The case of Murphy v. First Unum Life Insurance Company was brought following the administrative appeal which upheld Unum’s termination of plaintiff’s long term disability benefits under the definition of disability that required her to be disabled from “any occupation for which she is reasonably qualified by way of training, education and experience.” The case does not discuss the medical problems of the plaintiff, Marta Murphy, a Lead Medical Assistant at Huntington Hospital, the merits of her claim or reasons why it was denied.

Instead, the focus is on the types of state claims that must be dismissed due to ERISA preemption and whether or not plaintiff is entitled to discovery concerning Unum’s possible conflict of interest in denying her claim. A New York federal court determined she was entitled to discovery concerning the conflict of interest since it “logically follows that some amount of discovery is necessary, to enable the Court to determine the extent and nature of the conflict and the appropriate weight to give this conflict in the ultimate merits analysis.”

Court Dismissed Causes of Action Due to ERISA Preemption

The plaintiff brought several claims in her ERISA lawsuit. The court dismissed most of them on the grounds that the state law allegations are preempted by ERISA. Therefore, the court dismissed her claims for: Breach of contract, bad faith, negligence and a request for money damages. It also dismissed her request for a jury trial finding that “Relief sought pursuant to ERISA is equitable in nature, and ‘there is no right to a jury trial in a suit brought to recover ERISA benefits.'”

The court considered her claim to recover benefits under ERISA in conjunction with Unum’s motion for a declaratory judgment that plaintiff was not entitled to discovery outside of matters already contained in the administrative record.

Court Held That Discovery Was Warranted Relevant to Conflict of Interest Allegations

Unum argued that its decision to deny benefits should be reviewed according to whether its actions were arbitrary and capricious and as such, review should be limited to the administrative record. It claimed that the plaintiff should be barred from obtaining discovery on any possible conflict of interest. Unum admitted that, in years past, it had previously been “criticized by courts” for showing bias, but following a regulatory settlement in 2004, it had agreed to no longer engage in bias. Therefore, it argued that discovery was not necessary.

The court rejected Unum’s argument, noting that a past history of biased claims administration indicated “‘a higher likelihood that [the conflict] affected the benefits decision.'” The court noted that other courts “have permitted discovery ‘relating to [the] conflict, since much of the relevant information would not have been part of the record.” Based on its review of precedent, the court ruled that “Plaintiff is permitted to conduct discovery into the extent of Defendant’s conflict of interest, but not into the merits of Defendant’s decision to terminate Plaintiff’s LTD benefits.” The court then set a date by which discovery should be concluded.

This case was not handled by our office, but it may provide claimants guidance when they believe their disability claim was denied due to the claims administrator’s conflict of interest. If you need assistance with a similar matter, please contact any of our lawyers for a free consultation.