In Murphy v. Deloitte & Touche Group Insurance Plan, No. 09-2028 (10th Cir. 2010), the plaintiff, Aileen Murphy, was a participant in the Deloitte & Touche Group Insurance Plan (“the Plan”). The Plan is subject to ERISA. Metropolitan Life Insurance Company (“MetLife”) both insured and administered the Plan, so that it had an inherent conflict of interest with respect to the Plan. Ms. Murphy filed a claim under the Plan for long-term disability (“LTD”) benefits, which MetLife ultimately denied. Ms. Murphy then brought suit for the LTD benefits under ERISA. All parties agreed to proceed before a magistrate judge. Soon after filing her suit, Ms. Murphy moved for discovery-beyond the administrative record- regarding MetLife’s dual role/conflict of interest. The magistrate judge denied Ms. Murphy’s discovery request, on the grounds that the conflict of interest was apparent on the face of the administrative record, rendering discovery on that issue unnecessary. The magistrate judge later granted summary judgment in favor of the Plan and MetLife. Ms. Murphy appealed, challenging the magistrate judge’s denial of her discovery request and its grant of summary judgment against her.
In analyzing the case, the Tenth Circuit Court discussed the appropriate standard for permitting discovery pertaining to an administrator’s dual role/ conflict of interest, and when, as here, the administrator’s (here MedLife’s) decision to deny benefits is subject to a deferential review (due to the discretionary authority given to the administrator by the Plan). Generally, when conducting this review, a district court usually may not consider facts existing outside of the administrative record. However, the district court must weigh the conflict of interest in the course of its review, and it must allocate the conflict more or less weight depending on its seriousness. Discovery may be needed to provide a claimant or administrator with access to the information necessary to establish or refute the seriousness of the conflict. Therefore, discovery related to the scope and impact of a dual role/ conflict of interest may, at times, be appropriate. In accordance with Federal Rule of Civil Procedure 26(b), discovery is permitted for relevant information, and the discovery must appear reasonably calculated to lead to the production of admissible evidence. Burdensome discovery requests, discovery of cumulative materials, and overly broad or costly discovery requests are not permitted. The party moving to supplement the administrative record or engage in extra-record discovery bears the burden of showing the propriety of a discovery request.
The Tenth Circuit Court of Appeals overturned the magistrate judge’s denial of Ms. Murphy’s discovery request, as well as the judge’s grant of summary judgment against her, and remanded the case for further proceedings.