STEVENS & LEE
LAWYERS 8:; CONSULTANTS
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May 30, 2006
Honorable Kent A. Jordan
The United States District Court
844 North King Street
Lock Box 10
Wilmington, Delaware 19801
( Re: Haw/csley v. UN UM LW Insurance Company of America, et al.
CA No. 04-1305 4
Dear Judge Jordan:
This letter is Unum’s Status Report pursuant to your November 21, 2005 order. On
May 3, 2006, Plaintiff requested four depositions, including doctors who reviewed the file and
two Rule 30(b)(6) depositions. Unum objects to these depositions and Plaintiffs Discovery plan (
for the reasons set forth herein. This letter is intended to resolve our Discovery dispute pursuant
to Paragraph 3(e) of your Scheduling Order and avoid filing a Motion for Protective Order. This
letter outlines our position on the proper standard of review and the proper scope of Discovery in
ERISA cases.
1. The Proper Standard of Review.
In the seminal case of Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101 (1989), the
Supreme Court held that an action to recover Plan benefits under ERISA, 29 U.S.C.
§ 1132(a)(l)(B), should be judicially reviewed under an abuse of discretion standard if "the
benefit Plan gives the administrator or fiduciary discretionary authority to determine eligibility
for benefits or to construe the terms of the Plan." Q at 115. The Third Circuit has held that
"[d]iscretionary powers may be implied by a plan's terms even if not granted expressly." Luby v.
Teamsters Health Welfare & Pension Funds, 944 F.2d 1176, 1180 (3d Cir. 1991) (emphasis
added).
Here, the Plan document expressly grants UNUM the necessary discretion.
I Philadelphia • Reading • Valley Forge • Lehigh Valley ¤ Harrisburg • Lancaster • Scranton
Williamsport • Wilkes-Barre • Princeton • Cherry Hill • New York • Wilmington
A PROFESSIONAL CORPORATION
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STEVENS & LEE
LAWYERS & CoNSULrANrS y
The United States District Court
May 30, 2006
Page 2
2. The Proper Scope of Review.
The Third Circuit has determined that when the arbitrary and capricious standard of
review applies, the court should not consider evidence that is not contained in the administrative
record. Thus, in Abnathya, the court rejected a claimant's attempt to rely on medical opinions
that were not submitted to the administrator during the administrative review of the claim.
2 F.3d at 48, n.8. Similarly, in Mitchell v. Eastman Kodak Co., 113 F.3d 433, 439 (3rd Cir.
1997), the Third Circuit held that "[u]nder the arbitrary and capricious standard of review the. . .
record consists of that evidence that was before the administrator when he made the decision
being reviewed." This approach was confirmed again more recently in Keating v. Whitrnore
Manufacturing Co., 186 F.3d 418, 421-422 and n.6 (3d Cir. 1999).
3. The Proper Scope of Discovery. ,
Applying ER1SA’s arbitrary and capricious standard of review, and the resulting
limitations on the scope of review, numerous courts have held that Discovery should be limited
to the administrative record and the governing Plan documents. e,g,, Trombetta v. Cragin
Federal Bank for Savings Employees Stock Option Plan, 102 E .3d 1435, 1438 n. 1 (7th Cir.
1996); Newman v. Standard Ins. Co., 997 E. Supp. 1276 (C.D. Cal. 1998). As these cases
recognize, Discovery requests aimed at information extrinsic to the administrative record cannot
lead to the Discovery of admissible evidence if the only admissible evidence is the administrative
record.
In Kosiba v. Merck & Company, etal., 384 F.3d 58, 67 fn. 5 (3d Cir. 2004), the Third
Circuit Court of Appeals again held that the record for arbitrary and capricious review of an
ERISA benefits denial is the record made before the plan administrator and cannot be
supplemented during litigation. However, the court in Kosiba did state that limited Discovery
may be had on the issue of conflicts of interest or bias. Ld.
In Perlman v. Swiss Bank Corp., 195 F.3d 975 (7th Cir. 1999), where the Plaintiff
challenged the denial of her claim for disability benefits by the insurer that administered her
employer's disability plan, the Court held that the District Court erred by allowing the Plaintiff to
take Discovery into matters extrinsic to the administrative record (such as the thought processes
and training of the insurance company's representatives) because the case was governed by
ER1SA's arbitrary and capricious standard of review.
lt follows from the conclusion that review of U`NUM's decision is
deferential that the District Court erred in permitting Discovery
into UNUM's decision—mal
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STEVENS & LEE
LAWYERS &; CONSULTANTS
The United States District Court
May 30, 2006 V
Page 3
inquiry into the thought processes of UNUM’s staff, the training of
those who considered Perlman’s claim, and in general who said
what to whom within UNUM —- all of which Perlman was allowed
to explore at length by depositions and interrogatories, and on
some of which the District Judge relied. Deferential review of an
administrative decision means review on the administrative record.
We have al/owed parties to ta/ce Discovery and present new
evidence in ERISA cases subject to De Novo Judicial decisions, . . .
but never where the question is whether a decision is supported by
substantial evidence, or is arbitrary and capricious.
Q at 98l—82 (emphasis added). The Court concluded that when ERISA’s arbitrary and
capricious standard of review applies, "the mental processes of the Plan's administrator are not
legitimate grounds of inquiry" through Discovery. Id, at 982.
Other recent examples include cases such as Kaus v. Standard Insurance Company,
No. 97-3378 (10th Cir. Nov. 5, 1998) (1998 U.S. App. LEXIS 28154)(Court affirmed the Entry
of Stunmary Judgment even though the District Court had refused to allow the Plaintiff to
conduct Discovery in ERISA action); Trombetta, 102 F.3d 1435 (Court held that Discovery was
properly denied in a lawsuit arising out of a denial of a claim for ESOP benefits); and Maune v.
International Brotherhood of Electrical Workers, 83 F.3d 959, 963 (8th Cir. 1996) (Court
affirmed Entry of Summary Judgment and held that "[b]ecause the District Court had before it all
of the evidence relied on by the Trustees in denying the claim, it properly denied the Maunes the
opportunity to conduct further Discovery").
Other cases include Rambo v. First Union, No. 99—C\/-2516, E.D. Pa., where Judge
Tucker granted a like Motion to the Motion we will tile here if need be. Another recent example
is Spaziani v. First Union, 2000 U.S. Dist. Lexis 1396, (E.D. Pa. Feb. 7, 2000), where Judge
Bartle held that Discovery of matters outside of the administrative record was not proper under
ERISA’s arbitrary and capricious standard of review.
Presently, Plaintiff has requested the deposition of Dr. Graham and Dr. Neuren. These
depositions are not to establish a conflict and are therefore prohibited. Plaintiff s Rule 30(b)(6)
request is to explore the relationship between the employer and Unum. Unum will stipulate that
there is no relationship E11'lClll13.IIJ11U1'l1 administers the claims and also pays benefits from its
funds. Finally, Plaintiff seeks a Rule 30(b)(6) deposition of a person most knowledgeable in the
handling ofthe claim and how the decisions were arrived. Once again, this is not conflict
Discovery and is prohibited.
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STEVENS & LEE
LAWYERS & CoNSULrANrS
The United States District Court
May 30, 2006
Page 4
Thank you for your consideration in this matter
Very TIUIY YOUIS,
STEVENS & LEE
KLW:djm
cc: Gary Aber, Esquire
SLI 638542vl/010305.00179
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