Roy Neil Johnston, M.D. v. Aetna Life Insurance Company involves the scope of permissible discovery in an ERISA lawsuit brought when an insurer terminates a claimant’s short-term disability benefits and denies him long-term disability benefits. Aetna initially found Johnston disabled based on the opinion of its own independent neurologist. Apparently, Aetna’s medical review found Johnston to be disabled, but it denied disability benefits based on a surveillance video.
Johnston argued discovery should be permitted of any information the decision-maker used in its decision to deny him disability benefits, and that information may not be contained in the technical administrative record. For example, among other things, Johnston wanted to know the qualifications of the physicians whose opinions Aetna relied on in denying his claim.
Aetna vehemently objected to any discovery outside the technical administrative record. It argued that the administrative record contained all the information relied upon in evaluating Johnston’s claim. It relied on an unpublished opinion for its authority. The Florida District Court Judge disagreed with Aetna, and gave a number of reasons why the case relied upon by Aetna was wrong.
The Court also noted that Aetna, as both the evaluator and payer of claims, had a structural conflict that opened the door to the need for broader discovery than just that limited to the administrative record. Ultimately, the Court agreed with Johnston and granted most of his comprehensive discovery request.
The “Cerrito Factors” Allowing for Full Discovery
The Court relied on a 2002 case from the Middle District of Florida which established permissible discovery in order to assist the court in evaluating:
1. The nature of the information relied upon by the fiduciary in making its decision.
2. Whether the fiduciary was competent to evaluate the information in the administrative record.
3. How the fiduciary reached its decision.
4. Whether the information in the record gave rise to a fiduciary duty to seek outside assistance in order to reach a “fair and full review” of the claim.
5. To determine if the fiduciary had a conflict of interest.
This Court noted that Aetna’s same counsel had represented Aetna in two other similar cases involving discovery. In both cases, the plaintiff’s request for discovery outside of the administrative record had been granted based on the Cerrito factors, yet Aetna failed to mention these two cases in its argument to the Court hearing this case and also failed to cite the Cerrito case.
Although the Court made it clear that Aetna’s counsel had done nothing wrong by its omission, it did lend credence to Plaintiff’s claim that limiting discovery to the administrative record, when Aetna was the entity who determined what went into that record, was “akin to having the fox guard the henhouse.”
Ultimately, relying not only on Cerrito, but also post Cerrito cases, the Court concluded that wide-ranging discovery was permitted. The Court articulated the principles upon which it based its decision.
1. Review of the denial of benefits is generally limited to consideration of the material available to and relied upon by the plan administrator at the time it made its decision.
2. This available material may not be limited to the administrative record which is, “after all, prepared by the plan administrator.”
3. Material available may be oral. This allows the plaintiff to ask the plan administrator if it relied on any oral material and, if so, to identify the material and its influence on the decision.
4. When the defendant is both funding the plan and evaluating claims, there is a conflict and some discovery about the conflict is allowable.
5. When there is a conflict, the claims manual is discoverable.
6. Even though a structural conflict may broaden the scope of discovery, there are limits to what Plaintiff is permitted to discover.
7. Permitted discovery must still comply with Rule 26(b)(1).
8. Plaintiffs may discover the credentials of the physicians who participated in the analysis of their claim.
9. When there is a structural conflict, Plaintiff may discover whether anyone involved in claims processing receives any benefits based on their track record of approving or denying claims.
10. Plaintiff may discover relevant portions of the claims manual to determine if the administrator complied with applicable rules and internal guidelines.
11. Discovery of events after the denial of benefits is not discoverable.
12. Plaintiff is entitled to a copy of the surveillance report and may inquire as to the reasons surveillance was initiated.
13. Plaintiff is entitled to take depositions of Aetna’s witnesses, but is limited to questioning consistent with the Court’s opinion.
Fiduciary Exception to Attorney-Client Privilege
The Court agreed with Plaintiff that there may be a fiduciary exception that would allow discovery of pre-litigation communications between Aetna and its in-house legal counsel, and possible discovery of post-litigation communications about events before the lawsuit was filed. The Court ordered some documents to be provided for in-camera review prior to the Court determining whether or not the communications were discoverable.
Although this case was not handled by our office, we think it can be helpful to any claimant who is attempting discovery outside the administrative record in helping determine the reasons behind the denial or termination of disability benefits. For assistance with this issue, or any other aspect of your disability claim, contact one of our experienced disability attorneys at Dell & Shaefer. We offer a free case evaluation.