Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Henkel of America, Inc. v. Reliastar Life Ins. Co.

United States District Court, D. Connecticut

December 6, 2019


          RULING ON PENDING DISCOVERY MOTIONS (DOC. NOS. 80, 89, 95, 105 & 109)

          Robert M. Spector United States Magistrate Judge

         The plaintiff, Henkel of America, Inc. [“Henkel”], provides health benefits to its employees and their dependents through a self-funded group health plan with stop loss insurance from defendant ReliaStar Life Insurance Company [“ReliaStar”]. Pursuant to the plan, Henkel designated Aetna Life Insurance Company as the claims administrator for medical benefits and Express Scripts Inc. [“ESI”] as the claims administrator for prescription drug benefits. ReliaStar performed an audit of certain prescription drug benefits paid pursuant to Henkel's health benefit plan, following which ReliaStar denied coverage for more than $47 million dollars in health claims paid by Henkel.[1]

         Pending before the Court are a series of discovery motions which fall into two broad categories: (1) motions related to ESI's alleged conflict of interest; and, (2) motions related to the deposition of treating providers of the underlying insureds. (See Doc. No. 104 (referral order to the undersigned for all discovery)). In the first category, the following motions are pending: (1) Defendant ESI's Motion to Quash Subpoenas to Third Parties (Doc. No. 80; see also Doc. Nos. 81-83, 98, 101-02, 115); (2) Defendant ReliaStar's Motion to Compel (Doc. No. 89; see also Doc. Nos. 91-92, 109, 117); and, (3) Non-Party Takeda Pharmaceuticals International, Inc.'s Motion to Quash Subpoenas and For Joinder to ESI's Motion to Quash (Doc. No. 107; see also Doc. No. 119). In the second category, the following motions are pending: (1) Movants Dr. Henry Kanarek and the Duffins' Motion to Quash Deposition Subpoena and Stay Deposition of Dr. Kanarek (Doc. No. 95; see also Doc. Nos. 111-12, 123); and, (2) Movants Dr. Mark Neustrom and the Duffins' Motion to Quash Deposition Subpoena and Stay Deposition of Dr. Neustrom (Doc. No. 105; see also Doc. Nos. 118, 124). The Court held a telephonic discovery conference on November 8, 2019 (Doc. Nos. 108, 116); the parties completed briefing on the pending motions on December 2, 2019.

         In all of the motions, the parties rely on the Court's language regarding the scope of discovery as set forth in the March 28, 2019 Ruling on Henkel's Motion for Judgment on the Pleadings [“March Ruling”]. (Doc. No. 47). Accordingly, the proper starting point to address the discovery appropriate in this case is the Court's analysis in its March Ruling.

         A. THE MARCH 28, 2019 RULING

         In August 2018, Henkel moved for judgment on the pleadings, seeking a declaration that, under the plain language of the stop loss insurance policy, ReliaStar did not have the right to make underlying benefit determinations, overrule the determinations of the fiduciary claims administrators, or deny coverage on the basis of its assertion that an employee's treatment was experimental or investigational. The March Ruling identified the “[t]he real question” in this case as “not whether ReliaStar would have reached the same conclusion as the plan administrators[, ]” but rather “[t]o what standard must the plan administrators be held?” (Doc. No. 47 at 2). In identifying that issue, the Court observed that ReliaStar had neither “the right to “veto” the plan administrators' determinations merely because ReliaStar disagree[d] with such determination[, ]” nor the obligation to pay for coverage “without question.” (Id.).

         Relying on Computer Aided Design Sys. v. Safeco Life Ins. Co., 235 F.Supp.2d 1052, 1059 (S.D. Iowa 2002), the Court noted a plan administrator's authority is defined by a benefits plan, and then, once consideration is given to the language of the plan, the court looks to an abuse of discretion standard “applicable to the typical ERISA case, where a plan beneficiary challenges the actions of the administrator.” (Doc. No. 47 at 3). In Computer Aided Design Sys., the court explained that “providing an excess loss insurance company[, ]” like ReliaStar in this case, “with the unfettered power to control a plan administrator's decision making process by promising to withhold payment or by making post hoc coverage decisions” runs “afoul of ERISA and public policy, and is most definitely unreasonable.” Id., 235 F.Supp.2d at 1059. Accordingly, the March Ruling defined the applicable standard in this case as the discretionary standard of ‘“whether a reasonable person, given the evidence presented in the administrative record, could have reached the same decision, not whether the reasonable person would have reached a like decision.”' (Doc. No. 47 at 3 (quoting Computer Aided Design Sys., 235 F.Supp.2d at 1061)). Stated another way, the excess loss insurance company, in this case ReliaStar, would be bound by the actions of the plan administrator absent an abuse of discretion.

         “To ascertain the reasonableness of the plan administrator's factual review and application of the plan language in making a coverage decision, the Court looks to whether the decision was supported by substantial evidence[, ]” which, in Computer Aided Design Sys., involved looking at the information that the plan administrator had at the time the claim was processed, including the information submitted by the insured, the review by the independent medical review/utilization service and the third-party administrator, and the contradictory opinions submitted by the excess loss insurer. Computer Aided Design Sys., 235 F.Supp.2d at 1061 (citation omitted). With this legal standard articulated, the March Ruling concluded that the parties should conduct “additional discovery into whether the administrators' decisions in this case were supported by substantial evidence.” (Doc. No. 47, at 4) (citing Hobson v. Metropolitan Life Ins. Co., 574 F.3d 75, 82 (2d Cir. 2009)).

         The Court's reliance on the Second Circuit's decision in Hobson sheds light on the scope of discovery it intended to permit in this case. In Hobson, the insured brought an action against Metropolitan Life [“MetLife”] as the ERISA plan administrator, challenging the denial of her claim for long term disability benefits. Hobson, 574 F.3d at 78. Hobson alleged that MetLife's conflict of interest as both evaluator and payor of benefit claims influenced its decision to deny her claim for benefits. Id. The district court granted summary judgment for MetLife and denied Hobson's cross-motion for summary judgment, and the appeal followed. Id.

         The Second Circuit explained that, despite Hobson's claim of a conflict of interest, the district court still had to defer to the administrator's decision, unless the decision was arbitrary and capricious, as the “deference given to the administrator does not change unless the plaintiff shows that the administrator was, in fact, influenced by the conflict of interest.” Id. at 83 (citation and internal quotations omitted). To determine whether the administrator was influenced by a conflict of interest, the court must “(1) discuss the evidence allegedly showing that MetLife's conflict of interest influenced its decision-making, (2) determine what role MetLife's conflict of interest may have played in its decision, and (3) give that conflict any weight, as required by [Metropolitan Life Ins. Co. v. Glenn, 554 U.S. 105, 128 (2008)].” Id. (citing McCauley v. First Unum Life Ins. Co., 551 F.3d 126, 116 (2d Cir. 2008)). Thus, under Hobson, discovery into an alleged conflict of interest would be necessary because it would shed light on what role the alleged conflict of interest had, if any, in the decision to deny or grant - in this case, grant- benefits, and what weight the conflict deserves.

         In Glenn, the United States Supreme Court articulated a new standard applicable to the review of an administrator's decision when a plaintiff proves both that a conflict of interest exists and that this conflict affected the reasonableness of the administrator's discretionary decision. See Glenn, 554 U.S. at 110-11. “Following Glenn, a plan under which an administrator both evaluates and pays benefits claims creates the kind of conflict of interest that courts must take into account and weigh as a factor in determining whether there was an abuse of discretion[.]” McCauley, 551 F.3d at 133 (citing Glenn, 554 U.S. at 111). Under such circumstances, however, de novo review is not appropriate. Id. As the Supreme Court explained, evaluator/payor conflicts are “but one factor among many that a reviewing judge” must take into account when considering benefit decisions. Glenn, 554 U.S. at 116. The weight assigned to the conflict of interest “will change according to the evidence presented[, ]” McCauley, 551 F.3d at 133, proving “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.” Glenn, 554 U.S. at 117 (citation omitted). Conversely, the issue of a conflict of interest “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 decision[-]making irrespective of whom the inaccuracy benefits.” Id. (citations omitted). Thus, discovery into a potential conflict of interest is necessary.

         In Hobson, the court looked at the underlying documents evidencing the purported conflict of interest before declining to afford MetLife's conflict of interest any weight in its review of MetLife's benefit denial. Hobson, 574 F.3d at 83. The court then reviewed the administrator's decision under the “narrow” arbitrary and capricious standard of review under which a court may overturn a plan administrator's decision “only if it was without reason, unsupported by substantial evidence or erroneous as a matter of law.” Id. at 83-86. The court concluded that, in light of the substantial evidence supporting the denial of its claim, the denial of benefits was not arbitrary and capricious. Id. at 92.

         In this case, the Court, in the March Ruling, limited discovery to: “(1) the administrators' authority under Henkel's healthcare plan, and (2) whether the authority was abused.” (Doc. No. 47 at 4). Discovery into the role of those with authority under the plan, therefore, is necessary, and, following the Hobson and Glenn decisions, discovery into a purported conflict of interest is likewise appropriate. ESI, however, contends that Henkel has not asserted any claims of alleged conflict of interest, and thus, discovery is limited to ESI's authority to approve the claims at issue and whether ESI properly exercised its authority in approving those claims. (Doc. No. 80-1 at 4-5).

         With this backdrop, the Court turns to the allegations in the Amended Complaint and the pending motions. On April 26, 2019, Henkel filed its First Amended Complaint against ReliaStar and brought additional claims against ESI as a named defendant. (Doc. No. 56). Specifically, with respect to ESI, Henkel alleged that ESI breached its fiduciary duty under ERISA (Count IV) or the common law (Count V). (Id.). ESI filed a motion to dismiss, which Henkel opposed. (Doc. Nos. 61, 70 and 72).[2]

         In the Second Amended Complaint, Henkel alleges that, under the March Ruling, if ReliaStar is relieved of its coverage obligations under the stop-loss policy, it is because ESI [and its subsidiary Accredo[3], which was delegated discretionary authority as the Plan fiduciary with respect to the administration of the prescription drug benefits under the Plan, “abused its discretion in approving the disputed prescription drug claims. If that's the case, then ESI breached its fiduciary duties owed to the Plan and its participants as a claim administrator.” (Doc. No. 56 at 5). Thus, Henkel alleges that “in the alternative to its claim against ReliaStar, Henkel, as sponsor of the Plan and as a fiduciary of the Plan and in representative capacity on behalf of the Plan, seeks reimbursement from ESI to restore the Plan for the prescription drug benefits ESI approved on behalf of the Participants[.]” (Id.).


         In June 2019, ReliaStar served discovery requests on ESI and Accredo seeking the production of documents related to rebate and financial information. (See Doc. No. 93, Exs. A-E). ESI and Accredo objected to these requests on grounds that the information was irrelevant and highly confidential.

         In September 2019, ReliaStar issued subpoenas on the four pharmaceutical manufacturers who manufactured the drugs at issue: CSL Behring; Pharming Healthcare, Inc.; Shire US, Inc.; and Takeda Pharmaceuticals [collectively “the Drug Manufacturers”]. (Doc. No. 80, Ex. 6). On October 4, 2019, ESI moved to quash the subpoenas issued to the Drug Manufacturers because they sought the production of ESI's “highly confidential and proprietary trade secrets, and the risk of the disclosure of those materials highly outweighs ReliaStar's need for the documents, which are completely irrelevant to any claim or defenses ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.