Opinion ID: 174959
Heading Depth: 3
Heading Rank: 1

Heading: Supplementation of the Administrative Record Generally

Text: In an ERISA case where, as here, the plan `gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan,' we review the administrator's decision for an abuse of discretion. Holcomb v. Unum Life Ins. Co. of Am., 578 F.3d 1187, 1192 (10th Cir.2009) (quoting Fought v. UNUM Life Ins. Co. of Am., 379 F.3d 997, 1002-03 (10th Cir. 2004), abrogated on other grounds by Glenn, 128 S.Ct. at 2351); see also Weber, 541 F.3d at 1010 n. 10 (describing terms arbitrary and capricious and abuse of discretion as interchangeable in this context). Our cases, however, have failed to provide clear guidance to the district court regarding the appropriate standard for resolving discovery requests in these types of cases. See Kohut v. Hartford Life and Accident Ins. Co., 710 F.Supp.2d. 1139, 1152, 2008 WL 5246163,  (D.Colo. Dec.16, 2008) (describing our case law as exhibiting judicial schizophrenia). As a starting point, we have frequently, consistently, and unequivocally reiterated that, `in reviewing a plan administrator's decision under the arbitrary and capricious standard, the federal courts are limited to the administrative record.' Weber, 541 F.3d at 1011 (quoting Fought, 379 F.3d at 1003); see also, e.g., Holcomb, 578 F.3d at 1192 (10th Cir.2009) (citing Fought, 379 F.3d at 1003); Fought, 379 F.3d at 1003 (citing Hall v. UNUM Life Ins. Co. of Am., 300 F.3d 1197, 1201 (10th Cir.2002)); Hall, 300 F.3d at 1201 (citing Sandoval v. Aetna Life & Cas. Ins. Co., 967 F.2d 377, 380-81 (10th Cir.1992), and Woolsey v. Marion Labs., 934 F.2d 1452, 1460 (10th Cir.1991)); Sandoval, 967 F.2d at 380 (citing out-of-circuit cases); Woolsey, 934 F.2d at 1460 (citing out-of-circuit cases). Because we generally restrict district courts' review of an administrator's decision to the administrative record and because Federal Rule of Civil Procedure 26(b)(1) permits discovery only where it appears reasonably calculated to lead to the discovery of admissible evidence, extra-record discovery would generally seem inappropriate. However, even as we have told district courts to limit their analysis to the administrative record, we have also instructed the district courts to assess the effect of a dual role conflict of interest in a manner that seems incompatible with a flat prohibition on extra-record discovery and supplementation. If an administrator operates under a dual role conflict of interest, the district court must always weigh the conflict of interest in its abuse of discretion analysis, but it must allocate the conflict more or less weight depending on its seriousness. [1] See Weber, 541 F.3d at 1010. But, without discovery, a claimant may not have access to the information necessary to establish the seriousness of the conflict. Similarly, the administrator may not be fully able to rebut a claim of conflict by showing that it has taken active steps to reduce potential bias and to promote accuracy, for example, by walling off claims administrators from those interested in firm finances. Glenn, 128 S.Ct. at 2351. And, if the district court cannot consider material beyond the administrative record, it may not be able to fulfill its judicial task of allocating the proper weight to the conflict of interest. If the administrative record does not specifically address these issues and if we flatly prohibited the consideration and discovery of information outside the administrative record, the district court may not be able to make a fully informed analysis that properly weighs the conflict of interest. [2] This seeming tension in our case law, however, naturally resolves itself if we recall the origins of our language that speaks in terms of a flat rule against a district court's consideration of extra-record information. Our first two cases to adopt this restriction from other circuits were Woolsey v. Marion Laboratories, 934 F.2d 1452, 1460 (10th Cir.1991) (citing Perry v. Simplicity Engineering, 900 F.2d 963, 966 (6th Cir.1990), and Voliva v. Seafarers Pension Plan, 858 F.2d 195, 196 (4th Cir.1988)), and Sandoval v. Aetna Life & Casualty Insurance Co., 967 F.2d 377, 380-81 (10th Cir.1992) (citing Perry, 900 F.2d at 967, and Voliva, 858 F.2d at 196). In both Sandoval and Woolsey, we articulated the rule against extra-record supplementation in the context of rejecting a claimant's efforts to supplement the record with substantive evidence of his eligibility for benefits, such as additional evidence of disability. See Sandoval, 967 F.2d. at 380-81 (rejecting district court's consideration of psychological evaluations not submitted to the plan administrator and explaining that [i]n effect a curtain falls when the fiduciary completes its review, and for purposes of determining if substantial evidence supported the decision, the district court must evaluate the record as it was at the time of the decision.) (emphasis added); Woolsey, 934 F.2d at 1460 (stating in the context of discussing the substantive evidence that supported an administrator's decision concerning the disbursement of benefits that, [i]n determining whether the decision was supported by substantial evidence, we consider only the facts before the Administrators at the time of their decision). In this context, a general prohibition on extra-record supplementation makes sense. Both a plan participant and an administrator have a fair opportunity to include in the record materials related to the participant's eligibility for benefits. Because the administrator must base its decision on the materials included in the administrative record, a district court would have no justification for concluding that an administrator abused its discretion by failing to consider materials never submitted to it for inclusion in the administrative record. [3] See Sandoval, 967 F.2d at 381 (If a plan participant fails to bring evidence to the attention of the administrator, the participant cannot complain of the administrator's failure to consider this evidence.). As we explained in Sandoval, a plan participant is not entitled to a second chance to prove his disability. [4] Id. Other policy concerns also support a general rule against supplementation of the record on the merits issue of disability. In particular, Congress designed ERISA to provide a method for workers and beneficiaries to resolve disputes over benefits inexpensively and expeditiously. Id. at 380 (quotation omitted). Allowing the district court to go beyond its limited scope of review and consider extra-record materials would undermine this goal, and both prolong the decisionmaking process and inject greater uncertainty into that process. See id. Although we have frequently used broad language to describe our restriction on extra-record discovery and supplementation, the breadth of that language can be misleading, at least to some degree. In fact, in Sandoval we did not use the absolutist language that we have shifted towards in some later cases. See id. (stating that the district court generally may consider only materials contained in the administrative record) (emphasis added). While Woolsey used more absolute language, as stated previously, it used that language in the context of addressing a district court's consideration of substantive evidence of eligibility not included in the record. 934 F.2d at 1460. And like both Woolsey and Sandoval, most of our subsequent cases have employed this restriction with respect to substantive evidence of eligibility, or simply reiterated the restriction in rote form without substantive discussion of its scope. See, e.g., Holcomb, 578 F.3d at 1192 (reciting general proposition that a court's review is limited to the administrative record without further comment); Weber, 541 F.3d at 1008 n. 7, 1011 (refusing to consider extra-record materials offered to prove substantive eligibility for benefits); Flinders, 491 F.3d at 1190-91 (explaining that district court could review reasonableness only of rationale for denying claim that is asserted in the administrative record because the restriction on review of extra-record materials also prevents an administrator from submitting extra-record materials or theories); Adamson v. Unum Life Ins. Co. of Am., 455 F.3d 1209, 1212-14 (10th Cir.2006) (noting court's limitation to the record under abuse of discretion review without further comment); Gaither v. Aetna Life Ins. Co., 388 F.3d 759, 767-68 (10th Cir.2004) (same); Allison v. UNUM Life Ins. Co. of Am., 381 F.3d 1015, 1021 (10th Cir.2004) (same); Finley v. Hewlett-Packard Co. Employee Benefits Org. Income Prot. Plan, 379 F.3d 1168, 1176 (10th Cir.2004) (same); Nance, 294 F.3d at 1269 (rejecting claimant's argument that district court should consider substantive evidence of his disability submitted after administrator had issued its final decision); Hall, 300 F.3d at 1201 (same); Kimber v. Thiokol Corp., 196 F.3d 1092, 1098 (10th Cir.1999) (same); Chambers v. Family Health Plan Corp., 100 F.3d 818, 824 (10th Cir.1996) (holding that Sandoval prevents review of substantive extra-record evidence regarding claimant's eligibility for benefits and declining to address whether procedural irregularities affect a district court's scope of review). Specifically, the broad language prohibiting extra-record discovery is potentially misleading in cases involving a dual role conflict of interests or procedural irregularities. In fact, some of our cases contemplate the possibility that a district court may permit extra-record discovery related to a dual role conflict of interest. In Wolberg v. AT & T Broadband Pension Plan, 123 Fed.Appx. 840 (10th Cir.2005) (unpublished), [5] the plan participant argued that the plan administrator had a standard conflict of interest, which meant that the plan participant bore the burden to prove the conflict existed and jeopardized the administrator's decisionmaking process. Id. at 845. Although we reiterated the general principle that [i]n ERISA cases [our] review is confined to the administrative record, id. at 844-45, we explicitly criticized the plan participant for failing to seek discovery that could have proven the seriousness of the conflict of interest. Id. at 846 n. 3. Because we would not have criticized the plan participant for failing to seek discovery on the conflict of interest if discovery and supplementation of the record on that issue were never available, we necessarily implied that, at least in some circumstances, discovery related to a conflict of interest may be available. [6] Cf. Weber, 541 F.3d at 1011 (noting, in a case involving an administrator with an inherent dual role conflict of interest, that the court was left to its own analytic devices in assessing the administrator's reasonableness in lights of its conflict, in part, because the record reveal[ed] little about [the administrator's] claims assessment process). And district courts within our circuit have recognized that limited discovery for the purpose of determining the scope of a conflict of interest may be appropriate. Paul v. Hartford Life and Accident Ins. Co., No. 08-cv-00890, 2008 WL 2945607,  (D.Colo. July 28, 2008) (unreported) (compiling cases and concluding that while it would not be proper to allow Plaintiff to conduct discovery directed to the factual merits of his claim, this Court will permit limited discovery related to the alleged conflict of interest in this case and to the policies and procedures used by [the administrator] to make its decision); see also, e.g., Kohut, 710 F.Supp.2d at 1150-53, 2008 WL 5246163, - (interpreting Tenth Circuit law to permit discovery related to the seriousness of a conflict of interest). More to the point, the Supreme Court's decision in Glenn contemplates the possibility of extra-record discovery related to a dual role conflict of interest. In Glenn, the Supreme Court explained that a conflict of interest weighs more heavily against an administrator where it has a history of biased claims administration. 128 S.Ct. at 2351. As an example of this situation, Glenn cited to a law review article by John Langbein that detailed the history of one company's biased administration of claims. See id. (citing John H. Langbein, Trust Law as Regulatory Law: The Unum/Provident Scandal and Judicial Review of Benefit Denials Under ERISA, 101 Nw. U.L.Rev. 1315, 1317-21 (2007)). That article details how various investigations and lawsuits unrelated to benefit denial claims ( e.g., wrongful termination claims by former employees) revealed that an insurer pressured its employees and physicians to deny claims without proper analysis yet instructed them to use language that a court would find adequate to support the denial. Langbein, supra, 101 Nw. U.L.Rev. at 1317-21. This type of pressure was most apparent in cases of subjective illnesses that did not show up on x-rays, MRIs, and other objective medical tests ( e.g., mental illness, chronic pain, migraines, or even Parkinsons). Id. at 1319 (quotation omitted). Although the Supreme Court did not explicitly state that the district court could consider extra-record materials or that a claimant could discover extra-record materials, it must have contemplated that, at least in some cases, discovery and consideration of extra-record materials may be necessary and appropriate as an administrative record is not likely to contain the details of a history of biased administration of claims as discussed in Langbein's article. See Denmark v. Liberty Life Assurance Co. of Boston, 566 F.3d 1, 10 (1st Cir.2009) (The majority opinion in Glenn fairly can be read as contemplating some discovery on the issue of whether a structural conflict has morphed into an actual conflict.) (dicta); see also id. at 11 (Lipez, J., concurring) (agreeing with majority that Glenn contemplates discovery related to a dual role conflict of interest but criticizing the majority for reaching that question unnecessarily and taking an unnecessarily limited view on the availability of discovery); Johnson v. Conn. Gen. Life Ins. Co., 324 Fed.Appx. 459, 466-67 (6th Cir.2009) (unpublished) (indicating that Glenn is consistent with the Sixth Circuit's prior case law that permits discovery related to a dual role conflict of interest and procedural irregularities); Wilcox v. Wells Fargo & Co. Long Term Disability Plan, 287 Fed.Appx. 602, 603-04 (9th Cir.2008) (unpublished) (explaining that Glenn permits consideration of evidence outside of the administrative record to determine the appropriate weight to accord the conflict of interest factor). For the reasons we have discussed above, then, we conclude that our case law prohibits courts from considering materials outside the administrative record where the extra-record materials sought to be introduced relate to a claimant's eligibility for benefits. See Sandoval, 967 F.2d at 380. Our cases and the Supreme Court's decision in Glenn, however, contemplate that this general restriction does not conclusively prohibit a district court from considering extra-record materials related to an administrator's dual role conflict of interest. Therefore, discovery related to the scope and impact of a dual role conflict of interest may, at times, be appropriate, and we now turn to elucidating the standard for addressing discovery requests related to a dual role conflict of interest.