Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_19-cv-01837/USCOURTS-caed-2_19-cv-01837-3/pdf.json

Parties Involved:
AT&T Umbrella Benefit Plan No. 3
Defendant
Ruby Chacko
Plaintiff

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

RUBY CHACKO,

Plaintiff,

v.

AT&T UMBRELLA BENEFIT PLAN 

NO. 3,

Defendant.

No. 2:19-cv-01837-JAM-DB

ORDER GRANTING IN PART AND 

DENYING IN PART PLAINTIFF’S 

REQUEST FOR RECONSIDERATION

Before this Court is Plaintiff’s request for 

reconsideration, (“Mot.”) ECF No. 32, of the Magistrate Judge’s

ruling granting in part and denying in part Plaintiff’s motion to 

compel, March 16, 2020 Order (“Order”), ECF No. 29. Plaintiff 

requests that the Court overrule the Magistrate Judge’s findings 

and grant the motion to compel as it pertains to conflict-ofinterest discovery. Mot. at 9. For the reasons stated below 

this Court GRANTS in part and DENIES in part Plaintiff’s request 

for reconsideration. 

///

///

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I. FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND

Plaintiff Ruby Chacko (“Plaintiff”) was a participant in 

Defendant AT&T Umbrella Benefit Plan No. 3 (“Defendant” or “the 

Plan”). Mot. at 2. The Plan is an employee-benefit plan that 

provides long-term disability (“LTD”) benefits. Id. It is 

governed by the Employee Retirement Income Security ACT of 1974 

(“ERISA”). Id. 

Plaintiff filed this suit against Defendant, seeking to 

reinstate her LTD benefits. Compl. ECF No. 1. At issue is a 

discovery dispute between the Plan and Plaintiff. Mot. at 2. 

Plaintiff filed a Motion to Compel, seeking discovery responses 

from Defendant regarding the Administrative Record and the Plan’s 

alleged conflict of interest. Mot. to Compel, ECF 24. Defendant 

opposed all discovery in the case. Response to Req. for 

Reconsideration (“Response”), ECF No. 33, at 2. Specifically, 

Plaintiff moved to compel: (1) the completeness of the 

Administrative Record; (2) conflict-of-interest discovery 

concerning the relationship between the Plan and its third-party 

administrator, Sedgwick; and (3) conflict of interest discovery 

concerning a vendor and physician retained by Segdwick to 

evaluate Plaintiff’s claim. Mot. at 2. 

The Magistrate Judge held a telephonic hearing on 

Plaintiff’s motion to compel on March 13, 2020. Transcript of 

Proceedings, ECF No. 31. At the hearing, the Magistrate Judge 

granted the motion to compel as it pertained to the 

Administrative Record but took the two issues on conflict-ofinterest discovery under submission. Id. Three days later, the 

Magistrate Judge issued an order denying Plaintiff’s motion as to 

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the conflict-of-interest discovery. Order at 4. 

II. OPINION

A. Legal Standard

A magistrate’s ruling on non-dispositive matters, including 

motions to compel, must not be disturbed unless “clearly 

erroneous or contrary to law.” 28 U.S.C. § 636(b)(1)(A); Fed. 

R. Civ. P. 72(a); E.D. Local Rule 303(f). The “clearly 

erroneous” standard applies to “factual determinations and 

discretionary decisions.” Nevis v. Rideout Memorial Hospital, 

No. 2:17-cv-02295, 2019 WL 6310155 at *1 (E.D. Cal. Nov. 25, 

2019). A finding is only clearly erroneous, when the district 

court is “left with a ‘definite and firm conviction that a 

mistake has been committed.’” Cohen v. U.S. Dist. Court. For N.

Dist. Of California, 568 F.3d 703, 708 (9th Cir. 2009)(citations 

omitted). In contrast, the “contrary to law standard,” allows 

the independent review “of purely legal determinations by the 

magistrate judge.” Enns Pontiac, Buick, & GMC Truck v. Flores, 

N0. 1:07-cv-01043-LJO-BAM, 2012 WL 639541 at *4 (E.D. Cal. Feb. 

27, 2012). A magistrate judge’s decision is “contrary to law,” 

if it “contradict[s] or ignore[s] applicable precepts of law, as 

found in the Constitution, statutes or case precedent.” Id.

B. Analysis

1. Structural Conflict of Interest

Plaintiff seeks reconsideration of the Magistrate Judge’s 

denial of conflict of interest discovery concerning the 

relationship between the Plan and its third-party administrator. 

Mot. at 3. 

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In denying discovery on this issue, the Magistrate Judge 

found there is no structural conflict of interest, where as 

here, the benefit “Plan’s administrator [has] delegated the duty 

to decide claims to unconflicted third parties . . . .” Id.

(quoting Scoles v. Intel Corporation Long Term Disability 

Benefit Plan, 657 Fed. Appx. 667, 668 (9th Cir. 2016)). More 

importantly, the Magistrate Judge found the Ninth Circuit had 

already determined there was no structural conflict of interest 

present “in the very plan at issue here.” Id. (citing Day v. 

At&T Disability Income Plan, 698 F.3d 1091, 1096 (9th Cir. 

2012)). This Court has reviewed the Magistrate Judge’s findings 

and finds them to be correct. Plaintiff’s arguments for 

reconsideration are not persuasive. 

Upon review of this issue, the Court does not find the 

Magistrate Judge’s ruling denying Plaintiff’s motion to compel as 

to the structural conflict-of-interest discovery to be clearly 

erroneous or contrary to law. Plaintiff’s request for 

reconsideration on this issue is DENIED.

2. Retained Expert’s Conflict of Interest

Plaintiff also seeks reconsideration of the Magistrate 

Judge’s ruling denying discovery on financial conflict-ofinterest concerning the independent physician consultants. Mot. 

at 5. Plaintiff argues this ruling is contrary to law, as it 

“applies too narrow of a reading of the Ninth Circuit’s decision 

in Demer v. IBM Corporation LTD Plan, 835 F.3d 893 (9th Cir. 

2016).” Id. This Court agrees. 

In Demer, the plaintiff similarly challenged the denial of 

his disability benefits, and argued the Plan had two conflicts

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of interests that warranted the court’s standard of review to be 

“tempered by skepticism.” 835 F.3d at 899-900. First, MetLife 

was both the claim administrator for the Plan and its insurer. 

Id. at 900. Second, Plaintiff alleged there was a financial 

conflict of interest surrounding physicians MetLife hired to 

review the medical record. Id.

The Ninth Circuit addressed these two issues separately. 

First, it noted the district court found MetLife had a 

structural conflict of interest because it both evaluated the 

claims and funded the claims. Id. Yet the district court did 

not temper its standard of review with skepticism, because 

MetLife “had taken affirmative steps to reduce potential bias 

and promote accurate claim determinations.” Id. Although 

Plaintiff challenged the district court’s reasoning, the Ninth 

Circuit neglected to resolve this first issue. Instead, it 

found that even if the district court’s ruling was correct, 

“some skepticism [was] warranted here because of the financial 

conflict” surrounding the Independent Physician 

Consultants(“IPCs”). Id. at 901. 

In addressing the second question, the Ninth Circuit 

clarified that a financial conflict of interest “is distinct 

from the purported structural conflict of interest.” Id. In 

other words, even if MetLife lacked any structural conflict of 

interest, that did “not preclude MetLife from having a conflict 

of interest based on an IPC’s financial interest.” Id. The 

court held that Plaintiff’s evidence that the IPC’s earned a 

substantial amount of money from MetLife each year and had also 

performed a substantial number of reviews for MetLife, “raise[d] 

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a fair inference that there is a financial conflict.” Id. at 

902. It therefore found this evidence should be considered in 

reviewing MetLife’s decision for an abuse of discretion.

In the March 16 Order, the Magistrate Judge distinguished 

Demer, since unlike here, the Demer Plan had “the same entity 

[as] the claim administrator and plan insurer.” Order at 4. It 

is true that here the Plan does not have an underlying 

structural conflict of interest, since the claim administrator 

and plan insurer are two separate entities. However, the 

Magistrate Judge’s decision to distinguish Demer because it had 

an underlying structural conflict of interest, runs contrary to 

law. Whether the Plan has an underling structural conflict of 

interest is irrelevant to the question of an alleged financial 

conflict of interest. Demer, 835 F.3d at 901. That the Plan 

does not have an underlying structural conflict of interest, 

does not preclude it from having a financial conflict. Id. 

The Magistrate Judge further distinguished Demer because 

there the plaintiff had presented the court with “evidence of a 

conflict of interest.” Order at 4. Indeed, the court in Demer

placed the burden on the plaintiff “to produce evidence of a 

financial conflict sufficient to warrant a degree of 

skepticism.” 835 F.3d at 902. Here, the Plaintiff has not done 

so. Instead, Plaintiff asks the court to allow discovery on 

this issue so that it can then produce evidence of a conflict of 

interest. Mot. at 6. Unpersuaded, the Magistrate Judge ruled 

that “if that were the standard . . . discovery would always be 

permissible.” Order at 4. This Court disagrees. 

As Plaintiff notes, Demer was an appeal on a motion for 

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summary judgment. Mot. at 6. Therefore, the plaintiff in that 

case had already “obtained the information about the reviewing 

doctors through discovery at the district court.” Id. If the 

plaintiff had not been permitted to engage in such discovery, he 

would not have been able to meet the evidentiary burden 

concerning a conflict of interest at the summary judgment stage.

It is for that reason that courts within this circuit have 

allowed discovery of potential IPC’s financial conflicts. See 

e.g., Wojno v. Cigna Grp. Ins., No. cv 10-07238-JAK JEMX, 2011 

WL 3236025, at *2 (C.D Cal. July 21, 2011)(allowing discovery 

because plaintiff had explained the relevance of payment 

information to the IPC’s credibility). In fact, the Ninth 

Circuit has held that consideration of evidence outside of the 

administrative record is permissible “to determine the 

appropriate weight to accord the conflict of interest factor” in 

an ERISA action alleging that LTD benefits were wrongfully 

terminated. Wilcox v. Wells Fargo and Co. Long Term Disability 

Plan, 287 F. App’x 602, 603 (9th Cir. 2008). Finally, although 

not binding authority, this Court is persuaded by the Northern 

District of California’s recent decision in Dimry v. Bert 

Bell/Pete Rozelle NFL Retirement Plan, et al., (ECF No. 34)

which allowed financial discovery for the same reason raised by 

Plaintiff here. No. 19-CV-05560-JSC, 2020 WL 1865192 (N.D. Cal. 

Apr. 14, 2020)(holding in light of Demer, that “the Plan should 

produce its agreements with the independent physicians (as well 

as compensation) as those agreements might reveal a financial 

incentive to rule in favor of the plan.”). 

Therefore, the Court finds the Magistrate Judge’s ruling 

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denying Plaintiff’s motion to compel as to discovery of a 

potential financial conflict to be contrary to law. Plaintiff’s 

request for reconsideration on this issue is therefore GRANTED.

III. ORDER

For the reasons set forth above, the Court GRANTS in part 

and DENIES in part Plaintiff’s Request for Reconsideration.

IT IS SO ORDERED.

Dated: April 27, 2020

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