This month’s Friday Five covers recent cases ruling on the scope of discovery, what qualifies as an "appeal" by a plaintiff and the applicability of California law precluding discretionary language in insurance policies.

1. Does a disparaging comment about a plaintiff’s claim in a denial letter constitute a procedural irregularity? Discovery beyond the administrative record under an arbitrary and capricious standard of review is permissible in some instances where there is a procedural irregularity. The United States District Court for the District of New Jersey examined whether the plan administrator’s alleged failure to give proper weight to the opinions of the plaintiff’s medical providers and the administrator’s description of the plaintiff’s claimed disability as a “fairytale” in a denial letter could be construed as procedural irregularities so as to permit expanded discovery. The court held that these allegations did not create a reasonable suspicion of misconduct by the administrator, and therefore did not rise to a level of procedural irregularity that would warrant discovery beyond the administrative record. Hocheiser v. Liberty Mutual Insurance Company et al., No. 3:17-CV-6096 FLW-DEA, 2018 WL 6026818 (D.N.J. Nov. 16, 2018).
2. Is a reviewing physician’s salary discoverable information under a de novo standard of review? The United States District Court for the District of New York examined whether under a de novo standard of review the plan administrator should be required to provide information pertaining to a reviewing physician’s salary as well as specialties and board certifications in response to a plaintiff’s discovery requests. The court reasoned that in order to resolve the action, the court would have to review the administrative record, which contains conflicting medical reports, and make a de novo determination of the weight to be given to the medical evidence without the benefit of live testimony from the physicians. The court held that when a reviewing physician is the plan administrator’s salaried employee, if the administrator is paying the physician an exorbitant salary that fact would be relevant to assessing the physician’s opinion. Similarly, the physician’s experience, specialties and board certifications are also relevant to the assessment. Weinberg v. Unum Life Ins. Co. of Am., No. 17CIV8976RAHBP, 2018 WL 5801056 (S.D.N.Y. Nov. 6, 2018).
3. Does a request for information constitute an appeal? A plaintiff must exhaust administrative remedies prior to commencing a civil action seeking ERISA benefits. Administrative remedies for benefits determinations are generally bound by the appeal process set forth in the governing ERISA plan. The United States District Court for the Western District of Kentucky considered whether an appeal was made by virtue of a letter from the plaintiff to the plan administrator indicating that he had received the administrator’s denial letter and requesting information on which the administrator based its adverse decision. Relying on precedent from the Fifth, Seventh, and Eleventh Circuits, the district court held that, at most, the plaintiff’s letter merely indicated that an appeal might come after he received the requested documents, but the letter itself did not constitute an appeal. Traughber v. Sun Life Financial (U.S.) Services Company, Inc., No. 1:18-CV-00036-GNS, 2018 WL 6050875 (W.D. Ky. Nov. 19, 2018).
4. Is video surveillance footage dispositive to the determination of a plaintiff’s functional capacity? The United States District Court for the Southern Division of California held that a plan administrator incorrectly terminated the plaintiff’s long-term disability benefits despite surveillance video footage that allegedly showed inconsistencies between the plaintiff’s actual functional capacity and her treating physicians’ reports. The court assigned “little to no weight” to the footage because it was unclear from the record whether the plan administrator’s reviewers actually watched the surveillance footage or only read the accompanying report issued by the surveillance company, and that report “failed to paint a complete picture.” Upon the court’s review of the footage, it determined that the relevant portion was only 15 minutes long and the plaintiff could only be seen from a distance for brief periods of time. Furthermore, the physical activity that the plaintiff was doing in the video did not relate to the alleged restrictions and limitations in connection with her occupation. In addition, the court explained that even if the surveillance footage was somehow inconsistent with the plaintiff’s medical records and self-reported pain, the Ninth Circuit is skeptical of an insurer’s reliance on brief surveillance footage as proof of a claimant’s capacity to work full-time. Accordingly, the video surveillance was neither dispositive nor deserving of significant weight in the determination of the plaintiff’s long-term disability claim. Fleming v. Unum Life Ins. Co. of Am., No. SACV1701576CJCJDEX, 2018 WL 6133859, at *8 (C.D. Cal. Nov. 20, 2018).
5. Does a statute precluding enforcement of a discretionary clause in life insurance and disability insurance policies apply to health insurance policies? California has passed a regulation banning discretionary clauses in any policy “that provides or funds life or disability insurance coverage.” The United States District Court for the Northern District of California has held that this regulation is not applicable to a plan that provides for health insurance. The court acknowledged that another California court held that health insurance is a form of disability insurance for purposes of the California Insurance Code. However, the court was more persuaded by other analyses, which focused on the plain express language of the regulation. Brian H. v. Blue Shield of California, No. 17-CV-03095-MMC, 2018 WL 5778318 (N.D. Cal. Nov. 1, 2018).