Ohio Court Allows Investigation Into Reliance Standard Conflict of Interest After Disability Denial

In Sim v. Reliance Standard Insurance Co., et al, the Sixth Circuit court in Ohio granted plaintiff’s motion for discovery in his quest to show that Reliance did not give his claim for disability benefits a full and fair review due to its conflict of interest between being the plan administrator and the payor of benefits. In granting plaintiff’s motion, the court relied on other Sixth Circuit cases and noted that, “The court need not decide whether that conflict of interest alone is sufficient to allow discovery because plaintiff has offered additional evidence suggestive of bias. Specifically, defendants’ finding that plaintiff was not totally disabled is contrary to the Social Security Administration’s finding that plaintiff was totally disabled.”

Evidence of Conflict Offered by Plaintiff to Support his Motion for Discovery

In support of his motion for discovery, the plaintiff presented the court with six specific reasons Reliance was biased in denying plaintiff’s claim for disability benefits:

  1. Reliance was both the insurer of the ERISA plan and the one who decided which claims to allow.
  2. As both the payor of benefits and one who decided who was eligible for benefits, there was a financial incentive to deny benefits.
  3. Outside vendors and medical reviewers were paid to evaluate plaintiff’s claim and make a recommendation of approving or denying benefits.
  4. In this case, Reliance violated its own procedures by failing to even attempt to reconcile discrepancies in obtaining information about plaintiff’s job duties and position.
  5. The administrator’s decision denying total disability benefits was in direct conflict with plaintiff’s treating physician and the SSA which found plaintiff totally disabled.
  6. The administrator at first denied benefits on one ground, abandoned that reason and denied benefits on other evidentiary grounds.

These were sufficient allegations for the court to grant the plaintiffs Motion for Discovery. As the court noted, “These challenges constitute more than a ‘mere allegation’ of bias. Accordingly, discovery is warranted in this case. The Court now must now determine the permissible scope of discovery.”

Scope of Allowable Discovery

Although the court granted the plaintiff’s motion for discovery, it did not leave the door open for unlimited discovery. The court noted it “must balance the claimant’s interest in obtaining relevant information against the goal of ERISA of providing inexpensive and expeditious resolution of claims.”

The court then went through plaintiff’s list of discovery requests and determined whether each one was relevant to the plaintiff’s claim of bias and conflict of interest. In making its decision on each individual request for discovery, the court balanced the plaintiff’s need for the information with the burden it would impose on the defendant.

This case was not handled by our office, but it may provide claimants guidance in their pursuit of discovery when they believe their claim for disability was unfairly denied due to a conflict of interest when the insurer is both the payor of benefits and the plan administrator. If you need assistance with a similar matter, please contact any of our lawyers for a free consultation.

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