United States District Court, D. Connecticut
HENKEL OF AMERICA, INC.
RELIASTAR LIFE INS. CO. ET AL
RULING ON PENDING DISCOVERY MOTIONS (DOC. NOS. 80,
89, 95, 105 & 109)
M. Spector United States Magistrate Judge
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.
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.
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.
THE MARCH 28, 2019 RULING
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.).
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.
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)).
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.
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
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.
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.
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).
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).
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, 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[.]”
MOTIONS REGARDING FINANCIAL INTEREST (DOC. NOS. 80, 89
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.
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 ...