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Hocheiser v. Liberty Mutual Insurance Co.

United States District Court, D. New Jersey

November 13, 2018




         This matter comes before the Court on Plaintiff's Motion to Compel Defendants to Answer Plaintiff's Discovery Demands. ECF No. 35. Defendants oppose the Motion. ECF No. 36. The Court has fully reviewed the submissions of the parties and considers same without oral argument pursuant to Fed.R.Civ.P. 78. For the reasons set forth below, Plaintiff's Motion is DENIED.

         I. BACKGROUND[1]

         The facts of this case are well known to the Parties and were set down at length in the Opinion of U.S. District Judge Frieda L. Wolfson dismissing the original Complaint. ECF No. 25. Briefly, Plaintiff was a mortgage broker for Wells Fargo. ECF No. 27 at ¶2. After being diagnosed with several medical impairments, Plaintiff filed a claim for long-term disability benefits under an employee-benefits plan established by Wells Fargo (“the Plan”). Id. at ¶¶ 2, 12, 16. The Plan was funded and administered by Liberty Mutual Insurance Co. and Liberty Mutual Insurance Co. of Boston (collectively “Liberty”) and governed by the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. §§ 1132. Id. at ¶¶ 3, 12, 14. Liberty initially denied Plaintiff's claim, and Plaintiff appealed. Id. at ¶¶ 26-27. By letter dated December 9, 2014, Liberty notified Plaintiff it was reversing that denial, based on Liberty's determination that Plaintiff was eligible for long-term disability benefits. Id. at ¶ 29 and Exhibit 4. As a result, Plaintiff began receiving disability benefits under the Plan. Id. at ¶ 30 and Ex. 4). That said, the letter also stated that Liberty would continue to evaluate Plaintiff's claim and would require periodic updates from Plaintiff's medical providers. Id. Thereafter, Liberty sought and received several batches of medical records and authorizations updating Plaintiff's condition. Id. at 53-89. By letter dated May 23, 2016, Liberty terminated Plaintiff's long-term disability benefits under the Plan. Id. at ¶ 89. Liberty said the denial was based in part on a change in the Plan's definition of disability after two years of benefits payments, as well as its continuing review of Plaintiff's file. ECF No. 27-7 at pgs. 22-36. According to the Plan, during the first 24 months of payments, disability means, “the Covered Person, as a result of Injury or Sickness, is unable to perform the Material and Substantial duties of his Own Occupation.” ECF No. 1-1 at p. 45. (emphasis added) After 24 months, disability is defined as the inability “to perform the Material and Substantial duties of Any Occupation.” Id. (emphasis added) Plaintiff administratively appealed the termination of benefits, a decision that was upheld on February 18, 2017. Id. at ¶¶ 88, 93. On June 16, 2017, Plaintiff filed an action in Superior Court of New Jersey, Law Division, Monmouth County. Id. at ¶ 1. On August 14, 2017, Defendants removed the action to this District on the basis of federal question jurisdiction, pursuant to 28 U.S.C. §§ 1331 and 1441. Id. Thereafter, Defendants moved to dismiss Plaintiff's Complaint. Id.; see also ECF No. 7. Judge Wolfson dismissed without prejudice Plaintiff's claims against the five individual defendants, Plaintiff's common law claims asserted in Counts One, Two, Three, and Five, as well as the claims under §§ 502(a)(2) and 502(a)(3) of ERISA asserted in Count Four. ECF No. 25. Plaintiff was given leave to amend the Complaint within 30 days. ECF No. 25, 26. Plaintiff filed an Amended Complaint on April 18, 2018. ECF No. 27. On June 15, 2018, Defendants filed a Motion to Dismiss the Amended Complaint, ECF No. 34, while Plaintiff filed the instant motion. ECF No. 35.


         Under 29 U.S.C. § 1132(a)(1)(B), or ERISA, a participant in an employee-benefit plan is empowered to bring suit to recover benefits due him. The United States Supreme Court has held that a Court's evaluation of an ERISA claim requires a de novo standard of review “unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan, ” in which case the arbitrary-and-capricious standard of review applies. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 112-15 (1989). Whether the de novo or arbitrary-and-capricious standard applies affects the judicial inquiry into both any dispositive motion, see Hatchigian v. Nat'l Elec. Contractors Ass'n, 589 Fed.Appx. 606, 608 (3d Cir. 2014) (“where an ERISA plan's terms provide the plan administrator with discretionary authority to interpret the plan and determine benefits eligibility, the administrator's decision will be upheld unless it is arbitrary and capricious.”)) and, more important to the instant Motion, the discovery parameters.

         When evaluating ERISA claims under the arbitrary-and-capricious standard, a court is limited to “that evidence that was before the administrator when he made the decision being reviewed.” Mitchell v. Eastman Kodak Co., 113 F.3d 433, 440 (3d Cir. 1997), abrogated on other grounds by Metro. Life Ins. Co. v. Glenn, 554 U.S. 105 (2008). That said, the Third Circuit also has found “that when a reviewing court is deciding whether to employ the arbitrary and capricious standard or a more heightened standard of review, it may consider evidence of potential biases and conflicts of interest that are not found in the administrator's record.” Johnson v. UMWA Health & Ret. Funds, 125 Fed.Appx. 400, 405- 06 (3d Cir. 2005). The existence of a conflict of interest (e.g., when the entity responsible for determining benefits eligibility also pays the benefits) or evidence of potential biases or procedural abnormalities are factors to be considered, among others, in determining the appropriate standard of review. Glenn, 554 U.S. at 117.


         In this case, Plaintiff seeks, via interrogatories and requests for production, details about all facts, personnel and documents Liberty relied on in reaching the decision to terminate disability benefits. ECF No. 35-2 at pgs. 84-99. Defendants objected to most of the interrogatory questions and requests for documents. Id. at pgs. 163-181. The most-often stated objection was that such information was “beyond that permitted in ERISA cases.” Id. Otherwise, Defendants stated, as in the response to Interrogatory No. 1, that Plaintiff had received the complete administrative claims file from Liberty on October 16, 2017. Id. at pg. 177.

         Defendants contend the objections are grounded in Third Circuit jurisprudence declaring that where an ERISA-governed plan grants the plan administrator “clear and unequivocal discretion to administer terms of the plan, ” discovery is limited to the administrative record on which the termination decision was based. Def. Br. in Opp. to Mot. to Compel at 1. Defendants say language in the Plan, both explicit (“Interpretation of the Policy[:] Liberty shall possess the authority to construe the terms of this policy and to determine benefit eligibility hereunder.” ECF No. 1-1 at p. 75) and suggestive (“In determining whether the Covered Person is disabled, Plan's administration. Defendants point to Viera v. Life Ins. Co. of North America for the proposition that “[t]here are no ‘magic words'” connoting discretionary power, and that “discretionary powers may be granted expressly or implicitly.” Def. Br. at 8-9 (quoting Viera, 642 F.3d 407, 413 (3d Cir. 2001). Defendants contend the Plan's explicit and suggestive phrasing referred to above “is functionally equivalent to Viera's suggested language and unequivocally grants Liberty discretion to interpret the plan.” Def. Br. at 9. As a result, Defendants say, the arbitrary-and-capricious standard applies, and thus discovery is limited to the administrative record.

         Defendants further contend that even if the broader, de novo standard of review were to apply, Plaintiff still would not be entitled to additional discovery because the administrative record is sufficiently “robust and includes the universe of documents this Court would need to make an independent benefit determination, ” including “3, 912 pages [] and …the full panoply of Plaintiff's medical records, Liberty's peer reviews, claims notes, and correspondence between the parties.” Def. Br. at 14.

         Plaintiff contends the above jurisprudence is “not applicable to the discovery at issue in this matter” because Defendants “ignore the distinction between the two policies at issue in the case at bar.” Pl. Br. in Support of Mot. to Compel at 15. (emphasis added) Specifically, Plaintiff contends there is an ERISA-governed disability plan provided by his Well Fargo employer AND an “additional …self-purchased policy by the plaintiff and thus [] not subject to the ERISA limitations.” Id. As to this second policy, Plaintiff quotes Rush Prudential HMO, Inc. v. Moran, 536 U.S. 355, 376 (2002) overruled in part on other grounds by Kentucky Ass'n of Health Plans, Inc. v. Miller, 538 U.S. 329 (2003), for the proposition that “ERISA's civil enforcement provisions ‘authoriz[e] civil actions for six specific types of relief.'” Id. Plaintiff contends the non-ERISA claims are based “upon the bad faith and capricious actions undertaken by the defendants and their exercise of discretionary authority.” Id. at 16. Thus, Plaintiff contends, “the objections espoused by defendants cannot be applicable and defendants must be compelled to provide the discovery requested.” Id.

         The Court's inquiry begins by noting that this is not the first time Plaintiff has referred to the existence of a second disability policy held by Plaintiff. Judge Wolfson remarked in her Opinion granting the Motion to Dismiss the original Complaint, “[i]n his Opposition brief, Plaintiff also argues, for the first time, that, in addition to having long-term disability benefits under the Plan, Plaintiff also paid for additional long-term disability benefits that ‘should not be considered governed by ERISA as it is not part of...the [Plan].'” ECF No. 25, n6. But, Judge Wolfson stated, the original Complaint was devoid of references to a second, self-purchased disability policy and “because it is ‘axiomatic that the complaint may not be amended by the briefs in opposition to a motion to dismiss,' Com. of Pa. ex rel. Zimmerman v. PepsiCo, Inc., 836 F.2d 173, 181 (3d Cir. 1988) (citation omitted), it follows that the Court will not consider Plaintiff's argument that he is eligible for disability benefits outside of the Plan on this Motion. See Bell v. City of Philadelphia, 275 Fed.Appx. 157, 160 (3d Cir. 2008) (observing that “a plaintiff ‘may not amend his complaint through arguments in his brief in opposition....'”).” Id.

         Like the original Complaint, the Amended Complaint also is “devoid of references to a second, self-purchased disability policy, ” though Plaintiff does employ the construction “Liberty disability policy(ies)” four times. ECF No. 27 at ¶¶ 40, 42, 44, 46. In all other references, Plaintiff appears to refer to the policy and/or claim in the singular. See, e.g., Id. at ¶ 79. (“This complaint was about the way in which the individual defendants handled Plaintiff's ...

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