Ms. Kathleen M. Hackett brought suit in the U.S. District Court of South Dakota’s Western Division against Standard Insurance Company (Standard), alleging that Standard had wrongfully denied her long-term disability benefits claim. In the first round, in 2007, both parties moved for summary judgment. The District Court granted summary judgment to Standard on August 15, 2007. Court held that although Standard operated under a conflict of interest, under Woo, Hackett’s disability attorney had failed to prove that a serious breach of fiduciary duty had occurred.
On appeal against the order of the District Court, the Eighth Circuit Court of Appeals reversed and remanded the matter back to the District Court for its reconsideration of the conflict of interest issue. This was ordered in the light of Glenn v. Metropolitan Life Insurance Company decision.
In remand, Hackett’s disability attorney served a set of interrogatories and request for production of documents upon Standard. The answers Standard gave prompted a second motion to compel discovery.
Standard raised objections on those interrogatories and pointed out that discovery was already closed and the Court on remand was only allowed to consider the administrative records in light of Glenn, a decision that had taken place after the District Court’s first ruling.
Standard Raises Objections to Court Ordering Discovery.
Standard argued that the Eighth Circuit Court did not mentione anywhere in its order to remand that the District Court could allow additional discovery. Therefore, as far as Standard was concerned, the Judge had erred by allowing further discovery.
But in raising these objections, Standard failed to acknowledge the issuance of a Court order setting the deadline to file a rebuttal against the order within 10 days. The Eighth Circuit Court remanded the case which clearly showed that additional discovery had to be considered. After a careful analysis as to whether Glenn made this appropriate, the Court determined that additional discovery should be allowed. This decision was affirmed, and the objection raised by Standard was denied.
Standard then went on to argue that the requested discovery was cumulative and irrelevant to the present conflict. The Court disagreed. Hackett’s attorneys efforts to enquire into Standard’s efforts to assure accurate claims assessment was consistent with the clear language of Glenn.
Prior to Glenn, Hackett’s discovery would have been limited to the business relationship between Standard and Dr. Zivin and Dr. Dickerman. But post Glenn, the main question was whether the Court should allow discovery to extend into the other related areas not requested by Hackett’s ERISA attorney in his interrogatories. After consideration of cited authorities and the logic expressed by both sides for and against discovery, the Court held that the more appropriate step was to allow limited discovery. The Court determined that it should allow Hackett to make inquiry into any incentives paid by Standard for denial of claims. The same thing remained true with respect to relationship between Standard and the outside medical advisors it hired, who might have received incentives to inappropriately deny claims.
ThereforetheCourt held that Hackett’s disability attorney must be allowed to make inquiry into the conflict of interest so the Court could make a reasonable analysis. This objection was also denied. Limited discovery would be allowed.
Standard’s last objection was that the burden of the requested discovery outweighed the potential benefits. The disability insurance company claimed that the cost to produce the requested documents would outweigh the benefits which Hackett’s attorney would gain in presenting the case.
The Court found that this argument was not convincing. Standard had not raised this point when the Court was first considering whether discovery should be allowed. In Howell, the Court had already found that when the discovery requested is relevant to the dispute, expensiveness and burdensome of production of such discovery is not be a proper reason to deny the discovery. I always find it comical when a multi billion dollar insurance company says that it will be a financial burden for them to obtain requested information.
Court Considers Arguments against Interrogatories
The Court had already found that the six questions Hackett’s ERISA attorney asked regarding how Standard shielded decision makers from financial concerns addressed the main reason behind the Glenn decision. Her attorney had limited the scope of his questions from 2000 onward, which fell within a reasonable time scope, considering that Hackett’s first claim occurring in 2002.
Based on Burns v. Imagine Films Entm’t, Inc., the fact that answering these interrogatories would require Standard to “expend considerable time, effort, and expense consulting, reviewing, and analyzing huge volumes of documents and information” was not a sufficient reason for the Court to uphold Standard’s objections. The order to supply answers to these questions was once again affirmed, with stipulation that Standard use the time frame of 2000 through 2006.
The next objection was related to Hackett’s interrogatories 9 to 12. The first round of discovery revealed that Dr. Zivin had reviewed 398 files for the consideration of $115,228 during 2003 to 2005. Dr. Dickerman had reviewed 1,939 files for a fee of $577,00. This suggested to the Court that Standard had paid $289.94 to Dr. Zivin and $297.58 to Dr. Dickerman for each review done by them.
Standard argued that this was not the case. Rather some of the reviews had included multiple reviews of a single claimant’s file. Standard claimed that some reviews only involved comments on a single chart, while others included a claimant’s entire medical history.
The Court found that this argument supported Hackett’s attorney’s supposition that discovery into the billings presented to Standard would be useful in proving or disproving a conflict of interest. The Court found that the requested information was relevant to the matter in dispute. The information would help the Court to determine the percentage of time Dr. Zivin and Dr. Dickerman denied claims. And it would help to prove whether or not Standard was engaged in a history of biased claims administration with the help of both physicians. Without this information, Hackett’s disability attorney would not be able to prove a biased claims approval history. Therefore Hackett’s disability attorney was entitled to the discovery, as had been approved by the Court earlier, in order to shore up the evidence required to prove his case. For this reason Standard’s objection to interrogatories 9-12 was denied.
Hackett’s attorney succeeded in securing the Court’s support of his discovery requests, although Standard raised objections to them. Hackett’s disability attorney argued competently against each and every objection. Because Standard still maintains that it made the right decision regarding Hackett’s disability claim, this is a case that will be seen again. It will be interesting to see whether discovery has an impact on the District Court’s decision when it reviews this case again on remand.
About the author: Gregory Michael Dell is an attorney and managing partner of the disability income division of Attorneys Dell & Schaefer. Mr. Dell and his team of lawyers have assisted thousands of long-term disability claimants with their claims against every major disability insurance company. To request a free legal consultation call 800-411-9085.