507-TBR (W.D. KY 7/13/2016).
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