Chacko v. AT&T Umbrella Benefit Plan No. 3 ( 2020 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 RUBY CHACKO, No. 2:19-cv-1837 JAM DB 12 Plaintiff, 13 v. ORDER 14 AT&T UMBRELLA BENEFIT PLAN NO. 3, 15 16 Defendant. 17 18 On March 13, 2020, this matter came before the undersigned pursuant to Local Rule 19 302(c)(1) for hearing of plaintiff’s motion to compel. (ECF No. 24.) Attorney Michelle Roberts 20 appeared telephonically on behalf of plaintiff and attorney Stacey Campbell appeared 21 telephonically on behalf of defendant. 22 As explained in the parties’ Joint Statement re Discovery Disagreement, plaintiff seeks to 23 compel discovery, in part, as to the completeness of the administrative record in this action. This 24 action cannot proceed in the absence of a complete administrative record and discovery into the 25 completeness of the administrative record is permissible. See Crosby v. Louisiana Health Service 26 and Indem. Co., 647 F.3d 258, 263-64 (5th Cir. 2011) (“Here, Crosby sought to discover evidence 27 that would indicate whether the administrative record was complete . . . . Her discovery request 28 was at least reasonably calculated to lead to the discovery of some admissible evidence.”); Gonda 1 v. Permanente Medical Group, Inc., 300 F.R.D. 609, 614 (N.D. Cal. 2014) (ordering production 2 so that plaintiff could “determine whether it was included in the administrative record”). 3 At oral argument, defendant asserted that they have produced the complete administrative 4 record. If so, that would seem to be the appropriate response to any such discovery requests. 5 That, however, is for defendant to determine. 6 Plaintiff also seeks “conflict-of-interest discovery.” (ECF No. 25 at 14.) Whether to 7 permit such discovery depends on the applicable standard of review. “[A] district court may 8 review only the administrative record when considering whether the plan administrator abused its 9 discretion, but may admit additional evidence on de novo review.” Abatie v. Alta Health & Life 10 Ins. Co., 458 F.3d 955, 970 (9th Cir. 2006); see also Taft v. Equitable Life Assur. Soc., 9 F.3d 11 1469, 1471 (9th Cir. 1993) (“it was inappropriate for the district court to examine evidence at trial 12 that was not part of Equitable’s administrative record”). Nonetheless, “[a] conflict of interest is a 13 factor in the abuse-of-discretion review, the weight of which depends on the severity of the 14 conflict.” Demer v. IBM Corporation LTD Plan, 835 F.3d 893, 900 (9th Cir. 2016). 15 Plaintiff argues that “[d]ocuments produced to date demonstrate the existence of a conflict 16 of interest on the part of Defendant” justifying such discovery. (ECF No. 25 at 14.) In this 17 regard, plaintiff argues that under the long-term disability plan at issue AT&T is the Plan 18 Sponsor, AT&T Services, Inc., is the Plan Administrator, and Sedgwick Claims Management 19 Services, Inc., (“Sedgwick”), the Claims Administrator. (Id.) Plaintiff argues that under this plan 20 it is AT&T Services—the Plan Administrator—that has the discretionary authority with respect to 21 management of the plan. (Id.) 22 A conflict of interest exists where “an employer who administered an ERISA benefit plan 23 . . . both evaluated claims and paid for benefits.” Metropolitan Life Ins. Co. v. Glenn, 554 U.S. 24 105, 112 (2008). Here, however, the plan states: 25 The Claims Administrator has been delegated the complete discretionary fiduciary responsibility for all disability determinations 26 by the Plan Administrator to determine whether a particular Eligible Employee who has filed a claim for benefits is entitled to benefits 27 under the Program, to determine whether a claim was properly 28 //// 1 decided, and to conclusively interpret the terms and provisions of the Program. Such determinations and interpretations shall be final and 2 conclusive. 3 (Ex. A-1 (ECF No. 25-2) at 7.) 4 There is no conflict of interest where “the Plan’s administrator [has] delegated the duty to 5 decide claims to unconflicted third parties, removing any inherent or structural conflict of 6 interest.” Scoles v. Intel Corporation Long Term Disability Benefit Plan, 657 Fed. Appx. 667, 7 668 (9th Cir. 2016). Here, the plan delegates the duty to decide claims to a third party, Sedgwick. 8 And the Ninth Circuit appears to have found no conflict present in the very plan at issue 9 here. See Day v. AT&T Disability Income Plan, 698 F.3d 1091, 1096 (9th Cir. 2012) (“The Plan 10 is funded by AT&T and not Sedgwick, and administered by Sedgwick and not AT&T.”). 11 Plaintiff argues that it “does not appear that Day pursued any discovery or fully investigated the 12 relationship between the Plan and Sedgwick.” (ECF No. 25 at 16.) But Day was not the only 13 court to reach this same conclusion. See, e.g., Clay v. AT&T Umbrella Benefit Plan No. 3, No. 14 2:17-cv-0749 KJM KJN PS, 2019 WL 5682825, at *3 (E.D. Cal. Nov. 1, 2019) (“Here, 15 Defendant has delegated to Sedgwick its authority ‘to determine all claims and appeals for 16 benefits under the [disability] Program.’ Defendant’s delegation to Sedgwick indicates abuse of 17 discretion is the appropriate standard of review.”); James v. AT&T West Disability Benefits 18 Program, 41 F.Supp.3d 849, 873 (N.D. Cal. 2014) (“Here, the facts show that the plan is self- 19 funded and Sedgwick is the third-party claims administrator. Sedgwick is not financially 20 associated with AT&T Services, Inc., does not have a role in the plan’s funding, and is paid a flat 21 fee for its services regardless of its claims approval. Where the party that must pay the benefits 22 and the party that administers the benefits are not the same, there is little risk, if any, of a conflict 23 of interest.”); Bennetts v. AT&T Integrated Disability Service Center, 25 F.Supp.3d 1018, 1027 24 (E.D. Mich. 2014) (“AT&T and Sedgwick are separate entities, and therefore there is no conflict 25 of interest.”). 26 //// 27 //// 28 //// 1 When asked at oral argument to cite to a case issued after Day that supported a finding 2 | that discovery was permissible here, plaintiff relied on Demer, 835 F.3d 893. In Demer, however, 3 | not only was the Ninth Circuit presented with “evidence of a conflict of interest,” but the same 4 | entity was the claim administrator and plan insurer. Id. at 900. That is not the case here. 5 In this regard, the undersigned cannot agree with plaintiff's assertion that “[d]ocuments 6 | produced . . . demonstrate the existence of a conflict of interest[.]” (ECF No. 25) at 14.) At oral 7 | argument plaintiff essentially argued that discovery was necessary to determine if a conflict 8 | existed. If that were the standard, however, discovery would always be permissible. That is not 9 | to say that discovery is never permissible. However, plaintiff has presented nothing to show even 10 | the appearance of a conflict of interest which would justify conflict-of-interest discovery. See 11 | Murphy v. Deloitte & Touche Group Ins. Plan, 619 F.3d 1151, 1163 (10th Cir. 2010) (“The party 12 | moving to supplement the record or engage in extra-record discovery bears the burden of showing 13 | its propriety.”). 14 Accordingly, IT IS HEREBY ORDERED that: 15 1. Plaintiffs February 21, 2020 motion to compel (ECF No. 24) is granted as to 16 || discovery related to the completeness of the administrative record; 17 2. Plaintiffs February 21, 2020 motion to compel (ECF No. 24) is denied in all other 18 | respects; and 19 3. Within twenty-one days defendant shall produce responsive discovery. 20 | Dated: March 13, 2020 22 3 ORAH BARNES UNITED STATES MAGISTRATE JUDGE 24 25 | DLB:6 DB\orders\orders.civil\chacko1837.0ah.0313 27 28