Smith v. First UNUM Life Insurance Company

Background

David Smith sued First Unum Life Insurance Company and Prestige Employee Administrators II Inc., alleging violations of the Employee Retirement Income Security Act of 1974, a federal law governing employee-benefit plans. The dispute arose from First Unum’s denial of Smith’s long-term disability claim. First Unum determined that Smith’s disability began on January 25, 2017, and denied his claim as untimely because he submitted it on May 24, 2018, more than one year later.

Smith alleged that First Unum’s denial was arbitrary, erroneous, and influenced by bias or self-interest. First Unum served as both the administrator of the disability plan and the party paying benefits, which the court described as a structural conflict of interest. During discovery, Smith requested twelve categories of documents and sought to depose three First Unum employees involved in denying or reviewing his claim. First Unum objected to most of the requests and declined to produce the employees for depositions without further court direction.

Legal standard

The court explained that review of an Employee Retirement Income Security Act benefits decision is usually limited to the administrative record—the materials before the benefits administrator when it made its decision. Additional evidence may be considered for good cause, including evidence of a conflict of interest. For discovery intended to support a later request to introduce evidence outside that record, the court applied a “reasonable chance” standard because both parties asked it to do so. Under that standard, a claimant must show more than the administrator’s structural conflict alone and must provide some factual basis suggesting that the conflict may have affected the benefits decision.

The court found that Smith met this threshold for limited discovery. First Unum’s initial denial letter did not clearly explain why January 25, 2017 was Smith’s disability date, while a later appeal letter supplied additional explanations. The court found that this difference raised a sufficient question about whether First Unum developed a self-serving explanation after the initial denial. The court did not decide which party’s interpretation of the policy was correct; it considered the issue only in deciding whether limited discovery was justified.

Rulings on the discovery requests

The motion to compel was granted in part and denied in part.

The court granted the motion as to Requests for Production Nos. 1 and 2, but only within a limited scope. First Unum had to produce training materials, protocols, manuals, or guidelines that were provided to the employees involved in Smith’s claim and that concerned determining the disability date, calculating gross income, or interpreting policy provisions cited in the denial letters. The court stated that email communications providing guidance to those employees did not have to be produced under this ruling.

The court also granted the motion as to Requests Nos. 4, 5, and 7 within the permitted scope. First Unum had to produce documents showing whether and how it provided financial incentives or disincentives to employees who made long-term disability claim decisions, and whether and in what amount the three decision makers received financial incentives, disincentives, or performance-based bonuses.

The court denied the motion as to Requests Nos. 6, 8, and 9. Those requests sought performance evaluations, information about lawsuits involving the decision makers, and their claim-approval or claim-denial rates. The court found these requests insufficiently connected to Smith’s claim and reasoned that negative evaluations, lawsuits, or denial rates would not by themselves establish bias or show that the decision makers’ conduct was connected to Smith’s denial.

The court denied the motion as to Request No. 10, which sought the decision makers’ resumes. It found that the resumes concerned the merits or reasonableness of the claim decision rather than evidence of bias. The court also denied the motion as to Request No. 11, which sought communications between First Unum, MHR Fund Management LLC, and Prestige concerning Smith that were outside the claims and appeal files. Smith had not made a factual showing that the administrative record was incomplete.

The court denied the motion as to Requests Nos. 3 and 12. It found those requests overbroad or duplicative because they sought broad categories of policies, standards, and measures to reduce bias without limiting them to materials directly related to Smith’s claim or provided to the decision makers.

Depositions and final disposition

The court denied, without prejudice, Smith’s request to depose the three individual decision makers. Instead, it permitted Smith to depose a First Unum representative under Federal Rule of Civil Procedure 30(b)(6) within sixty days after entry of the opinion. The deposition was to address topics within the limited discovery scope described in the opinion, and the parties were directed to try to resolve disputes about those topics.

In its conclusion, the court stated that the motion to compel was granted to the extent it sought documents responsive to Requests Nos. 1, 2, 4, 5, and 7 within the stated limits, and that First Unum had to produce a Rule 30(b)(6) representative. The motion was denied as to the individual decision-maker depositions, without prejudice, and denied as to document Requests Nos. 3, 6, 8, 9, 10, 11, and 12, with prejudice. The court also stated that it intended to refer pretrial discovery to Magistrate Judge Judith C. McCarthy.