Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_19-cv-02385/USCOURTS-azd-2_19-cv-02385-1/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 29:1132 E.R.I.S.A.-Employee Benefits

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Leslie DeMarco,

Plaintiff,

v. 

Life Insurance Company of North America, 

et al.,

Defendants.

No. CV-19-02385-PHX-DWL

ORDER 

This is an ERISA case. Pending before the Court is Plaintiff Leslie DeMarco’s 

“Brief Re: Standard of Review and Discovery Dispute.” (Doc. 25.) After this brief was 

filed, DeMarco and Defendant Life Insurance Company of North America (“LINA”) 

stipulated to de novo review. (Doc. 26.) However, the parties continue to dispute whether, 

and to what extent, DeMarco should be allowed to pursue discovery. (Doc. 28.) For the 

following reasons, DeMarco’s request for permission to pursue discovery will be denied.

1

BACKGROUND

DeMarco has sued LINA under the Employee Retirement Income Security Act of 

1974 (“ERISA”), 29 U.S.C. § 1132, for denying her application for long-term disability 

benefits. (Doc. 1.) DeMarco was a longtime executive assistant at Iridium Satellite, LLC 

(“Iridium”). (Id. ¶ 16.) Iridium purchased a group long-term disability policy for its 

1 DeMarco has requested oral argument. The Court will deny the request because the 

issues have been fully briefed and oral argument will not aid the Court’s decision. See Fed. 

R. Civ. P. 78(b); LRCiv. 7.2(f).

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employees from LINA, which was responsible both for determining whether an employee 

qualified for benefits under the policy and, if so, for paying such benefits. (Id ¶¶ 3, 10.)

DeMarco alleges she became disabled on or around July 24, 2017. (Id. ¶ 16.) Soon 

afterward, DeMarco applied for and received short-term disability benefits. (Id. ¶ 18.) 

LINA reviewed and approved this application. (Id.) Iridium self-insured the short-term 

disability plan, meaning it was responsible for paying benefits. (Id. ¶ 19.)

On November 27, 2017, after exhausting her 90 days of short-term disability, 

DeMarco applied for long-term disability benefits. (Doc. 25 at 2.) DeMarco emphasizes 

that LINA was responsible for both reviewing claims and paying benefits under this policy. 

(Doc. 1 ¶¶ 24, 25.)

On February 5, 2018, LINA denied DeMarco’s claim for long-term disability 

benefits. (Doc. 25-1 at 2-5.) DeMarco appealed this decision. (Doc. 25 at 2.)

On May 25, 2018, Dr. Kevin Smith conducted an independent medical review of 

DeMarco’s medical condition. (Doc. 28 at 2.)

On June 22, 2018, LINA denied DeMarco’s appeal. (Doc. 25-1 at 6-9.)

On December 17, 2018, DeMarco appealed again, attaching letters from physicians, 

test results, lay witness affidavits, and updated medical records. (Doc. 25 at 2.)

On February 4, 2019, Dr. Brian Angsten issued an opinion, following review of 

DeMarco’s medical records, concluding that DeMarco would be able to work in her 

previous occupation. (Doc. 25-4 at 7.)

On March 4, 2019, Dr. Andrew Prychodko issued an opinion, following review of 

DeMarco’s medical records, concluding that, although DeMarco had some restrictions, she 

was not wholly precluded from working as of July 2017. (Doc. 25-4 at 22.)

The opinions of Dr. Angsten and Dr. Prychodko contain nearly identical 

certifications that the opinions are their own, their compensation does not depend on the 

outcome of the opinion, there is no conflict of interest, and their opinions represent a 

reasonable degree of medical certainty. (Id. at 14, 30.) DeMarco, however, alleges that 

this so-called independent review is part of a common scheme in the disability industry to 

deny benefits, where insurance companies farm out claims to third-party vendors like 

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MCMC and Genex Services in an effort to give the “‘impression’ of an unbiased review.” 

(Doc. 25 at 9.) According to DeMarco, this is allows LINA to “wash[] its hands of its 

fiduciary duty,” and DeMarco further contends that the doctors hired by third-party 

vendors, like Drs. Angsten, Prychodko, and Smith, all “deliberately ignored significant, 

reliable evidence of Plaintiff’s disability.” (Doc. 25 at 9.) 

On April 12, 2019, DeMarco initiated this action. (Doc. 1.)

On September 17, 2019, DeMarco filed her brief regarding the scope of review and 

discovery dispute. (Doc. 25.) 

On October 10, 2019, LINA stipulated to de novo review. (Doc. 26.)

On November 27, 2019, LINA responded to DeMarco’s brief. (Doc. 28.) 

DISCUSSION

DeMarco’s basic contention is that LINA, the doctors who reviewed her records, 

and the third-party vendors who hired those doctors were biased against her, which in turn 

caused LINA to wrongfully deny her claim for long-term disability benefits. (Doc. 25 at 

7-10.) Thus, DeMarco seeks to supplement the administrative record2 with various kinds 

of discovery. (Id. at 10-11.) LINA responds that DeMarco has not shown the “exceptional 

circumstances” necessary to require additional discovery in an ERISA case involving de 

novo review. (Doc. 28.) LINA also raises specific objections to some of DeMarco’s 

specific discovery requests. (Id.)

I. Additional Discovery Available On De Novo Review

The parties have stipulated to de novo review. (Doc. 26.) The Court’s essential task 

in an ERISA case involving de novo review is “to evaluate whether the plan administrator 

correctly or incorrectly denied benefits.” Opeta v. Nw. Airlines Pension Plan for Contract 

Emps., 484 F.3d 1211, 1217 (9th Cir. 2007) (internal quotation omitted). The Court is 

limited in most such cases to the administrative record and may use its discretion to

“consider evidence outside of the administrative record only when circumstances clearly 

2

“In the ERISA context, the administrative record consists of the papers the insurer 

had when it denied the claim.” Montour v. Hartford Life & Acc. Ins. Co., 588 F.3d 623, 

632 n.4 (9th Cir. 2009) (internal quotation omitted).

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establish that additional evidence is necessary to conduct an adequate de novo review of 

the benefit decision.” Id. (internal quotation omitted, emphasis in original). These 

“significant restrictions” are “an attempt to further ERISA’s policy of keeping proceedings 

inexpensive and expeditious.” Gonda v. Permanente Med. Grp., Inc., 300 F.R.D. 609, 613 

(N.D. Cal. 2014). See also Boyd v. Bert Bell/Pete Rozelle NFL Players Ret. Plan, 410 F.3d 

1173, 1178 (9th Cir. 2005) (“[A] primary goal of ERISA . . . [is] to provide a method for 

workers and beneficiaries to resolve disputes over benefits inexpensively and 

expeditiously.”) (internal quotation omitted).

Opeta has caused considerable confusion. Although Opeta’s underlying principle 

is simple enough—discovery in an ERISA case involving de novo review should be rare—

the court went on to identify a “non-exhaustive list of exceptional circumstances” that may

trigger the need for such discovery. 484 F.3d at 1217 (citing Quesinberry v. Life Ins. Co. 

of N. Am., 987 F.2d 1017, 1025 (4th Cir. 1993)).

3

 That list includes “claims that require 

consideration of . . . issues regarding the credibility of medical experts . . . [and] instances 

where the payor and the administrator are the same entity and the court is concerned about 

impartiality.” Id. One court summarized the “tension in the heart of Opeta” as arising 

from the conflict between its “ostensibly ‘restrictive’ rule and the common situations that 

it describes.” Nguyen v. Sun Life Assurance Co. of Canada, 2015 WL 6459689, *8 (N.D. 

Cal. 2015). Accordingly, district courts have been divided in resolving discovery disputes 

where, as here, the plaintiff alleges a conflict of interest on the part of the plan administrator 

and medical professionals. Id. (collecting cases). 

II. Conflict Of Plan Administrator

DeMarco alleges that LINA had a structural conflict of interest because it served as 

both the decision-maker and payor of benefits. (Doc. 1 ¶¶ 82-83.) Thus, DeMarco seeks 

3 Although Opeta “dealt with the issue of whether evidence outside the record is 

admissible rather than whether the evidence is discoverable,” district courts “have held that 

in light of Opeta’s limits on admissibility of evidence in de novo cases and the ERISA’s 

policy of keeping proceedings inexpensive and expeditious, it is appropriate to place 

similar limits on discovery.” Polnicky v. Liberty Life Assurance Co. of Boston, 2014 WL 

969973, *2 (N.D. Cal. 2014) (quotation omitted).

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to discover information to illustrate the effects of this conflict and to support her contention 

that LINA has a history of “parsimonious claims handling,” “self-dealing,” and “cheating 

insureds out of benefits.” (Doc. 25 at 8.) LINA responds that this structural conflict is 

irrelevant in light of the de novo standard of review, which means the Court must decide 

whether she was entitled to benefits without deferring to LINA’s determination. (Doc. 28 

at 6.)

As an initial matter, almost all of the decisions cited by DeMarco arose from cases 

involving abuse of discretion review, rather than de novo review. This is understandable, 

given that at the time DeMarco’s brief was filed, the parties were disputing the relevant 

standard of review. Nevertheless, the relevance of an administrator’s structural conflict of 

interest depends in significant part on the applicable standard of review. This is because, 

in abuse of discretion cases, “[a] district court . . . must decide in each case how much or 

how little to credit the plan administrator’s reason for denying insurance coverage.” Abatie 

v. Alta Health & Life Ins. Co., 458 F.3d 955, 968 (9th Cir. 2006). In such cases, the court 

“always considers the inherent conflict when a plan administrator is also the fiduciary.” 

Id. at 969 (emphasis added). In contrast, in a case (such as this case) involving de novo

review, the Court gives no credence to the decision made by plan administrators. And 

because the decision made by insurance company personnel is “completely irrelevant to 

the court’s decision, discovery into their motivations is also irrelevant.” Reynolds v. 

UNUM Life Ins. Co. of Am., 2011 WL 3565351, *2 (D. Ariz. 2011). See also Nguyen, 

2015 WL 6459689 at *6 (“The question on de novo review is generally not why the insurer 

reached the decision it did—whether from misanthropy, incompetence, or a miserly grip 

on ‘its’ funds. . . . [I]t is ‘simply’ whether, given the administrative record, the plaintiff was 

entitled to benefits.”) (emphasis in original). Thus, courts have recognized that an ERISA 

plaintiff does not carry its burden of clearly establishing that discovery is necessary for 

adequate de novo review by “merely pointing to [a defendant’s] dual role as plan 

administrator and payer.” Nguyen, 2015 WL 6459689 at *6. 

On the other hand, there may be a need to supplement the record in an ERISA case 

involving de novo review where a structural conflict “result[s] in a plaintiff’s inability to 

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introduce evidence into the administrative record.” Reynolds, 2011 WL 3565351 at *2. 

Nevertheless, DeMarco has merely identified a structural conflict of interest on LINA’s 

part and alleged that this bias caused her claim to be wrongfully denied. Although LINA, 

as the decision-maker and payor, had a financial incentive to deny disability claims, the 

Court has no such incentive—its task on de novo review is to determine whether DeMarco 

is entitled to benefits based on the administrative record. LINA’s decision itself is 

irrelevant to that determination, so it’s unclear how the financial incentive underlying and 

allegedly motivating its decision, as well as the impact of that incentive on unrelated past 

cases, would be relevant. Significantly, DeMarco does not appear to allege that the 

administrative record was kept incomplete by LINA’s structural conflict. Instead, 

DeMarco contends that LINA possessed evidence sufficient to grant her claim but 

manufactured contrary evidence to deny it. (Doc. 25 at 5-6.) Accordingly, DeMarco has 

not shown this structural conflict of interest demands additional discovery or 

supplementation of the administrative record.

For these reasons, DeMarco may not serve Interrogatory Nos. 1-2 and 8-10 and

Request for Production Nos. 3-5 and 17-21. Her request to depose Jomi Harris, which the 

briefing suggests is intended to explore LINA’s conflict of interest, is also denied. (Doc. 

25 at 11.)

III. Conflict Of Medical Reviewers

DeMarco also contends that the medical reviewers to whom LINA referred her case 

were biased and “deliberately ignored significant, reliable evidence of Plaintiff’s 

disability.” (Doc. 25 at 9.) She seeks to discover and admit evidence about the relationship 

between LINA and the third-party vendors for whom the medical reviewers worked, as 

well as evidence about the rate at which these medical reviewers have historically made a 

non-disability finding. (Id. at 10-11.) LINA responds that the Court will be able to assess 

for itself whether the medical reviewers ignored evidence and that the conflict DeMarco 

alleges—that the medical reviewers were compensated by a third-party vendor, which was 

compensated by LINA—is insufficient to allow additional discovery. (Doc. 28 at 6-7.)

District courts have divided on whether the compensation of medical reviewers by 

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insurance companies in and of itself justifies discovery outside the administrative record

on de novo review. Some courts have reasoned that a “potential conflict of interest or bias 

on the part of the physician reviewers . . . is relevant because it goes to the weight the court 

will assign those opinions in its de novo review.” Rowell v. Aviza Tech. Health & Welfare 

Plan, 2012 WL 440742, *2 (N.D. Cal. 2012). See also Reynolds, 2011 WL 3565351 at *1 

(same); Knopp v. Life Ins. Co. of N. Am., 2009 WL 5215395, *3 (N.D. Cal. 2009) (same). 

Other courts have held that “[a] plaintiff who wants discovery beyond the existing 

administrative record in a de novo case must point to something more than . . . the fact of 

compensation to third-party medical reviewers.” Nguyen, 2015 WL 6459689 at *10. See 

also Kelly v. Standard Ins. Co., 2018 WL 3639844, *3 (D. Or. 2018) (same); Blaj v. Unum 

Life Ins. Co. of Am., 2014 WL 2735182, *4 (N.D. Cal. 2014) (“In the absence of concrete 

allegations pertaining to qualifications or credibility, the district court will not find an 

exceptional circumstance warranting additional discovery”). The rationale for this 

conclusion is that Opeta restricts extrinsic discovery to “exceptional circumstances,” 

insurance companies routinely employ medical reviewers, and “[n]o one would expect 

such consultants to work for free.” Nguyen, 2015 WL 6459689 at *9.

On the one hand, it makes intuitive sense that a medical reviewer whose 

compensation ultimately comes from an insurance company—even where there’s a thirdparty provider acting as an intermediary—might be inclined to reach conclusions that are 

favorable to the insurance company. Moreover, the Court, lacking medical expertise of its 

own and forced to weigh conflicting expert medical opinions, could conceivably benefit 

from additional evidence as to whether a medical review is sound. On the other hand, 

employment (and thus, necessarily, payment) of medical reviewers is a routine practice of 

insurance companies, and Opeta limits discovery outside the record to “exceptional 

circumstances.” 484 F.3d at 1217. Furthermore, the language in Opeta is permissive rather 

than mandatory: it doesn’t say that doubt about the credibility of a medical professional 

requires discovery to supplement the administrative record and merely identifies such 

doubt as a reason why “introduction of evidence beyond the administrative record could

be considered necessary.” Id. at 1225 (emphasis added). 

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The Court concludes that DeMarco’s request for additional discovery into the 

conflicts of the medical reviewers should be denied. Opeta’s basic principle is that 

extrinsic discovery is permissible “only when circumstances clearly establish that 

additional evidence is necessary to conduct an adequate de novo review of the benefit 

decision.” 484 F.3d at 1217. DeMarco specifically requests information about (1) the 

medical reviewers’ track records in finding that claimants are not disabled, (2) how 

frequently LINA hired third-party vendors and medical reviewers, and (3) how much LINA 

paid third-party vendors and medical reviewers. (Doc. 25 at 10-11.) Although this 

information could be probative, DeMarco hasn’t clearly established that this information 

would be necessary for the Court to conduct an adequate de novo review of her case. 

First, there is already evidence in the administrative record that will allow the Court 

to make a credibility assessment without considering the medical reviewers’ historical 

findings. The administrative record contains reports from DeMarco’s treating physicians, 

and the Court can assess on its own whether LINA’s medical reviewers properly took those 

reports into account. The reviewers’ “batting averages,” as LINA puts it, are not necessary 

for a credibility determination. (Doc. 28 at 9.) Moreover, the rate at which a medical 

reviewer finds a claimant to be disabled or not disabled is an imperfect proxy for bias 

because it fails to account for whether the medical reviewer’s findings were correct. 

Although there may be some probative value to the rate at which a medical reviewer finds 

claimants disabled, it’s difficult to assess the actual value of this evidence without knowing 

the conclusions an objective and unbiased doctor would have reached reviewing the same 

cases. Broadening the scope of discovery in this manner is at odds with the policy of 

“keeping [ERISA] proceedings inexpensive and expeditious.” Gonda, 300 F.R.D. at 613. 

Second, it’s not clear why the amount LINA paid to third-party vendors or medical 

reviewers, or the frequency with which their services were used, would be necessary for 

adequate de novo review. The fact that the medical reviewers were paid, indirectly, by 

LINA is inevitable because LINA was the entity requesting the service, and “[n]o one 

would expect such consultants to work for free.” Nguyen, 2015 WL 6459689 at *9. The 

medical reviewers’ credibility would be seriously impugned if they were paid more for a 

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given finding, but it’s not clear that DeMarco actually makes this allegation. Indeed, the 

reports of Drs. Angsten and Prychodko, attached to DeMarco’s briefing, certify that their 

compensation does not depend on a given outcome and that their opinions are their own. 

(Doc. 25-4 at 14, 30.) Moreover, without some frame of reference—like standard 

insurance industry rates, rates LINA paid to other doctors, rates other insurance companies 

paid to these doctors, how many times other insurance companies hired third-party vendors 

and medical reviewers, and how often other insurance companies hired these doctors—it 

would be difficult to assess whether the amount LINA paid to third-party vendors or the 

doctors themselves, or the frequency with which they were hired, was somehow 

inappropriate. As noted, expanding discovery in this manner undermines the policy goal 

of ERISA in keeping proceedings inexpensive and expeditious. 

For these reasons, DeMarco may not serve Interrogatory Nos. 3-7 and 11-17, 

Request for Production Nos. 6-16, and Request for Admission Nos. 5-7 and 9-11.

IV. Other Items Of Requested Discovery

Some of the discovery DeMarco seeks does not fit neatly into the two categories of 

bias discussed above (i.e., bias on the part of LINA and bias on the part of third-party 

vendors and medical reviewers). In the interest of completeness and analytical clarity, the 

Court will discuss those items here. 

1. Request for Production Nos. 1-2

DeMarco requests that LINA produce “[a]ll documents reviewed or generated in 

any phase of LINA’s review which are contained in Plaintiff’s claim file, that are not in 

what LINA purports to be the administrative record already sent to Plaintiff’s counsel,” as 

well as “all documents, correspondence, or communications” between any combination of 

LINA, the third-party vendors, and medical reviewers “regarding Plaintiff’s claim.” (Doc. 

25-9 at 20.) 

These requests will be denied. The Court’s task on de novo review is to review the 

administrative record and determine whether DeMarco should have been awarded benefits. 

DeMarco has not “clearly establish[ed]” why the materials discussed in RFP Nos. 1-2 

would be “necessary” to complete such review. Opeta, 484 F.3d at 1217. Indeed, these 

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requests appear to seek, at least in part, information that was generated after the relevant 

decisions were made and/or that was not before LINA (for example, communications 

between combinations of medical reviewers and third-party vendors).

2. Request for Admission No. 1

DeMarco requests that LINA admit that it was “required to evaluate Plaintiff’s longterm disability claim in compliance with the terms set forth in the Regulatory Settlement 

Agreement (‘RSA’) LINA entered into with the Arizona Department of Insurance on June 

11, 2013.” (Doc. 25-9 at 28.) DeMarco’s briefing states that LINA was required to comply 

with this settlement agreement. (Doc. 25 at 8.) However, there’s no other explanation 

concerning why this settlement agreement—and whether LINA complied with it—is 

relevant to a de novo review of DeMarco’s claim. Given that the onus was on DeMarco to 

clearly establish why additional discovery is necessary, this request for admission may not 

be served on LINA.

3. Request for Admission Nos. 2-4

DeMarco requests that LINA admit that it never provided reports from medical 

reviewers and in-house rehabilitation specialists to her treating physicians following her 

second appeal request. (Doc. 25-9 at 28-29.) However, DeMarco’s briefing does not 

address why this topic is relevant. Because DeMarco bears the burden of clearly showing 

why the requested material is necessary for de novo review, she may not serve these 

requests for admission on LINA.

4. Request for Admission No. 8

Finally, DeMarco requests that LINA admit that its “failure to make a timely 

decision on Plaintiff’s second appeal request violates the terms of its own Group Policy 

No. SGD-605939.” Again, the relevance of this request is not discussed in DeMarco’s 

briefing. However, because the timeliness discussion in DeMarco’s briefing pertains to 

the argument that her claim ought to be reviewed de novo, the Court suspects this request 

has been rendered moot by the parties’ stipulation to de novo review. In any case, DeMarco 

may not serve this request for admission because she failed to adequately explain why it is 

necessary for adequate de novo review.

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Accordingly, IT IS ORDERED that DeMarco’s “Brief Re: Standard of Review and 

Discovery Dispute” (Doc. 25) is denied to the extent it seeks permission to pursue 

discovery.

Dated this 25th day of February, 2020.

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