Understanding the Nuances of ERISA Litigation: The Right to Discovery
ERISA law establishes two separate causes of action for employees who have run into a denial of employee benefits. However, while ERISA puts forth causes of action, it also creates specific issues that make ERISA litigation distinct from ordinary breach-of-contract cases.
While it may seem that a simple breach-of-contract cause of action is proper, a denial of employee benefits is governed by ERISA and therefore has its own special nuances. Properly pursuing ERISA litigation requires specialized knowledge of the law.
Right to Discovery: Not Guaranteed
A principal difference between an ERISA lawsuit and a typical breach-of-contract action is the parties’ right to discovery. In a standard breach-of-contract action, the parties have a right to discovery to prove or disprove their rights under the contract. In ERISA cases, the right to discovery is not guaranteed and in many instances is in fact prohibited.
This lack of guaranteed discovery comes from the intent of the ERISA legislation. ERISA requires employee benefit plans to include an internal insurance appeal before a claim can be brought before a court. Congress included this requirement in order to keep the resolution of claims and conflicts out of the courts’ prerogative and within the private employer-employee relationship.
As part of that goal, a court’s review of an ERISA litigation is generally limited to a review of “what was before the plan administrator” at the time of an employee benefits denial. The information before the plan administrator serves as an administrative record that would be generated during an administrative law hearing similar to what takes place in the Social Security Administration or the Division of Workers’ Compensation.
Generally, discovery is not permitted beyond this “administrative record.” This limitation makes the internal insurance appeal crucial to an employee’s challenge to a denial of benefit. If the right information is not presented during the insurance appeal, the court will likely never see that evidence.
ERISA Conditions for Right to Discovery
There are exceptions to the bar against discovery. The 8th Circuit case law governing ERISA litigation permits courts to grant discovery beyond the administrative record when the employee can show that there are (1) procedural irregularities or conflicts of interest apparent in the administrative record and (2) there is good cause for discovery.
This double-pronged test is a high hurdle to leap, as courts – especially in 8th Circuit ERISA litigation – are usually disinclined to break the prohibition against discovery in an ERISA matter.
The first prong of the test is a matter of issue-spotting. Being able to identify what courts will see as procedural irregularities is crucial in making a motion for additional discovery in the ERISA context. Courts have typically permitted discovery only if the employee can point to identifiable issues where the plan administrator did not follow a specific ERISA regulation or its own internal guidelines. Direct evidence that a conflict of interest existed and influenced the outcome is necessary.
Once the specific failure, irregularity or conflict is identified, discovery can be granted only if the requesting party can show a good cause for the need of the requested discovery. From that perspective, the employee must demonstrate how the procedural irregularity or conflict directly affected whether the plan administrator’s decisions were reasonable. Without good cause for why more information is needed, a court will not grant the right to discovery.
A good example of how an outcome of arguing this double-pronged test can go awry is Williams v. Cigna Health and Life Ins. Company, 2022 U.S. Dist. LEXIS 73119. In that case, Judge Clark of the Eastern District of Missouri ruled that “the administrative record readily establishes the existence of procedural irregularities. … no good cause exists.” While this ruling ultimately benefited the employee, it also prevented discovery into how the claim was handled.
Even if a right to discovery is granted, it is limited to proving what effect any procedural irregularity or conflict of interest had on the plan administrator’s decision-making. In short, discovery will never be granted to prove or disprove whether the employee was disabled (in a claim for a long-term disability benefit or a short-term disability benefit) or if a medical procedure is medically necessary (in a denial for medical coverage under a health insurance policy). Rather, it will be granted to establish how the plan administrator made its decision or if it properly shielded the beneficiary from a conflict of interest.
The right to discovery in the ERISA context is critical to resolution that favors the beneficiary. Knowing what to look for comes only from experience with litigation under ERISA law. The ERISA lawyers at Gallagher Davis, LLP have achieved many successful motions for discovery, all of which helped lead to a good outcome for clients as in the following cases:
Stallings v. Procter & Gamble Disability, Comm., 2021 U.S. Dist. LEXIS 203173
Radle v. UNUM Life Ins. Co. of Am., 2022 U.S. Dist. LEXIS 145289
Dapron v. Spire Mo., Inc., 2018 U.S. Dist. LEXIS 125864
Duncan v. Anthem Life Ins. Co., 2021 U.S. Dist. Lexis 64609
Schoolman v. United Healthcare Ins. Co., 2013 U.S. Dist. LEXIS 177629
Heartsill v. Ascension Health Alliance, 2017 U.S. Dist. LEXIS 10649
ERISA Lawyers & ERISA Litigation: Contact Us Today
If you believe you have encountered a wrongful denial of employee benefits, contact the ERISA lawyers at Gallagher Davis at (314) 725-1780. In addition to reviewing the details of your case, we can discuss whether you have a cause of action or if we can help you file an internal appeal of the insurance denial.
With experience in all state and federal trial and appellate courts in the St. Louis metropolitan area, as well as throughout Missouri and the Midwest, our attorneys provide vigorous advocacy and representation in justly receiving benefits to which you are entitled.