Reinsurance Law Blog : Oklahoma Insurance Lawyer & Attorney : Stauffer & Nathan Law Firm

Lee v. Max does not involve insurance, but it does involve issues that arise in many insurance (and other) cases -- discovery disputes.  Here, the plaintiff failed to turn over documents in discovery, then failed to turn them over after an order compelling the turnover was granted; and then failed to timely turn them over after they were ordered to do so by the court again.  The last time, they turned some more stuff over and certified under penalty of perjury that all the documents were turned over -- and then turned over some more.  While the Tenth Circuit prefers that the district court say why it is dismissing a case for discovery sanctions, if the Tenth Circuit can figure it out, it can decide it.  Here, it was easy to tell what happened, and the fact that the plaintiff failed to comply with two court orders on discovery was sufficient to support dismissal.

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The Tenth Circuit clarified the appropriate standard for discovery related to a dual role conflict of interest in ERISA cases in Murphy v. Deloitte & Touche Group based on the recent Supreme Court decision of  Metropolitan Life Insurance Co. v. Glenn, 554 U.S. 105, 128 S.Ct. 2343 (2008). While the holding did not change Tenth Circuit law, the court felt it was appropriate to clarify its prior holdings.  

In an ERISA case where the plan “‘gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan,’” the  administrator’s decision is reviewed for an abuse of discretion – and in this context, abuse of discretion and arbitrary and capricious are the same standard.  

In reviewing a plan administrator’s decision under the arbitrary and capricious standard, the federal courts are limited to the administrative record.  As a result, discovery is generally inappropriate in these cases.  The court found that while case law prohibits courts from considering materials outside the administrative record where the extra-record materials sought to be introduced relate to a claimant’s eligibility for benefits, this general restriction does not conclusively prohibit a district court from considering extra-record materials related to an administrator’s dual role conflict of interest. Therefore, discovery related to the scope and impact of a dual role conflict of interest may, at times, be appropriate.  The appropriateness of such discovery is governed by Fed.R.Civ.P.  Rule 26(b).  A district court has substantial discretion in handling discovery requests under Rule 26(b).

 

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