A couple of weeks ago the U.S. District Court for the Northern District of California issued a noteworthy order in Walker v. Metropolitan Life Ins. Co., ___ F.Supp. ___, 2008 U.S. Dist. LEXIS 93463 (N.D. Cal., 11/10/08).  I've placed a copy of Walker in the website library here.  The court ordered MetLife to produce information that would allow the Judge to evaluate the degree to which the "independent" medical reviewers MetLife retains are truly independent or, conversely, are designed primarily to provide MetLife with a basis to support the insurer’s claim denials.

David Walker was a local area network administrator for Kaiser Permanente. He suffered from increasingly severe diabetes, cardiac problems, glaucoma, and macular degeneration. He applied for disability benefits from MetLife and his doctors submitted reports agreeing that he could not continue to work in his own occupation. MetLife relied on in-house medical experts to deny the disability claim. When Walker appealed, MetLife sent the claim out to National Medical Review ("NMR") for its evaluation of the file. NMR receives several thousand referrals from MetLife and other insurers each year for review. NMR did not examine Walker. It referred his file to a internist/cardiologist and an ophthalmologist for their opinions about whether he could work. They concluded Walker could return to his own occupation.

After Walker brought suit to challenge the denial, both parties moved for summary judgment. Walker also requested additional information from MetLife about its relationship to NMR to determine whether NMR’s file reviews were objective in light of NMR’s close relationship to MetLife.

Much of the court’s decision is an analysis of MetLife v. Glenn, 128 S.Ct. 2343 (2008) and its effect on pre-existing Ninth Circuit precedent dealing with conflict of interest, Abatie v. Alta Life & Health Ins. Co., 458 F.3d 955 (9th Cir. 2006) (en banc). The decision does not find any inconsistency between Glenn and Abatie. Both cases require trial courts to evaluate the circumstances that could create conflicted decision-making on a case by case basis to determine the degree to which a court must temper deference that would otherwise be accorded an insurer based on a grant of discretion in the plan documents. Both Glenn and Abatie state that trial courts may need to consider evidence about an insurer’s "history of biased claims administration" (Glenn) or "parsimonious claims granting history" (Abatie) to fully evaluate that question.

The relationship between NMR and MetLife is close. The court notes that NMR received over $11 million from MetLife in the five year period between 2002 and 2007 and that ". . . [i]t follows that MetLife knows NMR has an incentive to provide it with reports upon which MetLife may rely in justifying its decision to deny benefits in order to increase the chances that MetLife will return to NMR in the future."  Slip op., p. 11.  Walker requested information about how many claims MetLife had referred to NMR and the number of times MetLife had denied benefits based, in whole or in part, on NMR reviews. MetLife was willing to provide information on the former question for 2007, 2006 and 2005 (3593, 3159 and 2304) but stated that it had not calculated the number of claims it had denied in reliance on NMR reviews. MetLife asserted that going through the process of compiling that information would be unduly burdensome and expensive. The court rejected the argument.

The decision states that without this information the court could not evaluate MetLife’s conflict of interest in the way Glenn and Abatie require. Second, Glenn and Abatie ensure that the demand for precisely this type of information will only grow. The court did not question MetLife’s assertion that gathering the information requested by Walker would be time consuming. But since it would be necessary in cases to follow, over time MetLife would realize savings arising out of shortened discovery disputes and, if no conflict was shown, reduced litigation about conflicts of interest. The upshot? The court ordered MetLife to produce within 30 days the number of claims it had accepted or rejected after a review involving an NMR physician from 2005 to 2007. "Absent such an answer, this Court will infer that MetLife has not granted a single claim in which NMR reviews were obtained." Slip op., p. 13. 

Along with other commentators, I predicted that we would see these types of court orders requiring additional discovery in ERISA benefit denial cases. That is starting to come to pass.

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