Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_04-cv-05373/USCOURTS-caed-1_04-cv-05373-4/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1441 Petition for Removal- Breach of Contract

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IN THE UNITED STATES DISTRICT COURT FOR THE

EASTERN DISTRICT OF CALIFORNIA

TERRY ALUISI, )

)

Plaintiff, )

v. )

)

)

ELLIOTT MANUFACTURING CO., )

INC. PLAN; ELLIOTT )

MANUFACTURING CO.,INC., as the )

Plan Administrator, )

)

Defendant. )

____________________________________)

CV F 04-5373 AWI SMS

ORDER REGARDING REQUEST

FOR DISCOVERY

ORDER SETTING BRIEFING

SCHEDULE

BACKGROUND

On March 3, 2003, this action was removed from the Fresno County Superior Court. On

October 17, 2005, Plaintiff filed a second amended complaint. Plaintiff requests the court to

review the denial of long term disability benefits pursuant to ERISA.

On January 6, 2006, Unum filed a motion for summary judgment. Unum contends that

the abuse of discretion standard applies to this action. Unum contends that under either the

abuse of discretion standard or de novo review, Unum’s denial of benefits was proper.

On January 20, 2006, Plaintiff filed an opposition. In the opposition, Plaintiff requested

that he be allowed to conduct discovery in support of his position that the de novo standard of

review applies.

On January 27, 2006, Unum filed a reply.

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On March 6, 2006, the court held a hearing. At the hearing the court found that in some

circumstances discovery is allowed in ERISA actions. The court then allowed Plaintiff to

provide more information about what discovery he seeks.

On March 13, 2006, Plaintiff filed a statement requesting discovery. First, Plaintiff

seeks information about Unum’s internal polices to determine if Unum followed these policies in

Plaintiff’s case. Second, Plaintiff seeks discovery to determine if all surveillance tapes have

been provided. Third, Plaintiff seeks additional evidence about Unum’s confidential informant

and what other information Plaintiff’s ex-wife might have said to Unum. Fourth, Plaintiff seeks

to depose Delci Bean, Melanie Cross, JoAnn Orozco, and Molly Jones. Plaintiff claims these

four individuals reviewed the records and incorrectly applied the definition of disability in

Plaintiff’s case. 

On March 23, 2006, Unum filed an opposition to Plaintiff’s requested discovery. Unum

contends that while a party may submit evidence outside the record to show a conflict of interest,

there is no basis to allow a party to conduct discovery. If discovery can be conducted in some

ERISA cases, Unum contends discovery is not appropriate here because Plaintiff has not made

out a prima facie case that Unum failed to follow the Plan’s procedures and discovery is not

reasonably calculated to provide material, probative evidence that Unum had a conflict of

interest.

On March 31, 2006, Plaintiff filed a reply.

DISCUSSION

ERISA provides for judicial review of a decision to deny benefits to an ERISA plan

beneficiary. See 29 U.S.C. § 1132(a)(1)(B). ERISA does not specify what legal standard the

court should apply in making this determination. Firestone Tire & Rubber v. Bruch, 489 U.S.

101, 109 (1989). However, the Supreme Court in Firestone, found that a court reviews a denial

of benefits de novo “unless the benefit plan gives the administrator or fiduciary discretionary

authority to determine eligibility or to construe the terms of the plan.” Id. at 115; Bendixen v.

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Standard Ins. Co., 185 F.3d 939, 942 (9th Cir. 1999). The parties agree the plan at issue in this

case requires the court to review Unum’s decisions under the abuse of discretion standard.

In some cases, de novo review of a decision denying benefits may be imposed even if the

plan calls for abuse of discretion review. Where the plan gives an administrator or fiduciary

discretion, but there is a conflict between the fiduciary’s or administrator’s self-interest and the

interests of the plan’s beneficiaries, a benefits denial decision may be reviewed de novo.

Bendixen, 185 F.3d at 943 (citations omitted). The Ninth Circuit has recognized that there is at

least an apparent conflict of interest where a plan administrator is also the plan's funding source. 

Hensley v. Northwest Permanente P.C. Retirement Plan & Trust, 258 F.3d 986, 996 (9 Cir. th

2001); Friedrich v. Intel Corp., 181 F.3d 1105, 1109 (9 Cir.1999). Even where a conflict of th

interest exists, however, imposition of the de novo standard is not automatic. Courts use a

burden-shifting approach to determine which standard to apply where a fiduciary or plan

administrator is “apparently conflicted.” Hensley v. Northwest Permanente P.C. Retirement

Plan & Trust, 258 F.3d 986, 995 (9 Cir. 2001); Atwood v. Newmont Gold Co., 45 F.3d 1317, th

1322-23 (9 Cir. 1995). First, the beneficiary must come forward with “material, probative th

evidence, beyond the mere fact of the apparent conflict, tending to show that the fiduciary’s selfinterest caused a breach of . . . fiduciary obligations to the beneficiary.” Hensley, 258 F.3d at

995; Atwood, 45 F.3d at 1323. If the beneficiary does not meet this burden, “abuse of

discretion” review is applied. However, if the beneficiary is able to make the necessary showing,

the burden shifts to the fiduciary or administrator to show that the conflict did not influence its

decision to deny benefits. Hensley, 258 F.3d at 995. If it is unable to do so, de novo review

applies. Hensley, 258 F.3d at 995; Atwood, 45 F.3d at 1323. 

Unum has asked for summary judgment in which the court finds that an abuse of

discretion standard of review applies. Plaintiff contends that de novo review is required because

Unum’s self-interest caused a breach of fiduciary obligations to Plaintiff. In attempting to

provide the court with material, probative evidence of the conflict, Plaintiff has asked to be

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allowed to conduct limited discovery. 

A. Is Discovery Available?

Unum contends that discovery is never available in an ERISA action regardless of what

standard of review the court applies. Plaintiff contends discovery is available on the issue of

whether Unum had a conflict of interest. 

In reviewing a plan under ERISA, the district court is to review only the evidence

presented to the plan. Taft v. Equitable Life Assur. Soc., 9 F.3d 1469, 1471 (9 Cir. 1993). th

There is one exception to this rule. Evidence outside the administrative record “may be

considered to determine if a plan administrator's decision was affected by its conflict of interest.” 

Tremain v. Bell Indus., Inc., 196 F.3d 970, 977 (9 Cir. 1999). th

Several district courts have found that limited discovery is permissible in an ERISA

action to determine whether the plan’s determination to deny benefits was influenced by its

conflict of interest. See, e.g., Frost v. Metropolitan Life Ins. Co., 414 F.Supp.2d 961, 964 -65

(C.D. Cal. 2006) (allowing discovery to show conflict of interest based on doctor’s relationship

to insurance company); Medford v. Metropolitan Life, 244 F.Supp.2d 1120, 1128 (D.Nev. 2003)

(allowing limited discovery on issues related to standard of review and whether there was a

conflict of interest affecting the benefits decision); Waggener v. UNUM Life Insurance, 238

F.Supp.2d 1179, 1186 (S.D. Cal. 2002) (allowing discovery on the extent to which the conflict of

interest affected plan’s decision making process and information regarding the independence or

neutrality of the physicians utilized by plan).

The court recognizes that some courts have refused to grant any discovery requests in

ERISA actions. In Newman v. Standard Insurance Co., 997 F.Supp. 1276 (C.D.Cal.1998), the

Central District of California held that there is no entitlement to discovery on the plan’s possible

conflict of interest because such discovery might be so extensive that it would undermine one of

the primary goals of ERISA – to resolve disputeS over benefits inexpensively and expeditiously. 

Id. at 1280-81. Despite the Newman court and other district courts reaching similar conclusions,

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this court agrees with those courts that have allowed limited discovery. The court declines to

follow the Newman court because often the only effective way for an ERISA plaintiff to show a

conflict of interest is to allow an ERISA plaintiff to discover such evidence. Cases such as

Newman impermissibly result in granting an ERISA plaintiff a right without a true remedy. See

Klund v. High Technology Solutions, Inc., 417 F.Supp.2d 1155, 1160 & n.1 (S.D. Cal. 2005). 

Thus, the court will allow some discovery in this action.

B. Scope of Discovery

Unum also objects to Plaintiff’s proposed discovery on the ground that it is too broad for

an ERISA action. Those courts that have allowed discovery have agreed such discovery must be

limited:

. . . the scope of discovery in a denial of benefits case should serve both the goals

of ERISA and the goals of the parties involved in the litigation. ERISA's two

primary goals are "to increase the likelihood" that beneficiaries will receive full

benefits, and "to maintain the premium costs of such [a] system at a reasonable

level." Kearney v. Standard Ins. Co., 175 F.3d 1084, 1094 (9th Cir.1999) (quoting

29 U.S.C. § 1001b(c)(3), (5)). In order to balance appropriately these competing

goals, discovery cannot be as broad and overreaching in ERISA cases as in other

types of litigation. See Waggener v. UNUM Life Ins. Co. of Am., 238 F.Supp.2d

1179, 1185 (S.D.Cal.2002). Instead, discovery must be more carefully tailored to

the issues raised in the particular case, specifically, "the need to demonstrate

conflict of interest," as well as the proper standard of review to be applied. Id.

Klund, 417 F.Supp.2d at 1159 -60.

Based on Klund and similar cases, the court finds discovery is limited in this action. In

ruling on Plaintiff’s discovery requests, the court must keep in mind Plaintiff’s arguments and

evidence showing a potential conflict of interest. 

1. Internal Policies

Plaintiff asks for UnUm’s internal policies to determine if Unum in fact followed these

polices in Plaintiff’s case.

A. Policy on IME

In the opposition, Plaintiff contends that Unum’s conflict of interest can be shown by

Unum’s failure to set up an Independent Medical Evaluation (“IME”). In the pending discovery

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request, Plaintiff seeks discovery regarding Unum’s internal polices. Where a conflict of interest

may impede an ERISA plan administrator's impartiality, several circuits have indicated that,

while not required, ERISA’s purposes are often promoted by obtaining an independent medical

evaluation. Fought v. Unum Life Ins. Co. Of America, 379 F.3d 997, 1015 (10 Cir. 2004); th

Hightshue v. AIG Life Ins. Co., 135 F.3d 1144, 1148 (7 Cir.1998); Woo v. Deluxe Corp., 144 th

F.3d 1157, 1161 (8 Cir.1998). However, the failure to do an IME does not automatically th

create a conflict of interest. In this case, an IME might have clarified Plaintiff’s chief complaint

in relation to what was observed on the surveillance. If Unum had policies concerning the use of

an IME that were not followed here, Plaintiff may have evidence of a conflict of interest. 

Procedural irregularities in the processing of claims is a factor the court may consider in

determining if there is evidence of self interest. Friedrich v. Intel Corporation, 181 F.3d 1105

(9 Cir.1999). Given the benefit of an IME in this case, potential problems with relying on a th

surveillance video, Unum’s possible misunderstanding of Plaintiff’s disability, and the conflict

between Plaintiff’s doctors statements, additional evidence on Unum’s procedures regarding IME

evaluations may be helpful. Thus, Plaintiff will be allowed through requests for productions of

documents and interrogatories to inquire on Unum’s policy regarding an IME and whether this

policy was followed in Plaintiff’s case.

B. Other Policies

In his request for discovery, Plaintiff also asks for Unum’s other internal policies. Such

a blanket request is inappropriate given the limited evidence outside the record that can be

considered in an ERISA action. In the opposition and request for discovery Plaintiff has failed

to provide sufficiently tailored argument about the need for other internal policies. Unlike the

IME issue, Plaintiff has not sufficiently alleged other specific issues of potential concern and

requested policies on these issues. Allowing Plaintiff to have all of Unum’s internal policies in

this case would provide support for the argument that in every ERISA case the Plaintiff has the

automatic right to the plan’s internal policies. The court finds given the limited discovery

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available in an ERISA action, some specific relationship between a potential policy and alleged

improper conduct must be shown. Thus, Plaintiff’s blanket request for all policies must be

denied.

2. Definition of Disability

In the request for discovery, Plaintiff seeks evidence on whether Unum applied the

definition of disability correctly. This discovery request is linked to Plaintiff’s position in his

opposition to the motion for summary judgment. In the opposition, Plaintiff contends that

Unum’s conflict can be shown because Unum did not apply the definition of disability correctly.

Plaintiff argues in the opposition that de novo review is necessary because Unum has

failed to acknowledge that there are different standards of review in play. Under the terms of the

policy, during the first 24 months, Plaintiff is entitled to benefits if Plaintiff is limited from

performing the material and substantial duties of his regular occupation due to his sickness or

injury. After 24 months, Plaintiff is entitled to benefits if Plaintiff is unable to perform the

duties of any gainful occupation for which he is reasonable fitted by education, training, or

experience. Because Unum denied benefits after 18 months, Plaintiff points out that he falls

within the first standard. Plaintiff argues that Unum only concluded he could perform sedentary

activities, but never evaluated whether he could perform the material and substantial duties of

Plaintiff’s regular occupation. 

Unum contends that it did properly apply the policy’s terms. Unum offers evidence that

a vocational rehabilitation consultant reviewed evidence from Plaintiff and Plaintiff’s employer

regarding Plaintiff’s job duties and concluded that Plaintiff’s occupation was classified as

sedentary work. U/A 433. Unum argues that because the vocational rehabilitation consultant

determined Plaintiff’s job duties were classified as sedentary work, Unum’s conclusion that

Plaintiff was able to do sedentary work properly applied the policy’s terms.

Abuse of discretion may be found where the administrator construes provisions of the

plan in a way that conflicts with the plain language of the plan. Saffle v. Sierra Pacific Power

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Co. Bargaining Unit Long Term Disability Income Plan, 85 F.3d 455, 458 (9 Cir. 1996); Taft th

v. Equitable Life Assur. Soc., 9 F3d 1469, 1472 (9 Cir. 1993). The court’s inquiry is not into th

whether the plan administrator's interpretation of the plan is the most persuasive one, but whether

the plan administrator's interpretation is unreasonable. Saffle, 85 F.3d at 458; Winters v. Costco

Wholesale Corp., 49 F.3d 550, 552 (9 Cir. 1995). It appears Plaintiff’s argument is that Unum th

did not correctly apply the plan’s terms because, instead of analyzing whether Plaintiff could do

his regular occupation, Unum determined Plaintiff’s regular occupation was sedentary work and

then determined that Plaintiff could perform sedentary work. To support this position, Plaintiff

seeks additional, unidentified discovery, presumably from the decision makers in Plaintiff’s case,

regarding the definition of disability Unum applied to Plaintiff.

Plaintiff’s position is that evaluating his ability to work at a sedentary job instead of his

ability to work at his regular occupation shows that Unum did not apply the Plan’s terms. This

argument does appear to be based on potentially disputed facts. There is no dispute that Unum

determined whether Plaintiff could do sedentary work and did not determine whether Plaintiff

could do his specific job. Thus, the issue for the parities and the court is whether it was

reasonable to classify Plaintiff’s job and then determine if Plaintiff was able to perform jobs in

that classification or whether the Unum needed to determine if Plaintiff could perform his

specific job. Whether the use of job classifications rather than specific job duties indicates a

conflict of interest is a legal question that the parties have already briefed. Plaintiff fails to show

how discovery would assist Plaintiff’s position. Given Unum has essentially conceded that it

applied a classification to Plaintiff instead of Plaintiff’s exact job description, the court only has

before it a legal question on the appropriateness of Unum’s actions. Thus, additional discovery

on what definition of disability Unum applied to Plaintiff is not warranted. 

3. Surveillance Tapes

Plaintiff seeks discovery to determine if all surveillance tapes have been provided. 

Unum only opposes Plaintiff’s request by stating that Unum has provided all tapes. Because

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Unum agrees Plaintiff is entitled to all tapes, Plaintiff may utilize the discovery process to

formally request the production of all surveillance tapes. While Unum most likely will respond

that all such tapes have been provided, Unum’s response to a formal discovery request has farther

reaching consequences that Unum’s attorney’s comment in a brief. Thus, Plaintiff may formally

request all surveillance tapes pursuant to a request for production.

4. Informant’s and Ex-Wife’s Statements

Plaintiff seeks the identity of the informant that stated Plaintiff was still working and any

notes or memoranda of what the informant said. Plaintiff also seeks any notes or memoranda of

what Plaintiff’s ex-wife told Unum. 

Unum’s primary opposition to Plaintiff being allowed to request additional notes or

memorandum regarding the informant and Plaintiff’s ex-wife is that this evidence was not relied

on by Unum. Unum claims that even if the informant and Plaintiff’s ex-wife were completely

discredited, there is no reason to believe that Unum would have made a different decision

regarding Plaintiff’s entitlement to benefits. If Unum’s position is that Unum would have

reached the same result without considering the informant and Plaintiff’s ex-wife and this court

does not need to consider the informant and Plaintiff’s ex-wife to uphold Unum’s decision, the

court agrees additional discovery on these issues is not warranted. Based on Unum’s position,

the court will not consider the evidence supplied by the informant and Plaintiff’s ex-wife in

determining the standard of review and whether Unum’s decision should be upheld. If Unum

desires the court to consider this evidence, Unum should inform the court and the court will

revisit the issue of whether Plaintiff is entitled to discovery on these issues. However, based on

Unum’s current position, the court will deny Plaintiff’s discovery requests because Unum states

this evidence does not need to be considered by the court. 

5. Depositions

Plaintiff seeks to depose Delci Bean, the Lead Customer Care Specialist handling

Plaintiff’s case, and three registered nurses who conducted medical reviews, including Melanie

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Cross, JoAnn Orozco, and Molly Jones. Concerning the need for depositions, Plaintiff states as

follows:

These four individuals seem to be the decision makers who allegedly reviewed the

records and applied them to the definition of disability. Yet the records show

little effort to communicate with Aluisi’s primary treating physician and little to

show application to the definition of disability. Plaintiff submits there is no

evidence in the record that UNUM, acting through these individuals, actually

applied the definition of disability correctly.

Based on this description of the proposed depositions, the court will deny Plaintiff’s request. 

As discussed above, the issue of whether Unum correctly applied the definition of disability is

not a factual dispute. Unum admits it categorized Plaintiff’s job as sedentary and then

determined whether Plaintiff could do a sedentary job. The issue for the court is whether this

categorization approach provides evidence of a conflict of interest. Thus, additional evidence

regarding the decision makers’ definition of disability is not necessary.

Plaintiff also complains that these decision makers did little to communicate with

Plaintiff’s physicians. Again, the court does not find depositions would provide additional

information to support the decision makers’ actions. The administrative records speaks for itself

about Unum’s contacts and lack of contacts with Plaintiff’s physicians. There is no indication

that the administrative record does not include all contacts with Plaintiff’s physicians. Thus,

deposition is not warranted on this issue.

As discussed above, the court has found that discovery on Unum’s IME policy and its

application to Plaintiff’s case is warranted. The decision makers may have relevant information

about the IME policy and whether it was followed in Plaintiff’s case. However, deposition of

the decision makers appears to be overly burdensome to obtain the necessary evidence. Instead,

Plaintiff will be allowed to submit up to fifteen interrogatories about the IME policy and its

application to Plaintiff’s case. These interrogatories may be directed to Unum for a response or

directed at the particular employees who reviewed or made decisions in Plaintiff’s case. 

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ORDER

Accordingly, the court ORDERS that:

1. Plaintiff’s request for discovery is GRANTED in part:

a. Plaintiff may serve requests on Unum for Unum’s IME policies and the

surveillance tapes pursuant to the Rules Governing Discovery found in the Federal

Rules of Civil Procedure; 

b. Plaintiff may serve up to fifteen interrogatory requests on Unum concerning the

application of Unum’s IME policy to Plaintiff’s case pursuant to the Rules

Governing Discovery found in the Federal Rules of Civil Procedure; 

2. In all other respects, Plaintiff’s request for discovery is DENIED; 

3. Plaintiff may file a supplemental opposition to Unum’s motion for summary judgment,

which includes arguments based on evidence found during discovery, by August 18,

2006; and

4. Unum may file a supplemental reply by September 1, 2006.

IT IS SO ORDERED.

Dated: June 15, 2006 /s/ Anthony W. Ishii 

0m8i78 UNITED STATES DISTRICT JUDGE

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