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Quarles v. Hartford Life & Accident Insurance Co.

United States District Court, W.D. Kentucky, Louisville Division

January 23, 2018



          David J. Hale, Judge United States District Court.

         Plaintiff Emmanuel J. Quarles filed this Employee Retirement Income Security Act (ERISA) action against Defendant Hartford Life & Accident Insurance Company after Hartford terminated his long-term disability benefits. (Docket No. 1) Quarles filed a motion to compel Hartford to respond to written discovery requests and to cooperate in scheduling depositions. (D.N. 30) Magistrate Judge Colin H. Lindsay issued a Memorandum Opinion and Order denying Quarles's motion to compel. (D.N. 38) Quarles timely objected to Judge Lindsay's ruling. (D.N. 40) For the reasons discussed below, Quarles's objections will be overruled.


         Quarles brought ERISA claims pursuant to 29 U.S.C. § 1132(a)(1)(B) and § 1132(a)(3) to enforce the terms of his insurance policy and to obtain past benefits, future benefits, declaratory relief, and other equitable relief. (D.N. 1) Only his § 1132(a)(1)(B) claim remains in this action, as the Court previously dismissed his § 1132(a)(3) claim. (D.N. 37)

         Quarles moved to compel Hartford to respond to requests for production and interrogatories concerning its affirmative defenses, the compensation and bonus structure for its claims and appeals personnel, its reasons for terminating his claim and denying his appeal, and its organizational structure. (D.N. 30) In his motion, Quarles also requested that the Court (1) order Hartford to cooperate in scheduling depositions of a company representative pursuant to Federal Rule of Civil Procedure 30(b)(6); the person who signed his claim denial letter; and the person who signed his appeal denial letter and (2) impose sanctions on Hartford for refusing to respond to his discovery requests and to cooperate in scheduling depositions in good faith. (Id.) Judge Lindsay denied Quarles's motion to compel based on Hartford's supplemental discovery responses and stipulation that the Court would review its decision to terminate benefits de novo. (D.N. 38) Quarles objected to Judge Lindsay's order, arguing that Hartford's stipulation as to the standard of review did not alter its discovery obligations and that he was entitled to all of the requested discovery. (D.N. 40) Without seeking leave of Court, Hartford filed a response to Quarles's objections (D.N. 41), which the Court will disregard as it was filed in violation of the Joint Local Rules of Civil Practice. See LR 72.2 (“Unless directed by the Court, no party may file any response to a written objection [to a non-dispositive order of a magistrate judge].”).

         II. STANDARD

         Federal Rule of Civil Procedure 72(a) provides that the Court must “modify or set aside any part of the [magistrate judge's] order that is clearly erroneous or is contrary to law.” Fed.R.Civ.P. 72(a). “The magistrate judge's factual findings are reviewed under the clearly erroneous standard.” Blackwell v. Liberty Life Assurance Co. of Boston, No. 3:15-cv-376-DJH, 2017 WL 927239, at *2 (W.D. Ky. Mar. 8, 2017) (quoting Scott-Warren v. Liberty Life Assurance Co. of Boston, No. 3:14-CV-00738-CRS-CHL, 2016 WL 5661774, at *3 (W.D. Ky. Sept. 29, 2016)). “Clear error exists ‘when the reviewing court is left with the definite and firm conviction that a mistake has been committed.'” Id. (quoting Max Trucking, LLC v. Liberty Mut. Ins. Corp., 802 F.3d 793, 810 (6th Cir. 2015)). “On the other hand, the magistrate judge's legal conclusions are reviewed under the ‘contrary to law' standard.” Id. (quoting Scott-Warren, 2016 WL 5661774, at *3). “A legal conclusion is contrary to law when it contradicts or ignores applicable legal principles found in the Constitution, statutes, and case precedent.” Id. (quoting Scott-Warren, 2016 WL 5661774, at *3).


         A. Discovery in ERISA Cases

         “While parties in a civil action may generally obtain discovery regarding any unprivileged matter that is relevant to the claim or defense of any party, discovery is limited in cases arising under ERISA.” Moss v. Unum Life Ins. Co., 495 F. App'x 583, 596 (6th Cir. 2012). “In reviewing a denial of benefits claim, ‘the district court [is] confined to the record that was before the Plan Administrator.'” Id. at 597 (quoting Wilkins v. Baptist Healthcare Sys., Inc., 150 F.3d 609, 615 (6th Cir. 1998)). “The district court should consider outside evidence ‘only if that evidence is offered in support of a procedural challenge to the administrator's decision, such as an alleged lack of due process afforded by the administrat[or] or alleged bias on its part.'” Id. (quoting Wilkins, 150 F.3d at 619 (Gilman, J., concurring)). Thus, the Court may allow limited discovery “when an ERISA claimant alleges bias by the plan administrator or a violation by the plan administrator of his or her due process rights.” Davis v. Hartford Life & Accident Ins. Co., No. 3:14-CV-00507-TBR, 2015 WL 7571905, at *2 (W.D. Ky. Nov. 24, 2015). In such cases, “appropriate areas of discovery include whether ‘(i) there is a history of biased claim denials; (ii) the employer has made measures to reduce bias and promote accuracy; and (iii) company policies reward or encourage denials.'” Id. at *3 (quoting Kasko v. Aetna Life Ins. Co., 33 F.Supp.3d 782, 788 (E.D. Ky. 2014)).

         Hartford has stipulated to a de novo standard of review for purposes of this case. (D.N. 33) Judge Lindsay reasoned that because the Court would apply de novo review, “there [was] no need for discovery regarding any factors internal to Hartford that may have influenced the persons who made the decision to terminate Quarles's long-term disability benefits or to deny his appeal.” (D.N. 38, PageID # 1038) Judge Lindsay therefore denied the motion to compel Hartford to produce information on employee compensation, employee bonus and incentive structure, and company organization, as well as the deposition requests, because the requested materials were aimed at uncovering evidence of conflicts of interest and bias-concerns that were diminished by the Court's de novo review of Hartford's decisions. (See id., PageID # 1042-43, 1045-47)

         As Judge Lindsay noted (id., PageID # 1029-30), it appears that the Sixth Circuit has not squarely addressed the relevance of conflict or bias discovery within the context of de novo review. However, trial courts within the Sixth Circuit typically conclude that potential conflicts of interest or bias are relevant only if the Court is applying arbitrary-and-capricious review. See Sim v. Reliance Standard Life Ins. Co., No. 1:15-cv-390, 2016 WL 319868, at *1 n.1 (S.D. Ohio Jan. 26, 2016) (“It is appropriate for the Court to consider the applicable standard of review at this juncture because whether discovery is permitted to explore defendants' alleged bias is irrelevant if the standard of review is de novo.”); Smiertka v. Guardian Life Ins. Co. of Am., No. 1:12-CV-99, 2013 WL 1304498, at *6 (W.D. Mich. Mar. 28, 2013) (quoting Daul v. PPM Energy, Inc., No. 08-CV-524-AC, 2010 WL 3945001, at *10 (D. Or. Oct. 6, 2010)) (“[I]n ERISA benefits cases, conflict of interest discovery can only be relevant if the standard of review is abuse of discretion. If . . . the standard of review is de novo, then conflict of interest discovery is irrelevant.”); Mulligan v. Provident Life & Accident Ins. Co., 271 F.R.D. 584, 588 n.5 (E.D. Tenn. 2011) (“An administrator's conflict of interest is relevant only if the administrator's decision is to be reviewed under the arbitrary and capricious standard of review.”); Guy v. Sun Life Assurance Co. of Can., No. 10-CV-12150-DT, 2010 WL 5387580, at *1 (E.D. Mich. Dec. 22, 2010) (“If the standard of review is de novo, Defendant's decision-making, and its conflict of interest, becomes irrelevant. . . . If Plaintiff prevails in her argument that the court should conduct a de novo review of the administrative record, then her motion to compel becomes moot.”); McCollum v. Life Ins. Co. of N. Am., No. 10-11471, 2010 WL 5015394, at *2 (E.D. Mich. Dec. 3, 2010) (“[T]he court will review Plaintiff's denial of benefits de novo, so no discovery is needed on [the insurance company's] structural conflict of interest.”); Price v. Hartford Life & Accident Ins. Co., 746 F.Supp.2d 860, 866 (E.D. Mich. 2010) (“If the standard of review is de novo, then the significance of the administrator's conflict of interest evaporates.”); Weidauer v. Broadspire Servs., Inc., No. C-3-07-097, 2008 WL 4758691, at *10 (S.D. Ohio Oct. 27, 2008) (“However, since a plan administrator's decision is accorded no deference or presumption of correctness when conducting a de novo review, whether there is a conflict of interest in this case is irrelevant.”). In light of this well-reasoned and persuasive authority, and in the absence of guidance from the Sixth Circuit, Judge Lindsay's conclusion that no discovery is needed on Hartford's potential conflict of interest or bias was not contrary to law.[1] See Blackwell, 2017 WL 927239, at *2; McCollum, 2010 WL 5015394, at *2. (See D.N. 33) The Court will now address the specific areas of dispute in this case.

         B. Requests for Production and Interrogatories

         1. ...

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