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Improving ERISA Law

Typically the federal court’s review in ERISA cases is limited to the “administrative record.” However, in the Eastern and Middle Districts of Tennessee, if a defendant had an inherent conflict of interest that impacted the benefit decision, then a plaintiff is entitled to some degree of discovery related to this issue. However, in 2011, in a case entitled Freshour v. Sun Life, No. 2-10-cv-153 (E.D. Tenn.), the defendant took a different tact and filed a Motion for Protective order requesting that the Court “enter an Order forbidding the discovery” and “relieving it from any obligation to respond to Plaintiff’s discovery requests.”

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Sun Life put forth a novel argument, asserting that “conflict analysis – and, by extension, discovery for that purpose – may only apply in a close case, in effect serving as a ‘tie-breaker.’” Sun Life argued that if its claim determination “is so clearly reasonable” then “conflict discovery is substantively irrelevant” and plaintiff must present a “colorable procedural challenge” before obtaining conflict discovery.

The entitlement to limited discovery had grown out of a line of cases in which I was lead counsel. I reasoned that the plaintiff’s discovery requests were virtually identical to those approved in one of my cases, Kinsler v. Lincoln Nat’l Life Ins. Co., F. Supp. 2d, 2009 WL 2996723 (M.D. Tenn. Sept. 21, 2009), and were similar to those compelled in another, Phillips v. Guardian Life Insurance Company of America, Slip op. *1-3, Docket No. 3:08-660 (M.D. Tenn. Nov. 23, 2009). I pointed out there was no requirement that, before discovery, a plaintiff must argue the substantive merits and show a court that a defendant’s benefit determination is “not clearly reasonable.” I reasoned that it made no sense to force a court to review the substantive merits of a case before it allowed discovery. That would be putting the cart before the horse.

The Magistrate essentially agreed with my reasoning; my approach would better facilitate the prompt and inexpensive resolution of disputes. The defendant appealed to the District Court, which upheld the Magistrate’s ruling.

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