Case: 10-30043 Document: 00511544224 Page: 1 Date Filed: 07/19/2011
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
July 19, 2011
No. 10-30043 Lyle W. Cayce
Clerk
JETE CROSBY,
Plaintiff - Appellant
v.
LOUISIANA HEALTH SERVICE AND INDEMNITY COMPANY, doing
business as Blue Cross and Blue Shield of Louisiana,
Defendant - Appellee
Appeal from the United States District Court
for the Eastern District of Louisiana
Before DeMOSS, BENAVIDES, and ELROD, Circuit Judges.
Harold R. DeMoss, Jr.:
The petition for rehearing en banc is denied. We, however, withdraw our
previous opinion in this matter, Crosby v. Louisiana Health Service and
Indemnity Company, 629 F.3d 457 (5th Cir. 2010), and substitute the following
opinion.
Appellant Jete Crosby appeals the district court’s summary judgment on
her Employee Retirement Income Security Act of 1974 (ERISA) claim to recover
denied health care benefits and the magistrate judge’s decision to limit
discovery. The challenges raised by Crosby require us to determine the scope of
admissible evidence and permissible discovery in an ERISA action to recover
Case: 10-30043 Document: 00511544224 Page: 2 Date Filed: 07/19/2011
No. 10-30043
benefits under 29 U.S.C. § 1132(a)(1)(B). Because the court too narrowly defined
the scope of discovery, we vacate the judgment and remand for further discovery.
I.
Crosby was insured in 2006 under the Blue$aver Group High-Deductible
Health Benefit Plan (the Plan) issued by Louisiana Health Service and
Indemnity Company (Blue Cross). The Plan was an employee benefit plan
governed by ERISA. In late 2006, Crosby’s periodontists diagnosed her with
severe idiopathic root resorption, which placed her at risk for losing her teeth.
Her periodontists performed several procedures to prevent the loss of her ability
to chew, speak, and swallow. Crosby sought benefits under the Plan to cover the
costs of the procedures.
Blue Cross denied coverage, and Crosby internally appealed the adverse
benefit determination in accordance with the Plan. Crosby’s first appeal was
assigned to Dr. Dwight Brower for review. Dr. Brower considered the appeal
and upheld the adverse benefit determination. He found that the Plan’s “Dental
Care and Treatment” provision excluded from coverage the services performed
by the periodontists. Blue Cross informed Crosby of Dr. Brower’s decision, and
Crosby requested a second internal appeal.
Crosby’s second appeal was presented to an appeals committee that
included Dr. Brower. The appeals committee arrived at the same result reached
by Dr. Brower.
Crosby then filed suit against Blue Cross, seeking to recover wrongfully
denied benefits. The parties exchanged their initial disclosures, and Blue Cross
sent Crosby a copy of the administrative record. Crosby later sought additional
discovery. Blue Cross objected to her discovery requests, asserting that the
scope of discovery was limited to the administrative record and moved for
summary judgment. Days later Crosby moved to compel discovery, and the
district court set Crosby’s motion for hearing before a magistrate judge.
2
Case: 10-30043 Document: 00511544224 Page: 3 Date Filed: 07/19/2011
No. 10-30043
The magistrate conducted a hearing and indicated that she would compel
some discovery. However, in her written order, she denied all requested relief.
Three days later the district court, interpreting Crosby’s claim as a claim for
benefits under 29 U.S.C. § 1132(a)(1)(B), granted summary judgment for Blue
Cross.
Thereafter, Crosby filed a motion asking the district court to reconsider
and vacate its judgment. In her motion and at the hearing on the motion,
Crosby complained about the lack of discovery she received and the magistrate’s
decision to deny discovery. She also argued that issues of fact remained and that
summary judgment should not have been granted. The district court denied her
motion, and Crosby appealed.
II.
On appeal Crosby argues that the district court erred in granting
summary judgment in favor of Blue Cross because the evidence in the record
indicates that Blue Cross violated ERISA’s procedural requirements and abused
its discretion by denying Crosby’s claim for benefits. She also argues that the
magistrate judge erred by refusing to compel Crosby’s requested discovery. We
will first consider Crosby’s complaint that discovery was wrongfully denied.
A court’s decision to limit discovery is reviewed for abuse of discretion.
Fielding v. Hubert Burda Media, Inc., 415 F.3d 419, 428 (5th Cir. 2005).
Although a court is afforded broad discretion when deciding discovery matters,
the court abuses its discretion when its decision is based on an erroneous view
of the law. See Paz v. Brush Engineered Materials, Inc., 555 F.3d 383, 387 (5th
Cir. 2009); O’Malley v. U.S. Fid. & Guar. Co., 776 F.2d 494, 499 (5th Cir. 1985).
Notwithstanding, we will only vacate a court’s judgment if the court’s abuse of
discretion affected the substantial rights of the appellant. Marathon Fin. Ins.,
Inc., RRG v. Ford Motor Co., 591 F.3d 458, 469 (5th Cir. 2009). The appellant
3
Case: 10-30043 Document: 00511544224 Page: 4 Date Filed: 07/19/2011
No. 10-30043
bears the burden of proving abuse of discretion and prejudice. Id.; see Fielding,
415 F.3d at 428.
Under this standard, we will review Crosby’s complaint that the
magistrate judge wrongfully limited discovery.1
III.
Generally, the scope of discovery is broad and permits the discovery of
“any nonprivileged matter that is relevant to any party’s claim or defense.” FED.
R. CIV. P. 26(b)(1); see Wyatt v. Kaplan, 686 F.2d 276, 283 (5th Cir. 1982). A
discovery request is relevant when the request seeks admissible evidence or “is
reasonably calculated to lead to the discovery of admissible evidence.” Wiwa v.
Royal Dutch Petroleum Co., 392 F.3d 812, 820 (5th Cir. 2004) (citation and
internal marks omitted); see Murphy v. Deloitte & Touche Group Ins. Plan, 619
F.3d 1151, 1157, 1162 (10th Cir. 2010) (applying Rule 26(b)(1) discovery rules in
an ERISA action).
Before the district court, Crosby sought discovery concerning the
compilation of the administrative record, the proceedings at the administrative
level, and Blue Cross’s past coverage determinations in situations that involved
the jaw, teeth, and mouth. Blue Cross admitted that the information sought was
likely relevant. However, it refused to produce the requested information,
essentially arguing that although relevant, the information sought would be
inadmissible. Relying on our opinion in Vega v. National Life Insurance
Services, Inc.2 and its progeny, Estate of Bratton v. National Union Fire
1
Generally, this court is without jurisdiction to review a magistrate judge’s decision
to deny discovery because the decision is not a final order under 28 U.S.C. § 1291. See Alpine
View Co. v. Atlas Copco AB, 205 F.3d 208, 219-20 (5th Cir. 2000). However, because Crosby
timely challenged the court’s discovery denial in her motion for reconsideration and the
district court denied the motion, we have jurisdiction to consider the magistrate’s discovery
denial. See id. at 220.
2
188 F.3d 287 (5th Cir. 1999) (en banc), abrogated on other grounds by Metro. Life Ins.
Co. v. Glenn, 554 U.S. 105 (2008), as recognized in Holland v. Int’l Paper Co. Ret. Plan, 576
4
Case: 10-30043 Document: 00511544224 Page: 5 Date Filed: 07/19/2011
No. 10-30043
Insurance Company,3 Blue Cross concluded that the only admissible evidence in
an ERISA action was 1) the administrative record; 2) evidence involving the
interpretation of the Plan; and 3) evidence explaining medical terms and
procedures.
The magistrate judge agreed and found that Vega limited the scope of
admissible evidence and thus limited the scope of discovery to evidence of how
the administrator interpreted the plan in other instances and expert opinions
explaining medical terms. The court denied Crosby’s motion to compel,
concluding that it would be “difficult to conceive how permitting the requested
responses to [Crosby’s] discovery requests would lead to the discovery of evidence
admissible within the restrictive boundaries identified in Vega, either because
it interprets the plan or explains medical terms and procedures relating to the
claim.”
We will first consider what limits Vega placed on the scope of admissible
evidence in ERISA actions under 29 U.S.C. § 1132(a)(1)(B). In Vega, the
insureds sought coverage for Vilma Vega’s surgery. See Vega, 188 F.3d at 289.
The insurer denied coverage on the basis that Vilma Vega had notice of her need
for surgery prior to the time she applied for plan membership and failed to
disclose it. Id. at 290. Vilma Vega and her husband filed suit and sought to
introduce evidence contradicting the plan administrator’s determination that
Vilma Vega contemplated surgery before applying for membership. Id. The
district court granted judgment in favor of the insurer, refusing to consider
evidence that was not made available to the plan administrator. Id.
On appeal, our en banc court considered whether the district court
correctly refused to consider evidence that was not a part of the administrative
F.3d 240, 247 n.3 (5th Cir. 2009).
3
215 F.3d 516 (5th Cir. 2000).
5
Case: 10-30043 Document: 00511544224 Page: 6 Date Filed: 07/19/2011
No. 10-30043
record when evaluating whether the plan administrator abused its discretion.
See id. at 299-300. We reaffirmed our precedent holding that “with respect to
material factual determinations—those that resolve factual controversies related
to the merits of the claim—the court may not consider evidence that [was] not
part of the administrative record” unless the evidence relates to how the
administrator had interpreted the plan in the past or would assist the court in
understanding medical terms and procedures. Id. at 299-300. We arrived at
this conclusion after articulating our concern that a holding to the contrary
would allow claimants to circumvent the administrative process by waiting until
they filed suit to produce evidence that related to the merits of their claim for
benefits. Id. That was precisely what the Vegas sought to do. Id. at 290, 299-
300. We found that the issue in dispute before the administrator was whether
Vilma Vega had notice of her condition before she applied for plan membership.
Id. at 299. The evidence the Vegas sought to introduce related to that dispute,
and the Vegas could have presented that evidence to the plan administrator. Id.
at 299-300. Accordingly, we affirmed the district court’s refusal to admit the
evidence. Id. at 300.
We find that Vega prohibits the admission of evidence to resolve the merits
of the coverage determination—i.e. whether coverage should have been afforded
under the plan—unless the evidence is in the administrative record, relates to
how the administrator has interpreted the plan in the past, or would assist the
court in understanding medical terms and procedures. See id. at 299-300. A
plan participant is not entitled to a second chance to produce evidence
demonstrating that coverage should be afforded. See id. Vega does not,
however, prohibit the admission of evidence to resolve other questions that may
be raised in an ERISA action. For example, in an ERISA action under 29 U.S.C.
§ 1132(a)(1)(B), a claimant may question the completeness of the administrative
6
Case: 10-30043 Document: 00511544224 Page: 7 Date Filed: 07/19/2011
No. 10-30043
record;4 whether the plan administrator complied with ERISA’s procedural
regulations;5 and the existence and extent of a conflict of interest created by a
plan administrator’s dual role in making benefits determinations and funding
the plan.6 These issues are distinct from the question of whether coverage
should have been afforded under the plan. We see no reason to limit the
admissibility of evidence on these matters to that contained in the
administrative record, in part, because we can envision situations where
evidence resolving these disputes may not be contained in the administrative
record. Accord Murphy, 619 F.3d at 1158 & n.2.; Wildbur v. ARCO Chem. Co.,
974 F.2d 631, 638-39 (5th Cir. 1992). A discovery request for such information
may be relevant and thus permissible under federal discovery rules. See Wiwa,
392 F.3d at 820.
Here, Crosby sought to discover evidence that would indicate whether the
administrative record was complete, whether Blue Cross complied with ERISA’s
procedural requirements, and whether Blue Cross had previously afforded
coverage for claims related to the jaw, teeth, or mouth. Her discovery request
was at least reasonably calculated to lead to the discovery of some admissible
evidence. The magistrate judge, however, denied Crosby’s motion based on an
erroneous view of the scope of admissible and discoverable evidence in ERISA
actions. That abuse of discretion prejudiced Crosby’s ability to demonstrate that
Blue Cross failed to comply with ERISA’s procedural requirements, that the
4
Estate of Bratton, 215 F.3d at 521 (indicating that a claimant may contest whether
the identified administrative record is complete).
5
Lafleur v. La. Health Serv. & Indem. Co., 563 F.3d 148, 150 (5th Cir. 2009)
(remanding the case to the district court to further remand to the plan administrator because
the plan administrator failed to comply with ERISA’s procedural requirements).
6
Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 117 (2008) (defining conflict of interest as
a factor for the court to consider when evaluating whether the plan administrator abused its
discretion).
7
Case: 10-30043 Document: 00511544224 Page: 8 Date Filed: 07/19/2011
No. 10-30043
administrative record compiled by Blue Cross failed to contain all relevant
information made available to Blue Cross prior to the filing of this suit, and that
Blue Cross had afforded coverage in similar situations. For these reasons, we
vacate the judgment in this action and remand for further discovery.
We further provide a few words of caution when applying the standards
we articulated today. Because our review of an ERISA benefits determination
is essentially analogous to a review of an administrative agency decision, district
courts must monitor discovery closely. See Doe v. Blue Cross & Blue Shield
United of Wis., 112 F.3d 869, 875 (7th Cir. 1997) (“Like a suit to challenge an
administrative decision, a suit under ERISA is a review proceeding, not an
evidentiary proceeding.”). ERISA plan administrators are permitted to exercise
broad discretion, which the statute confirms by strictly limiting the scope of
judicial review. For federal courts to engage in “full review of the motivations
behind every plan administrator’s discretionary decisions” would “move toward
a costly system in which Article III courts conduct wholesale reevaluations of
ERISA claims” and would seriously undermine ERISA’s goal of resolving claims
efficiently and inexpensively. Semien v. Life Ins. Co. of N. Am., 436 F.3d 805,
814-15 (7th Cir. 2006). Accordingly, district courts must be mindful of the
limitations placed on the frequency and extent of discovery under the federal
rules, particularly Rule 26(b). For instance, a district court must limit otherwise
permissible discovery if it determines that “the burden or expense of the
proposed discovery outweighs its likely benefit, considering the needs of the case,
the amount in controversy, the parties’ resources, the importance of the issues
at stake in the action, and the importance of the discovery in resolving the
issues.” FED. R. CIV. P. 26(b)(2)(C)(iii); see Murphy, 619 F.3d at 1163 (holding
that all discovery, including discovery in ERISA matters, “is limited by Rule
26(b)(2), which protects against, inter alia, overly burdensome discovery
requests, discovery of cumulative materials, and overly costly discovery
8
Case: 10-30043 Document: 00511544224 Page: 9 Date Filed: 07/19/2011
No. 10-30043
requests”). Rule 26(b) “has never been a license to engage in an unwieldy,
burdensome, and speculative fishing expedition.” Murphy, 619 F.3d at 1163. We
trust that district courts will guard against abusive discovery.
We decline to address at this time whether Blue Cross complied with
ERISA’s procedural requirements, whether Blue Cross abused its discretion, and
whether the administrative record is complete. Following adequate discovery
consistent with this opinion, the parties may raise these issues before the
district court. The mandate shall issue forthwith.
VACATE and REMAND.
9