Legal Summary: Kasko v. Aetna Life Insurance Company

33 F. Supp. 3d 782 (E.D. Ky. 2014)

Our client had long term disability (LTD) coverage through her employer. Kasko v. Aetna Life Ins. Co., 33 F. Supp. 3d 782, 785 (E.D. Ky. 2014). She became disabled and unable to work, and thus requested long term disability (LTD) benefits under her plan. Id. Aetna, the plan administrator, denied our client’s request. Id.

We then sued Aetna on behalf of our client. Id. Specifically, we argued that Aetna’s denial decision was arbitrary and capricious under the Employee Retirement Income Security Act (ERISA), that Aetna operated under a conflict of interest, and that the Aetna-hired doctors reviewing our client’s claim also operated under conflicts of interest. Id.

In order to make those arguments, we needed more information from Aetna and so requested that Aetna answer some questions and provide us with documents from its claim review process. Id. Aetna rejected our requests. Id. As a result, we asked the court to compel Aetna to comply. Id. The court granted our request, ordering Aetna to provide us with the information we needed. Id.

In making its decision, the court first explained the law on discovery requests in ERISA cases. Id. Under ERISA, plan participants generally “may not seek discovery regarding matters outside the administrative record.” Id. But, when a plan participant is challenging a denial decision on procedural grounds, the participant may be able to receive limited discovery. Id. at 786. The court then explained that challenging an insurance company for biased decision-making, like we were in this case, was a “procedural challenge” that rendered a claimant, such as our client, eligible to receive discovery outside of the administrative record. Id.

This conclusion raised questions regarding the extent of discovery that should be permitted outside of the administrative record, so the court surveyed precedent on that topic. Id. It noted that “threshold evidentiary showings are not required for discovery in ERISA cases,” Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 117 (2008), and that “the district court still possesses discretion to determine whether discovery should be allowed,” Bell v. Ameritech Sickness & Acc. Disability Ben. Plan, 399 F. Appx. 991, 998 (6th Cir. 2010). Id.

Because of the discretion district courts have on the matter, precedent differs on whether or not plaintiffs can receive expanded discovery simply by pointing to the inherent conflict of interest that exists when a plan administrator both decides claims and pays them, like Aetna did in our client’s case. Id. at 786-87. To get around the discrepancies in the case law, the court concluded that “regardless of the approach utilized, all courts allow discovery in cases in which a plaintiff makes a further showing of potential bias past the inherent conflict of interest claim.” Id. at 787.

Applying that standard, the court held that we made a sufficient “further showing of potential bias,” by providing proof that one Aetna-employed doctor who reviewed our client’s claim had made a recommendation of “not disabled” in “approximately 85% to 90% of the claims” she reviewed. Id. Additionally, we successfully pointed to other cases in which that same doctor was criticized “for the content and frequency of reviews she makes for Aetna.” Id. at 787-88. On the whole, we met our burden, which according to the court, opened the door to a fairly broad scope of discovery based on what had been permitted in similar cases. See id. at 788.

With those preliminary matters covered, the court next addressed our specific discovery requests. We requested information about Aetna’s total “payments to doctors who reviewed [our client’s] claim between 2010 and 2012,” but Aetna refused on the grounds that it had already told us specifically “the amount of payments made to [our client’s] reviewing doctors” for the work they did on her claim. Id. The court rejected Aetna’s argument, explaining that any potential bias might not be clear from looking only at amounts paid for specifically reviewing our client’s claim; rather, the total amount Aetna paid to the reviewing doctors during those two years for all claims they reviewed was relevant to determining the existence of bias against insured individuals. Id. at 789.

We also asked Aetna to provide a variety of other metrics related to the reviewing doctors’ work for Aetna, such as the number of times each reviewing doctor reviewed a claim for Aetna during the relevant time period and how many times those doctors found a claimant not to be disabled. See id. The court held that these were valid requests for “statistical data…that closely mirror[ed] discovery requests that have been found permissible in this district.” Id. (citing Pemberton v. Reliance Standard Life Ins. Co., No. 08-86-JBC, 2009 WL 89696, *3 (E.D. Ky. Jan. 13, 2009)).

Aetna argued that our requests were “unduly burdensome because physicians do not determine whether a claim should be denied,” but rather, help Aetna employees understand the medical side of each claim. Id. Therefore, according to Aetna, complying with our request would require it to undertake “a manual review of every report to determine the outcome of the claim.” Id. That excuse was unsatisfactory to the court since “this type of statistical information has been found to be discoverable in investigating a claim of bias,” and also being able to see “[t]he financial incentives, combined with the physicians’ recommendations, could assist the Court in resolving an allegation of biased claim administration.” Id.

Along these lines, the court also acknowledged that our requests were limited to a three-year period, whereas some courts had approved similar requests for up to a ten-year period. Id. Thus, Aetna’s “overly burdensome” argument was not supported in precedent. As a result, the court instructed Aetna to provide us with information regarding “the number of files in which the physicians recommended a finding of sedentary work or otherwise not disabled.” Id.

Next, the court addressed our requests for documents, which included various contracts, agreements, invoices, bills, and records of payment involving the reviewing doctors. Id. at 789-90. Aetna argued that these requests fell “outside of the scope permitted in an ERISA case,” but the court disagreed, holding that “[t]his type of discovery request has also been allowed as a ‘permissible area of inquiry.” Id. at 790.

Finally, the court held that the information Aetna had to disclose to us should be kept under a protective order, such that only attorneys and experts associated with the case could review and use it. Id. at 790-91.

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