Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_04-cv-00926/USCOURTS-azd-2_04-cv-00926-1/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 29:1001 E.R.I.S.A.: Employee Retirement

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Carol Wilcox, 

Plaintiff, 

vs.

Metropolitan Life Insurance Company;

Wells Fargo & Company; Wells Fargo

Disability Plan; Long Term Disability

Plans 1-10; Wells Fargo & Company, as

Plan Trustee and Administrator; and

Trustees and Plan Administrators 1-10,

Defendants. _________________________________

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No. CV 04-0926 PHX-DGC

ORDER

This case has been remanded by the Ninth Circuit. The Court’s task is to determine

what discovery, if any, should be permitted, and then to revisit the merits of the case under

the standards established by the Ninth Circuit in Abatie v. Alta Health and Life Ins. Co., 458

F.3d 955 (9th Cir. 2006). 

Before Abatie was decided, this Court entered an order denying Plaintiff’s request for

discovery. Dkt. #29. The Court’s decision was based on the goal of ERISA to provide a

method for workers and beneficiaries to resolve disputes over benefits inexpensively and

expeditiously. Dkt. #29 at 3. The Court then granted summary judgment in favor of

Defendant after considering arguments from the administrative record and such other

evidence as Plaintiff chose to present. Dkt. #53. The Court concluded that Plaintiff had not

made a sufficient showing of a conflict of interest to warrant de novo review under the thenCase 2:04-cv-00926-DGC Document 85 Filed 01/08/09 Page 1 of 6
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existing standard established in Atwood v. Newmont Gold Co., Inc., 45 F.3d 1317 (9th Cir.

1995). Applying an abuse of discretion analysis, the Court found that Plaintiff had not

presented sufficient evidence to show that Defendant had abused its discretion in denying

benefits. Dkt. #53 at 8-12. 

Following the Court’s decision, the Ninth Circuit issued the Abatie opinion and the

Supreme Court handed down Metropolitan Life Insurance Co. v. Glenn, 128 S.Ct. 2343

(2008). When the Ninth Circuit reviewed the Court’s decision in this case, it concluded that

Glenn and Abatie required a more complex abuse-of-discretion analysis than the Court had

undertaken applying the Atwood standard. Wilcox v. Wells Fargo & Co. Long Term

Disability Plan, 287 Fed. Appx. 602 (9th Cir. 2008). The Ninth Circuit specifically noted

that the Court must weigh the conflict of interest created by Defendant’s dual role as claims

administrator and claims payor, and directed the Court to reconsider Plaintiff’s request for

discovery. Id.

After Glenn and Abatie, district courts have discretion to consider extrinsic evidence

in evaluating the weight and effect of a conflict of interest. For example, as the Ninth Circuit

made clear in this case, where there is evidence that a plan administrator has repeatedly

denied benefits to deserving participants by interpreting plan terms incorrectly or by making

decisions against the weight of the evidence in the record, Courts may weigh a conflict more

heavily. Wilcox, 287 Fed. Appx. at 603. A conflict may be weighed more heavily where an

administrator has a history of biased claims administration, and less heavily where the

administrator has taken actions to reduce potential bias and promote accuracy, such as

walling off claims administrators from those interested in firm finances. Id. The Ninth

Circuit specifically instructed this Court, on remand, “to consider the conflict of interest as

a factor whose weight depends on the ‘nature, extent, and effect’ of the conflict on the

decision-making process, which may be unmasked through discovery.” Id. 

In light of this ruling, the Court instructed the parties to confer about the appropriate

scope of discovery. When the parties could not agree, the Court instructed them to file

memoranda setting forth their respective views of the discovery that should be undertaken

Case 2:04-cv-00926-DGC Document 85 Filed 01/08/09 Page 2 of 6
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in light of the Ninth Circuit’s ruling. The Court has now reviewed those memoranda. See

Dkt. ##81, 82. 

Plaintiff seeks extensive discovery. She seeks to determine whether there is a history

of biased claims administration or whether the administrator took active steps to reduce bias

and promote accuracy. She seeks information about the training and compensation of those

involved in handling her claim, including employees and outside consultants. She seeks to

discover any economic incentives for employees or consultants to recommend denials or

termination of benefits. She seeks to determine the approval and termination rates for longterm disability claims generally, and for Defendant’s treatment of fibromyalgia claims. She

seeks to discover any reserves Defendant has set for this claim, as well as any claim manuals,

guidelines, memoranda, and letters authored or relied on by Defendant or its employees in

determining this claim. Plaintiff seeks any documents distributed by Defendant to employees

or consultants concerning the financial benefits of approving or denying ERISA claims. She

also seeks to conduct discovery concerning inconsistencies in the claim determination

process for this claim, whether Defendant’s employees followed procedures in handling the

claim, whether Defendant obtained legal advice in the handling of the claim and, if so, on

what issues, and whether those involved in the claim process were provided appropriate

records upon which a decision could be made, or whether Defendant selectively parceled out

records material to her disability status. Dkt. #81. Plaintiff makes no attempt to explain why

any of this proposed discovery is likely to bear fruit.

Defendant takes an equally extreme position, arguing that the Court should permit no

discovery. Defendant asserts that the administrative record reflects all of the factors

Defendant considered in making its claim determination. Defendant does not address the

Ninth Circuit’s clear indication that evidence concerning the nature and effect of the

structural conflict in this case may be relevant and may be unmasked through discovery.

The Court finds this to be a challenging issue. On one hand, a primary goal of ERISA

is to provide a means for workers and beneficiaries to resolve disputes over benefits

inexpensively and expeditiously. Boyd v. Bert Bell/Pete Rozelle NFL Players Retirement

Case 2:04-cv-00926-DGC Document 85 Filed 01/08/09 Page 3 of 6
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Plan, 410 F.3d 1173, 1178 (9th Cir. 2005); Taft v. Equitable Life Assurance Soc'y, 9 F.3d

1469, 1472 (9th Cir.1993); 1974 U.S. Code Cong. & Admin. News 4639, 5000. Extensive

discovery conflicts with that purpose. On the other hand, the Court cannot fully evaluate the

nature and effect of a structural conflict without considering some evidence regarding the

conflict – evidence not likely to be found in the administrative record. The issue becomes

even more challenging when one attempts to draw lines between permissible and

impermissible discovery. Some of the potentially relevant factors identified in Glenn and

Abatie, such as the defendant’s “history of biased claims administration,” Glenn, 128 S.Ct.

at 2351, or “evidence of malice,” “self-dealing,” or a practice of “den[ying] benefits to

deserving participants by interpreting plan terms incorrectly or by making decisions against

the weight of evidence in the record,” Abatie, 458 F.3d at 968, could lead to extensive

discovery into historical practices and internal operations. One could see a plaintiff inquiring

into hundreds of past cases in an effort to unearth evidence of such systematic bias – an

inquiry that clearly would be contrary to ERISA’s goal of efficiency and expedition and the

general rule that abuse-of-discretion inquiries are record-based. And yet, other than

confirming the district court’s discretion, Glenn and Abatie provide no guidance as to when

or how discovery may be limited. Other recent Ninth Circuit cases are equally vague, stating

only that “[w]hether to permit discovery into the nature, extent, and effect of the Plan’s

structural conflict of interest is . . . a matter within the district court’s discretion.” Burke v.

Pitney Bowes Long-Term Disability Plan, 544 F.3d 1016, 1028 n. 15 (9th Cir. 2008).

Perhaps not surprisingly, district court cases after Glenn and Abatie have reached a wide

variety of conclusions. See Winterbauer v. Life Ins. Co. of North America, 2008 WL

4643942 at *4-5 (E.D. Mo., Oct. 20, 2008) (collecting cases).

Exercising its discretion, and in an effort to accommodate Plaintiff’s need for

discovery while serving ERISA’s purpose of efficiency and expedition, the Court concludes

that discovery in this case will be limited in three respects: (a) to those subjects most likely

to reveal the effect of the conflict, (b) to a limited number of written discovery requests and

depositions, and (c) to a relatively short period of time. 

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Plaintiff may conduct discovery into the following areas: (1) whether any of the

employees or consultants involved in deciding Plaintiff’s claim had a financial incentive to

deny the claim; (2) Defendant’s general approval and termination rates for long-term

disability claims, and, separately, for long-term disability claims involving fibromyalgia;

(3) steps Defendant has taken to reduce bias and promote accuracy, such as walling off

claims administrators from those interested in firm finances; and (4) any factors or evidence

considered by Defendant in denying Plaintiff’s claim that are not contained in the

administrative record. Defendant shall also produce to Plaintiff any evidence outside the

administrative record that Defendant intends to use in showing that the structural conflict did

not affect its decision in this case.

The Court will not permit the more generalized discovery proposed by Plaintiff, such

as inquiry into the training or experience level of Defendant’s employees, the reserves

established for this claim, advice of counsel with respect to this claim, or claims manuals,

guidelines, memoranda, and letters. Plaintiff has provided no basis for concluding that these

subjects have anything more than a theoretical connection to the effect of the structural

conflict in this case. The Court also concludes that discovery is not necessary for Plaintiff

to address inconsistencies in the determination of this claim. Those inconsistencies are

apparent from the administrative record and were argued at length in the previous summary

judgment briefing.

Plaintiff may serve one set of interrogatories, not to exceed 20 questions, including

subparts. Plaintiff may serve one set of document production requests, not to exceed 10

requests, including subparts. Plaintiff may serve one set of requests for admissions, not to

exceed 10 requests. Plaintiff may take three depositions. 

Fact discovery shall be completed on or before April 3, 2009. On April 17, 2009, the

parties shall file 12-page memoranda supplementing their original summary judgment

briefing. The parties need not restate arguments made in their original briefing. On or before

April 24, 2009, the parties shall file 8-page response memoranda, again supplementing their

original summary judgment briefing. This supplemental briefing shall particularly address

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the weight to be accorded Defendant’s structural conflict of interest under Glenn and Abatie.

Once the Court has received this additional briefing, the Court will revisit its summary

judgment ruling consistent with the Ninth Circuit’s directive.

DATED this 8th day of January, 2009.

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