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Hackett v. Standard Insurance Co.

September 21, 2009


The opinion of the court was delivered by: Veronica L. Duffy United States Magistrate Judge



This matter comes before the court pursuant to plaintiff Kathleen M. Hackett's second motion seeking an order compelling defendant Standard Insurance Company (hereinafter "Standard") to disclose documents showing whether management checks imposed penalties for inaccurate decision making; information concerning penalties imposed against Standard employees for inaccurate decision making; personnel files of Standard claims adjusters who made decisions regarding Ms. Hackett's claim; files on Drs. Zivin and Dickerman and any evaluations made by Standard of the doctors' work; and the number of times Dr. Zivin and Dr. Dickerman each made decisions either supporting or denying the allowance of disability benefits under the "any occupation" standard under the ERISA benefit plan issued by Standard.

[Docket 69]. Ms. Hackett represents to the court that she has made a good faith effort to resolve this matter without the court's intervention, but to no avail. Id. The district court referred the motion to this magistrate judge for resolution pursuant to 28 U.S.C. § 636(b)(1)(A). [Docket 72].


The court will limit its factual recitation to those facts relevant to the present discovery dispute. Ms. Hackett brought suit in this court against Standard Insurance Company (Standard), alleging that Standard wrongfully denied her claim for long-term disability benefits under the group disability insurance policy issued to Ms. Hackett's former employer, Mileage Plus, Inc. (MPI), and which covered Ms. Hackett. See Docket No. 1. Ms. Hackett and Standard both moved for summary judgment. See Docket Nos. 26, 41. The United States District Court for the District of South Dakota granted summary judgment for Standard. Docket No. 56. The district court applied Woo v. Deluxe Corp., 144 F.3d 1157 (8th Cir. 1998) to hold that, although Standard operated under a conflict of interest, the court could not consider the conflict of interest in reviewing the lawfulness of Standard's decision to deny benefits to Ms. Hackett because Hackett failed to present "evidence to suggest that any potential funding conflict of interest caused a serious breach of a fiduciary duty." Docket No. 56 (quoting Woo, 144 F.3d at 1161-62). Accordingly, under Woo, the district court concluded that Standard did not abuse its discretion in denying Hackett's claim. Ms. Hackett appealed.

The Eighth Circuit Court of Appeals reversed the district court's decision and remanded for reconsideration of the conflict of interest, citing the Supreme Court's intervening decision in Metropolitan Life Insurance Co. v. Glenn, ___ U.S. ___, 128 S.Ct. 2343 (2008), which changed the law as to how a conflict of interest should " 'be taken into account on judicial review of a discretionary benefit determination.' " Hackett v. Standard Ins. Co., 559 F.3d 825, 830 (8th Cir. 2009) (quoting MetLife v. Glenn, ___ U.S. ____, 128 S.Ct. 1117 (2008)).

In Glenn, the Court held that a conflict of interest exists whenever the plan administrator is the employer or insurance company which "both funds the plan and evaluates the claims." Glenn, 128 S.Ct. at 2348. The Glenn Court concluded that a conflict of interest should be one of the factors considered on judicial review as to whether an abuse of discretion existed. Id. at 2350. The Court emphasized that its decision did not warrant a change in the standard of review to be applied by the district court. Instead, the Court said that principles of trust law apply to judicial review of benefits denials, requiring the district court to "apply a deferential standard of review to the discretionary decisionmaking of a conflicted trustee, while at the same time requiring the reviewing judge to take account of the conflict when determining whether the trustee, substantively or procedurally, has abused his discretion."

Id. Glenn mandated that the reviewing court employ a "combination-of-factors method of review," under which "the conflict of interest serves as a tiebreaker where other factors are closely balanced." Id. at 2351. The Court said the conflict of interest: should prove more important (perhaps of great importance) where circumstances suggest a higher likelihood that it affected the benefits decision, including, but not limited to, cases where an insurance company administrator has a history of biased claims administration. It should prove less important (perhaps to the vanishing point) where the administrator has taken active steps to reduce potential bias and to promote accuracy, for example, by walling off claims administrators from those interested in firm finances, or by imposing management checks that penalize inaccurate decisionmaking irrespective of whom the inaccuracy benefits.

Id. (Internal citation omitted).

Because the district court understandably failed to consider Standard's conflict of interest when it evaluated Standard's decision with respect to Ms. Hackett, the Court of Appeals reversed and remanded to allow the district court to "reconsider its decision in light of Glenn." Hackett, 559 F.3d at 830.


A. Whether the Information Sought is Discoverable

1. Scope of Discovery Under Rule 26 Federal Rule of Civil Procedure 26(b)(1) sets forth the standard governing the scope of discovery in civil cases:

(1) Scope in General. Unless otherwise limited by court order, the scope of discovery is as follows: Parties may obtain discovery regarding any non-privileged matter that is relevant to any party's claim or defense--including the existence, description, nature, custody, condition, and location of any documents or other tangible things and the identity and location of persons who know of any discoverable matter. 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 ...

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