This month’s Friday Five covers cases relating to an alleged conflict of interest leading to discovery, two courts’ opposite treatments of subjective pain complaints, a decision that claims of fraud and misrepresentation were not preempted by ERISA and a court’s deference to an insurer’s determination when faced with “mixed” evidence of disability.

1. Eastern District of Kentucky Permits Discovery Due to Insurer’s Alleged Conflict of Interest. In an action for failure to pay long-term disability (“LTD”) benefits, the plaintiff alleged that the insurer had an “inherent conflict of interest because it was responsible for paying benefits and deciding whether [the plaintiff] was entitled to benefits.” The plaintiff moved to compel responses to interrogatories and requests for production of documents. The Eastern District of Kentucky acknowledged that, in ERISA cases, plaintiffs are not typically entitled to discovery outside of the administrative record but noted that “limited discovery is available if a claimant makes a satisfactory allegation of a violation of due process or bias by the plan administrator.” (citing MetLife Ins. Co. v. Glenn, 554 U.S. 105, 117 (2008)). The court adhered to its prior decision that, under Glenn, “the presence of the conflict of interest on its own, is apparently sufficient to permit a court to allow discovery beyond the administrative record,” (quoting Busch v. Hartford Life & Acc. Ins. Co., 2010 WL 3842367 (E.D. Ky. Sept. 27, 2010)) and granted plaintiff’s motion to compel discovery. Dotson v. Metro. Life Ins. Co., No. CR 5:23-178-DCR, 2024 WL 532301 (E.D. Ky. Feb. 9, 2024)
2. Western District of Kentucky Reviews LTD Denial De Novo Despite Policy’s Discretionary Language; Grants Summary Judgment to Plaintiff Based on “Inherently Subjective” Pain-Related Symptoms. Even in a case where the policy at issue contained language vesting discretion in the administrator to determine benefits under the plan, the Western District of Kentucky nevertheless reviewed the plaintiff’s claims for allegedly past due LTD benefits de novo. The court explained that, even though the policy gave the administrator discretionary authority to interpret the plan, the administrator did not actually exercise that discretion. Instead, a third party issued the determination (though on the administrator’s letterhead). The court found that because the third party “exercised ultimate decision-making responsibility for the policy determination,” the court could review the claims determination de novo. After reviewing evidence of the plaintiff’s “inherently subjective” pain-related symptoms, the court noted that, “[b]ecause it is difficult to assess a subjective symptom such as pain, courts are often skeptical of dismissing them as subjective when treating physicians have credited a patient’s pain.” The court granted judgment in favor of the plaintiff and retroactively reinstated her benefits. Further, because the plaintiff succeeded on the merits of her claim, the court granted her leave to brief a request for attorneys’ fees and costs. Smith v. Reliance Std. Ins. Co., No. 4:21-CV-128-RGJ, 2024 WL 647395 (W.D. Ky. Feb. 15, 2024)
3. Central District of California Credits Non-Treating Physicians’ Reports and Finds Plaintiff Was Not Disabled Despite Record “Replete” with Subjective Pain Complaints. After considering cross-motions under Federal Rule of Civil Procedure 52, the Central District of California ruled in favor of an insurer, finding the plaintiff did not meet her burden of proving by a preponderance of the evidence that she was disabled within the meaning of the plans at issue. In reaching this conclusion, the court gave greater weight to “paper reviews” conducted by the insurer’s physicians than the records from the plaintiff’s treating physicians. The reason, the court explained, was that the plaintiff’s physicians did not specialize in orthopedic medicine (or anything else relevant to plaintiff’s lumbar radiculopathy diagnosis), the details in their notes and records were “thin” and not connected to their opinions on plaintiff’s functional limitations, and their findings rested primarily on plaintiff’s subjective reports of back pain. In short, “[t]he opinions are too spare [sic] and too dependent on subjective reporting to be accorded much significance.” The insurer’s reviewing physicians, on the other hand, had orthopedic specialties with more robust analyses. Although the record was “replete with Plaintiff’s subjective complaints of back pain,” the court reasoned it could not “rest a finding of disability on them standing alone, without supporting objective evidence.” Ultimately, the court ruled that the plaintiff was not entitled to further benefits under the plans. Gray v. United of Omaha Life Ins. Co., No. 223CV00630MCSPLA, 2024 WL 324899 (C.D. Cal. Jan. 29, 2024)
4. Southern District of Florida Rules Claims of Fraud and Misrepresentation Are Not Preempted By ERISA. Plaintiff purchased a supplemental LTD policy from an insurer that was later acquired by another insurer. The new insurer advised the plaintiff in a letter that her coverage would be replaced with new coverage through the new insurer. Plaintiff was unaware that the new policy was not identical to the policy that was being replaced and would reduce the amount of her benefits with an offset for individual disability insurance benefits. When the plaintiff became disabled from her occupation as an attorney and learned that her benefits had been reduced, she filed claims for fraudulent inducement, negligent misrepresentation, violation of the Illinois Consumer Protection Act, and violations of the Connecticut Unfair Trade Practices Act. The insurer moved to dismiss the claims, arguing that they were preempted by ERISA. However, the court found the claims were not preempted because, when the insurer sent the letter to the plaintiff, it was not acting in its capacity as an ERISA entity. “Rather, it was acting as the seller of an insurance product.” Additionally, the plaintiff’s claims did not rest on interpretation of the policy at issue; instead, they were based on the insurer’s representations before the plaintiff entered into the new policy. The court concluded that “[a]t bottom, reduced to the size of a pea, this case is really about claims of fraud and misrepresentation in the sale of some insurance policies.” (internal quotation omitted). Accordingly, the court denied the insurer’s motion to dismiss plaintiff’s claims. Silverman v. Sun Life & Health Ins. Co., No. 1:22-CV-22339, 2024 WL 262531 (S.D. Fla. Jan. 24, 2024)
5. Western District of Wisconsin Defers to Insurer’s Judgment in Light of “Mixed” Record Evidence of Disability. Plaintiff argued the insurer’s denial of her LTD benefits was arbitrary and capricious for multiple reasons, including that the insurer cherry-picked her medical records and ignored the findings of plaintiff’s physicians regarding her cognitive impairment, particularly in light of her other medical conditions (diabetes, diabetic retinopathy and vitreous hemorrhage, back and shoulder pain, kidney disease and carpal tunnel syndrome). The court noted that the record evidence regarding plaintiff’s cognitive issues was “mixed,” meaning that some evidence suggested significant cognitive issues, while other evidence indicated plaintiff was not cognitively impaired. The court noted that the insurer did not “cherry-pick” evidence to support its decision, because it acknowledged at least some of the evidence contrary to its conclusion. Moreover, the court was not willing to speculate regarding a physician’s general findings regarding plaintiff’s “impaired memory.” Ultimately, the court denied the plaintiff’s motion for summary judgment, and granted the insurer’s motion, recognizing that it “cannot disturb [the insurer’s] conclusion that [the plaintiff’s cognitive issues prevented her from working in her own occupation] where the evidence might justify either outcome.” Treslley v. Guardian Life Ins. Co. of Am., No. 22-CV-494-WMC, 2024 WL 262812 (W.D. Wis. Jan. 24, 2024)