United States District Court, D. Arizona
ORDER
HONORABLE JOHN J. TUCHI UNITED STATES DISTRICT JUDGE
At
issue is Plaintiff Christina Renowden's Motion to Vacate
Scheduling Order and Set a Scheduling Conference (Doc. 24,
Mot.), to which Defendant Prudential Insurance Company of
America (“Prudential”) filed a Response (Doc. 25,
Resp.), and Plaintiff filed a Reply (Doc. 34, Reply).
I.
BACKGROUND
Plaintiff,
a former employee of Walgreen Company, was enrolled in an
employee insurance plan. (Doc. 1, Compl. ¶ 15.)
Defendant was the insurer and claims administrator under the
policy. (Compl. ¶ 8.) Plaintiff alleges that she became
disabled in 2016 and had to stop working. (Compl. ¶ 17.)
Soon after, Plaintiff filed a claim for the Group Life
Insurance Premiums Waiver benefit under her policy, seeking
life insurance coverage free of premiums due to her
disability. (Compl. ¶ 19.) Defendant denied
Plaintiff's claim. (Compl. ¶ 25.) Around the same
time, Plaintiff filed a long-term disability claim under a
group long-term disability policy also insured and
administered by Defendant, and that claim was approved.
(Compl. ¶¶ 33-35.)
On
September 27, 2018, Plaintiff filed a Complaint seeking
review, pursuant to the Employment Retirement Income Security
Act (“ERISA”), 29 U.S.C. § 1132(e)(1) and
§ 1132(f), of the decision to deny her benefits under
her Policy's Life Insurance Premiums Waiver benefit. As
is the Court's policy, it issued a Rule 16 Scheduling
Order in an Action for Review on an Administrative Record
ERISA Case. (Doc. 18.) This version of the standard Rule 16
Scheduling Order contemplates the traditional ERISA case,
where the dispute focuses on the administrative record and
additional discovery is not required. Plaintiff now moves to
vacate the Scheduling Order on the basis that “the
Court misstate[d] Plaintiff's cause of action as one for
the review of an administrative decision” and
“because discovery is permitted in this circuit to
allow the Court to assess whether . . . any conflict of
interest . . . improperly influenced Defendant's decision
to deny the claim.” (Mot. at 2.)
II.
LEGAL STANDARD
In
ERISA cases, whether evidence outside the administrative
record may be admitted depends on the whether the court
reviews the benefits decision under an abuse of discretion or
de novo standard. See Abatie v. Alta Health
& Life Ins. Co., 458 F.3d 955 (9th Cir. 2006).
“[I]n general, a district court may review only the
administrative record when considering whether the plan
administrator abused its discretion, but may admit additional
evidence on de novo review.” Id. at
970.
As a
default, the Ninth Circuit applies a de novo review,
and in order to trigger “the more lenient abuse of
discretion, the plan must unambiguously provide discretion to
the administrator.” Abatie, 458 F.3d at 963.
In deciding whether the plan administrator has discretion,
“[t]he essential first step of the analysis . . . is to
examine whether the terms of the ERISA plan unambiguously
grant discretion to the administrator.” Id.
While “[t]here are no ‘magic' words that
conjure up discretion . . . the Supreme Court has suggested
that a plan grants discretion if the administrator has the
‘power to construe disputed or doubtful terms' in
the plan.” Id. (quoting Firestone Tire
& Rubber Co. v. Bruch, 489 U.S. 101, 111 (1989)).
The Ninth Circuit has held that wording “granting the
power to interpret plan terms and to make final benefits
determinations” is sufficient to confer discretion on
the administrator. Id. But plans “are
insufficient to confer discretionary authority on the
administrator when they do not grant any power to construe
the terms of the plan.” Id. at 964.
Review
under the abuse of discretion standard is limited to the
evidence in the administrative record. Id. at 970
(“[I]n general, a district court may review only the
administrative record when considering whether the plan
administrator abused its discretion”). However, a
potential conflict of interest-for example, where the insurer
both funds and administers the plan-may be evaluated through
evidence outside the administrative record. When a plaintiff
alleges a conflict, a “court must decide how much
weight to give” it, and in doing so, “may
consider evidence beyond that contained in the administrative
record . . . to determine whether a conflict of interest
exists that would affect the appropriate level of judicial
scrutiny.” Id. This extrinsic evidence may be
used “to decide the nature, extent, and effect on the
decision-making process of any conflict of interest; the
decision on the merits, though, must rest on the
administrative record once the conflict (if any) has been
established.” Id.
In
short, while evidence outside the record may be permitted,
its use must be limited to determining the existence and
extent of a conflict of interest. Once that determination is
made, the court must return to its narrow review of the
record alone, and the abuse of discretion standard will allow
the court to consider in its analysis the impact of any
conflict of interest. Id. at 968 (“A
straightforward abuse of discretion analysis allows a court
to tailor its review to all the circumstances before
it.”) (citing Woo v. Deluxe Corp., 144 F.3d
1157, 1161 (8th Cir. 1998) (“The abuse of discretion
standard is inherently flexible, which enables reviewing
courts to simply adjust for the circumstances.”)).
On the
other hand, when a plan confers no discretion on the
administrator, a court will review the decision de
novo. Id. at 969. Under this standard, the
court is permitted to examine evidence outside of the
administrative record. Id. at 970 (“While
under an abuse of discretion standard our review is limited
to the record . . . this limitation does not apply to de
novo review.”) (quoting Jebian v.
Hewlett-Packard Co. Emp. Benefits Org. Income Prot.
Plan, 349 F.3d 1098, 1110 (9th Cir. 2003)). Courts are
not required to accept extrinsic evidence and should review
it only “when circumstances clearly establish that
additional evidence is necessary to conduct an adequate
de novo review.” Jebian, 349 F.3d at
1110 (quoting Mongeluzo v. Baxter Travenol Long Term
Disability Benefit Plan, 46 F.3d 938, 944 (9th Cir.
1995)). Courts must therefore examine each proffered item of
evidence to “determine whether each piece of extrinsic
evidence [is] necessary” for an adequate review.
Opeta v. Nw Airlines Pension Plan for Contract
Emps., 383 F.3d 1211, 1218 (9th Cir. 2007).
The
Ninth Circuit has provided “a non-exhaustive list of
exceptional circumstances where introduction of evidence
beyond the administrative record could be considered
necessary.” Opeta 383 F.3d at 1217. The list,
adopted from a Fourth Circuit decision, includes the
following circumstances:
claims that require consideration of complex medical
questions or issues regarding the credibility of medical
experts; the availability of very limited administrative
review procedures with little or no evidentiary record; the
necessity of evidence regarding interpretation of the terms
of the plan rather than specific historical facts; instances
where the payor and the administrator are the same entity and
the court is concerned about impartiality; claims which would
have been insurance contract claims prior to ERISA; and
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