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Hurley v. Life Insurance Co. of North America

July 9, 2006

PAUL HURLEY, PLAINTIFF,
v.
LIFE INSURANCE CO. OF NORTH AMERICA, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Colleen Kollar-kotelly United States District Judge

MEMORANDUM OPINION

Presently before the Court is Plaintiff's Memorandum of Points and Authorities in Support of Discovery. Plaintiff Paul Hurley brings suit against Defendants Life Insurance Company of North America and its parent company CIGNA Corporation ("LINA/CIGNA"), alleging that Defendants wrongfully denied benefits in violation of the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001, et. seq. ("ERISA"). Plaintiff requests discovery regarding the scope of Defendants' review, Defendants' interpretation of the benefits plan, and the relationship between CIGNA and LINA. After considering Plaintiff's Memorandum, Defendants' Opposition, and Plaintiff's Reply, and the relevant statutes and case law, the Court -- in exercising its discretion -- shall grant-in-part and deny-in-part Plaintiff's discovery requests in the form of interrogatories and document requests.

I. BACKGROUND

It is not disputed that on February 22, 2001, Kevin Hurley, an accountant at KPMG, LLP, died in an automobile accident on his way home from a KPMG recruiting event in Washington, D.C. Second Am. Compl. ¶ 16. The recruiting event included a reception and a visit to a local nightclub. Id. ¶ 10-11. Laboratory work after the accident showed large amounts of alcohol in Kevin Hurley's blood and bodily fluids. Id. ¶ 10-12, 17. At the time of the accident, Kevin Hurley was assigned by KPMG to work at the offices of PBS Station WETA, an Arlington-based client. Id. ¶ 8. Because Kevin Hurley did not have an office at KPMG's Washington, D.C. premises, he drove from his Arlington, Virginia, office to attend the event in Washington, D.C., and parked his car downtown. Id. ¶ 10. According to Plaintiff's Second Amended Complaint, the exact location in which Kevin Hurley parked his car is unclear, but may have been an office building garage. Id. ¶ 23.

KPMG sponsors a business travel accident policy administered by LINA. Answer ¶ 18-19. According to the policy, the estate, heirs, or beneficiary receives $250,000 if Kevin Hurley died on his way home from business travel. Second Am. Compl. ¶ 32. The policy excludes commuting between one's home and regular place of employment. Defs.' Opp'n at 4. After the accident, Kevin Hurley's father, Plaintiff Paul Hurley, filed a claim for business travel accident benefits on the grounds that Kevin Hurley died while traveling home from business for KPMG. Second Am. Compl. ¶ 20. LINA denied Paul Hurley coverage for his son's death, arguing that Kevin Hurley returned to his "place of work" when he retrieved his car. Defs.' Opp'n at 4.

Plaintiff initially filed this suit in the Superior Court of the District of Columbia against LINA, CIGNA and KPMG, alleging various state law claims arising from Kevin Hurley's death and LINA/CIGNA's subsequent denial of recovery for that death. Hurley v. Life Ins. Co. of N. Am., No. 04-252(CKK), slip op. at 2 (D.D.C. July 7, 2005) (memorandum opinion and order granting-in-part and denying-in-part motions to dismiss). Defendants LINA/CIGNA removed the case to this Court on February 17, 2004, pursuant to 28 U.S.C. § 1441, on the grounds that this Court had original jurisdiction under 28 U.S.C. § 1331 and ERISA. Id. at 2-3. Simultaneously, LINA/CIGNA filed a Motion to Dismiss the original Complaint, alleging that ERISA preempted Plaintiff's state law claims. Id. at 3. On March 5, 2004, Plaintiff filed an Opposition to Defendant's Motion to Dismiss, moved for leave to amend the Complaint, and attached an Amended Complaint with ERISA claims. Id. at 3. On March 11, 2004, Plaintiff moved to remand the case to state court. Id. at 3. Defendant KPMG answered the original Complaint, filed a Motion to Dismiss Counts IV and V of the Complaint, and opposed Plaintiff's Motions for Leave to Amend the Complaint and for remand. Id. at 3.

After holding a Status Conference on August 5, 2004, the Honorable Judge Thomas Penfield Jackson granted Plaintiff's motion for leave to amend the Complaint and denied Plaintiff's Motion to Remand. Id. at 3. Judge Jackson also denied without prejudice Defendants' motions to dismiss the original Complaint because those motions to dismiss had become moot after he granted leave to amend the Complaint.*fn1 Id. at 3. Plaintiff's Amended Complaint contained six counts: (1) Count I alleged wrongful denial of benefits under ERISA against LINA/CIGNA, and sought $250,000 plus prejudgment interest, fees, and costs; (2) Count II alleged breach of contract against KPMG, and sought $250,000 plus prejudgment interest, fees, and costs; (3) Count III alleged ERISA breach of contract against KPMG, and sought $250,000 plus prejudgment interest, fees, and costs; (4) Count IV alleged ERISA breach of fiduciary duty against KPMG, and sought $250,000; (5) Count V alleged civil conspiracy against both LINA/CIGNA and KPMG, and sought $500,000 in compensatory damages and $1,000,000 in punitive damages; and (6) Count VI alleged ERISA promissory estoppel against KPMG and LINA/CIGNA, and sought $500,000 in compensatory damages. Id. at 3-4.

On August 19, 2004, Defendants LINA/CIGNA filed a Motion to Dismiss Counts I, V, and VI of the Amended Complaint, pursuant to Federal Rule of Civil Procedure (FRCP) 12(b)(6). Id. at 4. On the same day, KPMG filed a motion to dismiss Counts II, III, IV, V, and VI of the Amended Complaint pursuant to FRCP 12(b)(6). Id. at 4. In addition, Plaintiff filed a Motion for Summary Judgment on Count I of the Amended Complaint against LINA/CIGNA on September 10, 2004. Id. at 4. The Court denied without prejudice Defendant LINA/CIGNA's Motion to Dismiss Count I of the Amended Complaint, but granted LINA/CIGNA's and KPMG's Motions to Dismiss the remaining counts, on the grounds that ERISA preempts each of the counts because they relate to an employee welfare benefit plan within the meaning of ERISA Section 514(a), 29 U.S.C. § 1144(a) (2005), and because Plaintiff has an adequate remedy under Section 502(a)(1)(B) in Count I. Id. at 11. The Court denied Plaintiff's Motion for Summary Judgment on Count I because Plaintiff did not meet his initial burden of demonstrating an absence of genuine issues of material fact. Id. at 29.

Following the Court's ruling, Plaintiff filed both a Second Amended Complaint and a Memorandum of Points and Authorities in Support of Discovery, which is currently before the Court.*fn2 Plaintiff's discovery requests include the following: (1) information regarding the scope of review and investigation of the claim; (2) all documents and information that Defendants generated as part of the claims process; (3) policy information to determine whether the policy confers discretion and whether the insurer was affected by a conflict of interest; (4) information regarding the policies and procedures for deciding claims; (5) information regarding the relationship between CIGNA and LINA; and (6) information regarding decisions made in the evaluation of other insurance claims that dealt with the issue of whether a place of work included a parking garage. Pl.'s Mem. at 2, 3, 5, 10, 12, 13.

Defendants filed an Opposition in which they argue that Plaintiff's discovery requests should be denied because Plaintiff has not demonstrated exceptional circumstances or a need for discovery. Defs.' Opp'n. at 8. Defendants also allege that the administrative record provided to Plaintiff "contains all information collected, reviewed, and/or relied upon by LINA when denying Plaintiff's benefit claim," and that the record documents telephone calls, e-mails, and facsimiles relating to Plaintiff's claim. Id. Furthermore, Defendants argue that discovery is not necessary for the standard of review issue because LINA stipulates that de novo review is appropriate. Id. at 9-11. In Plaintiff's Reply, Plaintiff drops its request for discovery regarding the appropriate standard of review based on Defendants' stipulation that de novo review is appropriate. Pl.'s Reply at 1. However, Plaintiff maintains and clarifies its discovery requests relating to the completeness of the administrative record, the policies and procedures regarding claim determination, the adequacy of Defendants' review, Defendants' interpretation of the benefits plan, and the relationship between CIGNA and LINA. Id. at 2-11.

II. DISCUSSION

A. Standard of Review

A participant or beneficiary of an employee benefit plan may file suit under ERISA Section 502(a)(1)(B) "to recover benefits due to him under the terms of the plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan." 29 U.S.C. § 1132(a)(1)(B). In Firestone Tire & Rubber Co. v. Bruch, the Supreme Court held that federal courts must apply a de novo standard of review to a denial of benefits challenged under section 1132(a)(1)(b), "unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan," in which case the abuse of discretion standard applies. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989). The standard of review may also be affected by a conflict of interest, which occurs when the insurance administrator is responsible for both deciding whether to grant claims and paying the benefits.*fn3 Id. Courts within this jurisdiction have allowed discovery in order to determine whether a conflict of interest exists because "information regarding a potential conflict of interest will be relevant to the trial court's determination of the applicable standard of review." See, e.g., Pulliam v. Cont'l Cas. Co., No. Civ. A 02-370 (RWR/AK), 2003 WL 1085939, at *3 (D.D.C. Feb. 27, 2003).

In the case at hand, Plaintiff initially argued that LINA/CIGNA have a conflict of interest, and therefore the Court should allow discovery on the conflict of interest issue to determine which standard of review should apply. Pl.'s Mem. at 5. However, Defendants stipulated in their Opposition that de novo review is appropriate, and Plaintiff subsequently discarded its request for discovery regarding a potential conflict of interest. Defs.' Opp'n at 11; Pl.'s Reply at 1. Accordingly, the issue of discovery for the purposes of determining the standard of review is moot, and the Court adopts a de novo review in light of the potential ...


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