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PULLIAM v. CONTINENTAL CASUALTY COMPANY

United States District Court, District of Columbia


January 24, 2003

L. DELORES PULLIAM, PLAINTIFF,
v.
CONTINENTAL CASUALTY COMPANY, DEFENDANT.

The opinion of the court was delivered by: Alan Kay, Magistrate Judge

MEMORANDUM OPINION

Pending before this Court is Plaintiff's Motion to Compel and Memorandum of Points and Authorities in Support Thereof ("Motion to Compel") [9] and Defendant's Memorandum of Points and Authorities in Opposition to Plaintiff's Motion to Compel ("Opposition to Motion to Compel") [14]. Also pending before the Court is Continental Casualty Company's Motion for a Protective Order ("Motion for Protective Order") [11], Plaintiff's Opposition to Defendant's Motion for a Protective Order ("Opposition to Motion for Protective Order") [12], and Continental Casualty Company's Reply Memorandum in Further Support of Motion for Protective Order ("Reply") [13]. Because these motions involved closely related issues, the Court will resolve these two motions together in one Memorandum Opinion and Order. For the reasons set forth below, the Court has determined that Plaintiff's Motion to Compel [9] shall be GRANTED in part and DENIED in part and Defendant's Motion for Protective Order [11] shall be DENIED in part and GRANTED in part. An appropriate Order accompanies this

Memorandum Opinion.

I. Background

Plaintiff L. Delores Pulliam filed suit against Continental Casualty Company ("Continental") on February 26, 2002 after her claim for long term disability benefits was denied. Ms. Pulliam worked for more than twenty four years for Guest Services, Inc. and was a participant in Guest Services' long term disability plan administered by Continental. At the end of her employment with Guest Services, Ms. Pulliam was a District Manager, responsible for the operations of twelve food concessions around the Mall in Washington, D.C.

Ms. Pulliam worked on July 4 and 5, 1999 and suffered a stroke on July 6, 1999, a day that she had taken off. Ms. Pulliam notified her employer of the stroke and sought leave, providing certification from her physicians to her employer. After a series of contacts with her employer between the time of the stroke and July 27, 1999, Ms. Pulliam received a letter dated July 28, 1999, notifying her that, under company policy, she was considered to have resigned because of her absence for three consecutive working days without notifying a supervisor. Guest Services further informed Ms. Pulliam that she was terminated and not eligible for any employee benefits. Guest Services would not provide Ms. Pulliam with the claim form or booklet on the long term disability plan.

On June 28, 2000, Ms. Pulliam applied to Continental for long term disability benefits. Continental Casualty denied the claim for benefits and again denied the claim after Ms. Pulliam requested a review of the decision. Continental asserted that Ms. Pulliam was terminated on July 5, 1999 and was therefore not eligible for benefits when the stroke occurred on July 6, 1999.

Ms. Pulliam filed suit against Continental pursuant to the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001, et seq., seeking recovery of benefits allegedly owed under the long term disability policy administered by Continental. This Court has jurisdiction pursuant to 28 U.S.C. § 1337 and 29 U.S.C. § 1132(e). This case was referred by Judge Richard W. Roberts to Magistrate Judge Alan Kay for resolution of all discovery disputes on October 10, 2002.

Ms. Pulliam issued interrogatories, requests for production of documents, and requests for admissions to Continental. Continental provided timely responses to these requests. When Plaintiff was not satisfied with the responses, the parties worked to resolve these disagreements and many of the issues were subsequently resolved. The remaining issue that the parties were unable to resolve is the subject of the pending motions. Plaintiff sought discovery regarding a potential conflict of interest by Continental which would result in a heightened standard of review being applied in reviewing the insurer's denial of benefits. Continental objected to interrogatories and requests for production of documents relating to this issue. After being unable to reach an agreement on this matter, Plaintiff filed the instant Motion to Compel pursuant to Federal Rule 37(a). In addition, pursuant to Federal Rule 26(c)(4), Continental filed the pending Motion for Protective Order prohibiting the Plaintiff from inquiring into this issue during a Rule 30(b)(6) deposition.

II. Analysis

A. Motion to Compel

Under Rule 26(b)(1) of the Federal Rules of Civil Procedure,

[p]arties may obtain discovery regarding any matter, not privileged, that is relevant to the claim or defense of any party. . . . For good cause, the court may order discovery of any matter relevant to the subject matter involved in the action. Relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence.
Fed.R.Civ.P. 26(b)(1). This provision was amended in 2000 to narrow the party-controlled scope of discovery by requiring that discovery be relevant, not just to the subject matter of the case, but to the claim or defense of a party. Fed.R.Civ.P. 26(b)(1) advisory committee's note to 2000 amendments. The court still retains the authority to broaden the scope of discovery to inquire into any matter that is relevant to the subject matter of the case. Id.

In the pending Motion to Compel, Plaintiff seeks discovery regarding a possible conflict of interest by Continental. Plaintiff contends that in this ERISA case for recovery of benefits, the court must determine the appropriate standard of review to apply to the administrator's denial of benefits. Motion to Compel at 4. A de novo standard of review applies, unless the plan reserves discretionary authority to the fiduciary to interpret the terms. Id.; Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). If the fiduciary is given discretionary authority, then the court applies an abuse of discretion standard of review. Motion to Compel at 4; Firestone, 489 U.S. at 115. If the fiduciary with discretionary authority is operating under a conflict of interest, then the conflict of interest is considered as a factor in deciding whether there has been an abuse of discretion. Motion to Compel at 4; Firestone, 489 U.S. at 115.

The parties disagree as to the standard of review applicable to this case and there is no relevant authority from the D.C. Circuit. Motion to Compel at 4; Opposition to Motion to Compel at 3. However, there is ample authority from other circuits in which courts consider evidence of a conflict of interest in determining the appropriate standard of review. See, e.g., Smathers v. Multi-Tool, Inc./Multi-Plastics, Inc. Employee Health & Welfare Plan, 298 F.3d 191, 194-97 (3d Cir. 2002); Nord v. Black & Decker Disability Plan, 296 F.3d 823, 828-30 (9th Cir. 2002); Schatz v. Mutual of Omaha Insurance Co., 220 F.3d 944, 946-47 (8th Cir. 2000); Hensley v. Northwest Permanente Retirement Plan & Trust, 5 F. Supp.2d 887, 890-92 (D.Or. 1998). The standard of review to apply in this case is, of course, a question for the trial court to answer. However, discovery on this issue is proper, including discovery into the possibility that Continental was operating under a conflict of interest because the existence of a conflict of interest will affect the standard of review to be applied. See, e.g., Hensley, 5 F. Supp.2d at 894 ("[t]o determine whether these alleged conflicts of interest will bear fruit and ripen into proof of actual conflicts of interest, plaintiffs are entitled to some limited discovery to seek probative evidence to support their allegations"); see also Farley v. Arkansas Blue Cross & Blue Shield, 147 F.3d 774, 776 n. 4 (8th Cir. 1998). Information regarding a potential conflict of interest will be relevant to the trial court's determination of the applicable standard of review. This Court concludes that the possibility that Continental had a conflict of interest is relevant to the case and a proper subject of inquiry during discovery. In addition, Plaintiff persuasively argues that evidence of inconsistent claims handling or failure to follow claims procedures may be evidence of a conflict of interest. Motion to Compel at 13. See, e.g., Hensley v. Northwest Permanente Retirement Plan & Trust, 258 F.3d 986, 996 (9th Cir. 2001) (stating "[w]e have held that a plan administrator's failure to follow its internal procedures for denying benefit claims is evidence that the administrator acted because of a conflict of interest.") (citing Friedrich v. Intel Corp., 181 F.3d 1105, 1110 (9th Cir. 1999) (finding procedural irregularities to be proof of conflict of interest)). Therefore, Plaintiff may inquire into Continental's general policies and procedures for handling claims and into the handling of Plaintiff's claim in particular.

Having found these matters to be relevant, the Court notes that Federal Rule of Civil Procedure 26(b)(5) requires that when a party withholds responsive material it claims is privileged,

the party shall make the claim expressly and shall describe the nature of the documents, communications, or things not produced or disclosed in a manner that, without revealing information itself privileged or protected, will enable other parties to assess the applicability of the privilege or protection.
Fed.R.Civ.P. 26(b)(5). Continental contends that it "had no duty to produce a privilege log as to any documents or other information withheld on the basis of privilege" because the information sought was not relevant. Opposition to Motion to Compel at 5 n. 2. As explained above, this information is relevant. Accordingly, Continental has a duty to prepare a privilege log setting forth the basis for withholding any documents responsive to Plaintiff's requests. This Memorandum Opinion and accompanying Order establish that certain matters are relevant and discoverable, overruling Continental's objections in certain respects. The duty to prepare a privilege log is applicable to the extent that any materials previously designated by Continental as "irrelevant" and therefore not subject to the requirements of Rule 26(b)(5) have been withheld. This determination is applicable to each instance in which the Court overrules Continental's relevance objection; however, for simplicity sake, the Court will not reiterate this conclusion.

Plaintiff has issued requests for production of documents and interrogatories seeking information relating to a possible conflict of interest of Continental. Request for Production of Documents Number 23 seeks "[a]ll documents reflecting all incentives, commissions, contingencies and/or bonuses for which any of your claims reviewers or supervisors were eligible at any time after July 1999." Motion to Compel at 8. This Court concludes that the information sought regarding incentive-type compensation, including bonuses, is relevant to a potential conflict of interest and is properly within the scope of discovery. Non-incentive-type compensation is not relevant and not discoverable. Continental's remaining objections are discussed below. Continental asserted two other general objections: (1) requires disclosure of confidential commercial and/or proprietary business documents and information and (2) request is not sufficiently limited in time and scope. Continental does not set forth in its Opposition to Motion to Compel the basis for their claim that the information sought is confidential commercial and/or proprietary business information, instead asserting, unpersuasively, that the information is irrelevant. Opposition to Motion to Compel at 4-5 & n. 2. Consequently, the Court makes no ruling on confidential or proprietary objections. With respect to scope, the request for production provides a sufficiently limited time period by specifying the period after July 1999. Continental also objects to this request for production on the grounds that particular words and phrases are vague, ambiguous, and undefined. The Court disagrees. In addition, Continental objects to the request on grounds it presupposes the existence of such compensation. This is incorrect. If no such compensation existed for that time period, then Continental may state this in the response to the request.

Interrogatory Numbers 11 and 12 seek information relating to financial incentives for claims reviewers and whether particular individuals received such compensation for the period since July 1999. Motion to Compel at 9. Continental objected to Interrogatory Number 11 on grounds of over breadth, insufficiently limited in time and scope, contains vague, ambiguous, and undefined terms, and requires Continental to presuppose it provided such compensation. The Court finds that the interrogatory is not over broad; nor are its terms vague and ambiguous. The request is sufficiently limited by seeking information for the period since July 1999. As explained above, Continental is not required to presuppose it provided such compensation; if it did not provide such compensation, it may state that it did not. Continental objected to Interrogatory Number 12 on grounds it was not sufficiently limited in time and scope and contained a vague, ambiguous, undefined, and nonsensical phrase. The Court finds that the time period is sufficiently limited*fn1 and the phrase is comprehensible. These requests are not overly broad and Continental is directed to respond.

Document Request Numbers 25 and 26 seek bills, invoices, and premiums paid for the plan participants of the Guest Services plan for the period of March 1999 through January 2000. Motion to Compel at 11. Continental objected on grounds the requests seek privileged information and are overly broad and burdensome. In its Opposition to the Motion to Compel, Continental does not articulate the basis for any privilege claim so the Court makes no ruling on this objection. Opposition to Motion to Compel at 5. According to the Plaintiff, the invoices and premium adjustment reports identify the employees covered by the plan. Motion to Compel at 12. The Court finds that these documents are relevant. The Plaintiff also seeks the bills and premium payments for the plan. The Court does not see the relevance of these documents and will not direct their production. Continental also objects to these requests as being overly broad. The Court will limit the time period for which the documents must be produced to May 1999 through January 2000. This provides the Plaintiff with invoices and premium adjustment reports going back several months before the Plaintiff's stroke. The Court directs Continental to produce invoices and premium adjustment reports for the period of May 1999 through January 2000. Documents before May 1999 need not be produced. In addition, Continental need only produce those documents which identify the covered employees, not the bills or premium payments.

Document Request Numbers 9, 17, 20, 21, and 22 seek documents relating to policies and procedures for handling claims and for evaluating oral statements. Continental asserted general objections for privilege, relevance, and not limited in time or scope. As explained above, the Court concludes this information is relevant and Continental must produce all responsive, non-privileged materials. As discussed above, if Continental withholds responsive documents on grounds of privilege, then it has a duty to prepare a privilege log setting forth the basis of the asserted privilege. Fed.R.Civ.P. 26(b)(5). The Court concludes that the requests are sufficiently limited in time and scope by interrogatory instruction number three which provides that "[u]nless otherwise indicated, these interrogatories refer to the times, places and circumstances of the incidents alleged in Plaintiff's Complaint." Motion to Compel at 9 n. 1. Continental also asserts that Interrogatory Number 9 is overly broad and unduly burdensome. The Court disagrees based on the limited time period at issue.

In Interrogatory Number 16, Plaintiff seeks information regarding the identity and role of all individuals involved in the appeal of the denial of Plaintiff's claim. This information sought is relevant and Continental is directed to respond to the interrogatory.

In Interrogatory Numbers 17 and 18, Plaintiff seeks all facts supporting Continental's position that Plaintiff was not employed by Guest Services or covered under the long term disability policy on July 6, 1999. Continental objects on grounds of undue burden, improper timing for the request, and on grounds the request is "multifarious." Motion to Compel at 17. The Court finds that the requests are not overly broad and are a proper subject for discovery. Plaintiff is not required to wait until a later time to issue interrogatories on this subject. Although the Court has the discretion to do so, the Court will not order a delay in responding to this request. Fed.R.Civ.P. 33(c). Continental is directed to respond to the question with the information it currently has and may supplement its responses as appropriate. Fed.R.Civ.P. 26(e). Subject to its objections, Continental responded by directing Plaintiff's attention to its "business records," asserting that the burden of obtaining the answers to these requests was the same for Plaintiff as for Continental. Under Federal Rule 33(d), if an answer to an interrogatory may be found in the business records of the responding party and the burden of ascertaining the answer is substantially the same for the requesting and responding party, then

it is a sufficient answer . . . to specify the records from which the answer may be derived or ascertained and to afford the party serving the interrogatory reasonable opportunity to examine audit or inspect such records. . . . A specification shall be in sufficient detail to permit the interrogating party to locate and identify, as readily as can the party served, the records from which the answer may be ascertained.
Fed.R.Civ.P. 33(d). However, this Rule requires sufficient detail to permit the inquiring party to ascertain the answer. See, e.g., In re Savitt/Adler, 176 F.R.D. 44, 49 (N.D.N.Y. 1997) (finding reference to documents improper where interrogatories requested all facts supporting contentions in complaint); Herdlein Technologies, Inc. v. Century Contractors, Inc., 147 F.R.D. 103, 105 (W.D.N.C. 1993) ("[w]hen a party responding to interrogatories chooses to produce its business records in lieu of a conventional response, the responding party must specifically identify the document(s) from which the responding party may derive the answer."). Continental's response is improper and the Court directs Continental to respond to these interrogatories in accordance with this Memorandum Opinion.

Interrogatory Numbers 5 and 6 seek information supporting Continental's contention that the Plaintiff was not and is currently not disabled. The Court overrules Continental's objections based on over breadth and improper timing. The Court will not order a delay in responding to this inquiry. Fed.R.Civ.P. 33(c). Continental is directed to respond based on the information it now has and may supplement its responses as appropriate. Fed.R.Civ.P. 26(e).

Accordingly, Plaintiff's Motion to Compel is GRANTED in part and DENIED in part. The Motion to Compel is DENIED with respect to Document Request Numbers 25 and 26 in so far as Plaintiff seeks documents that do not identify covered employees and to the extent that Plaintiff seeks documents relating to the period before May 1999. In all other respects, the Motion to Compel is GRANTED. Continental Casualty is directed to prepare a privilege log to the extent that materials determined by the Court to be relevant and discoverable have been withheld on grounds of privilege. Continental Casualty is directed to comply within 30 days of the date of this Memorandum Opinion and Order.

B. Motion for a Protective Order

On August 28, 2002, Plaintiff noticed the 30(b)(6) deposition of Continental. Although the parties were able to resolve several disputes relating to the noticed deposition, the parties were unable to resolve a dispute over the third topic identified in Plaintiff's Notice of Deposition. Motion for Protective Order at 2. Paragraph 3 of the notice sought testimony regarding

(3) All persons involved in the processing of the Plaintiff's claim in any way, including the members of the appeals committee, the role, duties and functions of each, the education and training of each such person in the processing of long term disability insurance claims; the caseload of each such person; the financial compensation, bonuses, commissions and incentives offered to claims examiners and/or to members of the appeals committee, and the criteria required for obtaining each type of compensation, and particularly with respect to any criteria related to Claims savings (i.e., denials, terminations, reductions in payout) for the Defendant.
Id. Ex. 1. Continental does not object to providing testimony regarding "all persons involved in the processing of the Plaintiff's claim in any way, including the members of the appeals committee, the role, duties and functions of each;" however, Continental contends that the remainder of Paragraph 3 is beyond the scope of discovery and seeks a protective order to that effect. Id. at 4. Under Federal Rule of Civil Procedure 26(c), courts have broad discretion to "make any order which justice requires to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense." Fed.R.Civ.P. 26(c).

As set forth above, the Court concludes that potential incentive-based compensation for claims reviewers is relevant and may be inquired into at the 30(b)(6) deposition. Continental argues that the education and training of those individuals involved in processing Plaintiff's claim is not relevant. Id. at 4-5. Plaintiff persuasively argues that evidence of inconsistent claims handling or failures to follow claims procedures may be evidence of a conflict of interest. Motion to Compel at 13. See, e.g., Hensley, 258 F.3d at 996 (stating "[w]e have held that a plan administrator's failure to follow its internal procedures for denying benefit claims is evidence that the administrator acted because of a conflict of interest.") (citing Friedrich, 181 F.3d at 1110 (finding procedural irregularities to be proof of conflict of interest)). Therefore, Plaintiff may inquire into the education and training in the processing of long term disability insurance claims of those involved in processing Plaintiff's claim.

Plaintiff seeks information regarding the caseload of each individual involved in processing Plaintiff's claim. The Court fails to see the relevance of this information and Plaintiff does not demonstrate the possible relevance in her Motion to Compel. Plaintiff seeks testimony regarding "financial compensation, bonuses, commissions and incentives offered to claims examiners and/or to members of the appeals committee, and the criteria required for obtaining each type of compensation." Continental contends that this information is irrelevant. As set forth above, the Court concludes that incentive-based compensation for individuals involved in processing the Plaintiff's claim is relevant. However, Plaintiff's deposition notice goes much further, seeking testimony regarding all compensation, not just incentive-based compensation. The Court finds that this casts too broad a net and will limit Plaintiff to inquiring into only incentive-based compensation. Accordingly, Continental Casualty's Motion for a Protective Order is GRANTED in so far as it seeks to prevent Plaintiff from inquiring into the caseload of individuals involved in handling Plaintiff's claim and to prevent inquiry into non-incentive-based compensation. In all other respects, Continental's Motion for a Protective Order is DENIED.

III. Conclusion

Therefore, it is this ___ day of January, 2003, hereby

ORDERED that Plaintiff's Motion to Compel and Memorandum of Points and Authorities in Support Thereof [9] is GRANTED in part and DENIED in part. The Motion to Compel is DENIED with respect to Document Request Numbers 25 and 26 in so far as Plaintiff seeks documents that do not identify covered employees and to the extent that Plaintiff seeks documents relating to the period before May 1999. In all other respects, the Motion to Compel is GRANTED. Continental Casualty is directed to prepare a privilege log to the extent that materials determined by the Court to be relevant and discoverable have been withheld on grounds of privilege. Continental Casualty is directed to comply within 30 days of the date of this Memorandum Opinion and Order. It is further

ORDERED that Continental Casualty Company's Motion for a Protective Order [11] is DENIED in part and GRANTED in part. The Motion for Protective Order is GRANTED in so far as it seeks to prevent Plaintiff from inquiring into the caseload of individuals involved in handling Plaintiff's claim and to prevent inquiry into non-incentive-based compensation. In all other respects, the Motion for Protective Order is DENIED.

ORDER

Pending before this Court is Plaintiff's Motion to Compel and Memorandum of Points and Authorities in Support Thereof ("Motion to Compel") [9] and Defendant's Memorandum of Points and Authorities in Opposition to Plaintiff's Motion to Compel [14]. Also pending before the Court is Continental Casualty Company's Motion for a Protective Order ("Motion for Protective Order") [11], Plaintiff's Opposition to Defendant's Motion for a Protective Order [12], and Continental Casualty Company's Reply Memorandum in Further Support of Motion for Protective Order [13]. For the reasons set forth in the accompanying Memorandum Opinion, the Court has determined that Plaintiff's Motion to Compel [9] shall be GRANTED in part and DENIED in part and Defendant's Motion for a Protective Order [11] shall be DENIED in part and GRANTED in part. Accordingly, it is this ___ day of January, 2003 hereby

ORDERED that Plaintiff's Motion to Compel and Memorandum of Points and Authorities in Support Thereof [9] is GRANTED in part and DENIED in part. The Motion to Compel is DENIED with respect to Document Request Numbers 25 and 26 in so far as Plaintiff seeks documents that do not identify covered employees and to the extent that Plaintiff seeks documents relating to the period before May 1999. In all other respects, the Motion to Compel is GRANTED. Continental Casualty is directed to prepare a privilege log to the extent that materials determined by the Court to be relevant and discoverable have been withheld on grounds of privilege. Continental Casualty is directed to comply within 30 days of the date of this Memorandum Opinion and Order. It is further

ORDERED that Continental Casualty Company's Motion for a Protective Order [11] is DENIED in part and GRANTED in part. The Motion for Protective Order is GRANTED in so far as it seeks to prevent Plaintiff from inquiring into the caseload of individuals involved in handling Plaintiff's claim and to prevent inquiry into non-incentive-based compensation. In all other respects, the Motion for Protective Order is DENIED.


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