Use discovery as a tool to expose the procedure through which insurance companies deny claims

From . This is the defense attorney view of the current situation.
Our view is that plaintiffs should aggressively try to push for discovery and make the bad faith insurance company accountable for its decisions.

Although the cases seem to be fractured between and within the various federal
jurisdictions, certain general principles can nonetheless be derived from them.
First, after Glenn it is no longer the case that defendants can oppose all discovery in
ERISA benefits actions. There is authority in all federal jurisdictions that after Glenn,
plaintiffs are able to engage in some discovery, at least insofar as it relates to the
scope and discovery of any financial conflict of interest.
Second, many courts have made clear that discovery beyond the administrative
record should be narrowly limited to the issue of bias and self-interest,
although some have allowed free-ranging discovery. The common kinds of facts that courts have
permitted discovery on include (1) statistical information about the frequency of denials, (2) information about the use of medical consultants and other experts, (3) the financial incentive claim administrators
may have for deciding claims, and (4) efforts by the employer or insurer to
“wall off” decision-makers from having any financial stake in the outcome of a benefit
decision. Third, some courts appear willing to consider procedures to circumvent the need to engage immediately in discovery. For example, as illustrated by Greasey, courts might be persuaded to adopt a procedure by which they would initially review the administrative record to determine if they can decide whether or not the benefit decision was arbitrary and capricious without regard to considering the conflict of
interest. A claim denial might be so clearly supported and substantiated in the record
(or so clearly unsupported and unsubstantiated)
that it obviously is, or obviously is not, arbitrary and capricious. Only if the answer
to that threshold question is “no” would the parties then be put to the burden and expense
of engaging in discovery regarding the purported conflict of interest, its scope and extent, and whether it affected the decision. That, as explained in Greasey, would better serve ERISA’s fundamental goal of providing an expedient, inexpensive and expeditious method for reviewing claims. That approach also has authority from other courts, such as the Sixth Circuit in Kramer and the Third Circuit in Feigenbaum, which found it unnecessary to consider whether discovery was permissible in light of the fact that the denial
of benefits was obviously arbitrary and capricious given the medical evidence establishing
disability. Fourth, defendants opposing plaintiffs’ efforts to widen discovery should carefully distinguish merits discovery (which is generally disallowed) from discovery into the impact the conflict of interest may have had
on the benefit decision. Lastly, although it may not be possible to limit all discovery, it may be possible to minimize the amount if administrators adopt and implement procedures during the time of claim administration. As the Court of Appeals for the First Circuit observed in Denmark, after Glenn administrators should be expected to put in the administrative record express evidence of the measures taken to reduce bias stemming from any conflict of interest, and to provide evidence in each administrative record of the measures implemented. For example, claims administrators should include in administrative records signed or verified
certifications attesting to the fact that they derive no financial benefit from the denial of claims, that they are not subject to any bonus or incentive programs, that they incur no penalty as the result of any benefit decision, and similar issues that Glenn, and to a lesser extent Denmark, identified. In addition, claims administrators might
Discovery After Glenn  page 48 also include such material with respect to any third-party administrators upon whose input claims decisions are based, such as the numbers of claims referred to third
parties for review, compensation rates, and any of the other kinds of material for which courts have recently permitted discovery in ERISA benefits cases. Although such measures cannot guarantee that courts will not permit discovery into them once litigation has begun, it is relatively clear that without that kind of material in the administrative record, courts will continue to permit
such discovery.