Opinion ID: 170023
Heading Depth: 2
Heading Rank: 1

Heading: Standard for Admission of Extra-Record Evidence

Text: ERISA, a comprehensive and reticulated statute, Nachman Corp. v. Pension Benefit Guar. Corp., 446 U.S. 359, 361, 100 S.Ct. 1723, 64 L.Ed.2d 354 (1980), governs employee benefit plans, including disability benefit plans such as LINA's. When an individual covered by the plan makes a claim for benefits, the administrator gathers evidence, including the evidentiary submissions of the claimant, and determines under the plan's terms whether or not to grant benefits. If the administrator denies the claim, the claimant may bring suit to recover [the] benefits due to him under the terms of his plan. 29 U.S.C. § 1132(a)(1)(B). Federal court is the exclusive forum for such suits, as ERISA preempts state laws relating to nearly all private employee benefit plans. Id. § 1144(a). Where, as here, a plan administrator did not have discretionary authority to determine eligibility for benefits or to construe the terms of the plan, district courts will review a benefit denial de novo. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989). Although ERISA provides federal review for benefit denials, this does not entail that federal courts should function as substitute plan administrators. Hall, 300 F.3d at 1201 (quoting Perry v. Simplicity Eng'g, 900 F.2d 963, 966 (6th Cir.1990)). Consequently we have said that the best way for a district court to implement ERISA's purposes in this context is ordinarily to restrict de novo review to the administrative record compiled during the claim administration process, instead of taking new evidence, hearing witnesses, and the like. Id. at 1202. Confining review in general to the administrative record, and thus encouraging the parties to develop the factual record as fully and as early as possible, is important for a variety of reasons related to the goals of ERISA. For instance, it may avert problems related to the loss or staleness of evidence, since federal suits may be brought years after a disputed decision. More importantly, the availability of a complete factual record makes it easier for the plan administrator to come to an objectively correct, well-supported determination; this, in turn, decreases both the likelihood of subsequent federal litigation and the costs that would be attendant thereto. ERISA was designed to promote internal resolution of claims, . . . and to encourage informal and non-adversarial proceedings, and these related aims are promoted by early and full development of the factual record before the administrator, rather than the federal district court. Quesinberry v. Life Ins. Co. of N. Am., 987 F.2d 1017, 1022 (4th Cir.1993) (quoting Berry v. Ciba-Geigy Corp., 761 F.2d 1003, 1007 n. 4 (4th Cir.1985) (internal quotation marks and further citation omitted)). As we indicated in Hall, a fully developed administrative record facilitates the goal of prompt resolution of claims by the fiduciary under the ERISA scheme. 300 F.3d at 1201. And if litigation should ensue, requiring the parties to have developed the record during the claim administration process deters the practice of holding back evidence for presentation to the district court as a fallback or a surprise. In Hall, this Court first had occasion to consider the standard for admission of evidence from outside the administrative record in the de novo review of an ERISA plan administrator's benefit determination. We made clear that it is the unusual case in which the district court should allow supplementation of the record, 300 F.3d at 1203, and that only exceptional circumstances could warrant the admission of additional evidence. Id. Today we again emphasize that ERISA policy strongly disfavors expanding the record beyond that which was available to the plan administrator. Supplemental evidence should not be used to take a second bite at the apple, but only when necessary to enable the court to understand and evaluate the decision under review. A party seeking to introduce evidence from outside the administrative record bears a significant burden in establishing that he may do so. In particular, (1) the evidence must be necessary to the district court's de novo review; (2) the party offering the extra-record evidence must demonstrate that it could not have been submitted to the plan administrator at the time the challenged decision was made; (3) the evidence must not be [c]umulative or repetitive; nor (4) may it be evidence that `is simply better evidence than the claimant mustered for the claim review.' Hall, 300 F.3d at 1203 (quoting Quesinberry, 987 F.2d at 1027). [2] Even then, district courts are not required to admit additional evidence when these circumstances exist because a court `may well conclude that the case can be properly resolved on the administrative record without the need to put the parties to additional delay and expense.' Id. For guidance in evaluating the necessity of extra-record evidence, we listed in Hall several examples of the exceptional circumstances which could warrant the admission of additional evidence. Id. Those situations include claims that require consideration of complex medical questions or issues regarding the credibility of medical experts; the availability of very limited administrative review procedures with little or no evidentiary record; the necessity of evidence regarding interpretation of the terms of the plan rather than specific historical facts; instances where the payor and the administrator are the same entity and the court is concerned about impartiality; claims which would have been insurance contract claims prior to ERISA; and circumstances in which there is additional evidence that the claimant could not have presented in the administrative process. Id. (quoting Quesinberry, 987 F.2d at 1027). These are not exceptions to the Hall rule; they are merely examples of circumstances that might militate in favor of a finding of necessity. The existence of one or more of these circumstances does not make extra-record evidence automatically admissible, for if it did, then supplementation of the record would not be limited to unusual cases or extraordinary circumstances. This would undermin[e] the goal of not making district courts `substitute plan administrators.' Id. at 1206 (quoting Quesinberry, 987 F.2d at 1025). District courts must conduct analysis case-by-case to determine whether all four prongs of the Hall test are met. This Court reviews the district court's ultimate determination under Hall for an abuse of discretion.