Semien, Kathleen v. Life Insur Co

In the

United States Court of Appeals

For the Seventh Circuit

____________

No. 04-3664

KATHLEEN SEMIEN,

Plaintiff-Appellant,

v.

LIFE INSURANCE COMPANY OF NORTH AMERICA,

a CIGNA COMPANY, and BP LONG TERM

DISABILITY (LTD) PLAN,

Defendants-Appellees.

____________

Appeal from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 03 C 4795—Charles P. Kocoras, Chief Judge.

____________

ARGUED DECEMBER 1, 2005—DECIDED FEBRUARY 6, 2006

____________

Before FLAUM, Chief Judge, and BAUER and EVANS,

Circuit Judges.

FLAUM, Chief Judge. The defendant, Life Insurance

Company of North America (“LINA”), terminated the

payment of long term disability benefits to the plaintiff,

Kathleen Semien. In response, Semien filed suit against her

benefit plan, BP Long Term Disability Plan, and LINA

seeking an order compelling LINA to continue payment

of her disability benefits.

Additionally, Semien sought to compel discovery in or-

der to gather evidence about the relationship between the

2 No. 04-3664

physicians LINA consulted and the insurer. The district

court denied Semien’s motion to compel discovery and

granted summary judgment in favor of the defendants.

Semien appeals the district court’s denial of her discovery

requests as well as the district court’s grant of summary

judgment to LINA.

For the following reasons, we now affirm the judgment of

the district court.

I. Background

Kathleen Semien is a 54-year old woman who began

working for BP-Amoco in February 1989 as an environmen-

tal remediation manager. On May 15, 2000, when Semien

left BP-Amoco, she was employed as a chemical engineer.

Her occupation required significant travel, concentration,

teamwork, and quick reactions. Upon leaving her job,

Semien filed a disability claim with BP’s Long Term

Disability Plan.

BP established its Consolidated Welfare Benefit Plan

(“Plan”) to provide long-term disability benefits to eligible

employees. BP adopted a Plan Governance Amendment

on January 31, 2000. The Amendment defined an “Adminis-

trative Named Fiduciary” as any entity that entered into an

Administrative Services Agreement with the

Plan Administrator. Administrative Named Fiduciaries

were granted the authority to “Exercise such discretion as

may be required to construe and apply the provisions of the

Plan, subject only to the terms and conditions of the Plan.”

On April 1, 2000, LINA entered into an Administrative

Services Agreement with Semien’s employer covering long-

term disability claims arising out of the Plan. As part of this

Administrative Services Agreement, LINA would screen

benefits and determine whether claims were payable under

the Plan. In addition, LINA insured the benefits of employ-

ees under the Plan.

No. 04-3664 3

Semien asserts that she suffers from a variety of med-

ical conditions: back pain, a herniated lumbar disk, bone

spurs in her neck, carpal tunnel syndrome, other prob-

lems in her joints and extremities, fibromyalgia (a disease

with no known causes or cure, but with symptoms including

chronic pain “all over,” fatigue, disturbed sleep, and other

problems), and past sickness as a result of Hepatitis C. In

addition to her alleged physical ailments, Semien also

claims to suffer from chronic depression and mental

confusion. She has been described as having suicidal

thoughts and “masochistic, schizoid, and narcissistic fea-

tures.” Semien is currently taking several medications for

pain, sleeping problems, and depressive disorders.

LINA received Semien’s initial claim on September 15,

2000. This initial claim was approved on November 15,

2000. The bases for LINA’s approval of benefits were

side effects from Hepatitis C, medication, fatigue, and

pain. In its initial approval, LINA stated its intent to

monitor Semien’s condition and reserved the right to

request additional records. To receive benefits for the

first 24 months of disability insurance, Semien only needed

to show that she could not perform her “Regular Occupation

or a Qualified Alternative” at BP. After the initial 24-

month period, a more stringent standard applied.

During the two-year initial disability period, Semien

submitted many medical records to LINA. Semien’s physi-

cians also completed assessments on her behalf. Some of

these assessments indicated that Semien was capable of

performing moderate work, but cautioned that her abilities

were limited. Semien received fusion surgery on her back in

January 2002.

On May 8, 2002, LINA sent Semien a letter stating

that she would remain eligible for benefits only if illness

prevented her from performing any qualified work or

4 No. 04-3664

earning 80% or more of pre-disability earnings. Addition-

ally, during this time period, Semien’s disability payments

were reduced in part to offset the money she received

from social security disability payments.

In a letter dated November 22, 2002, LINA notified

Semien that “the information we have on file to date

does not establish that you meet the Policy definition of

Disabled. Accordingly, [long term disability] benefits are not

payable beyond November 14, 2002, under this policy.”

LINA further explained, “[Y]our file was . . . reviewed

by a Nurse Care Manager and a Behavior Care Specialist. It

was noted that the medical documentation does not support

your inability to perform your occupation as

an Environmental Business Manager[.] . . . Accordingly

no additional benefits are payable under the policy.”

The language of the long-term disability plan states:

After Disability Benefits have been payable for 24

months, the Employee is considered Disabled if, solely

because of Injury or Sickness, he or she is either:

1. unable to perform all the material duties of any

occupation for which he or she is, or may reason-

ably become, qualified based on education, training

or experience; or

2. unable to earn 80% or more of his or her Indexed

Covered Earnings.

On March 25, 2003, Semien appealed LINA’s termination

decision. She submitted a great deal of medical evidence to

support her appeal. LINA hired an independent psychiatric

consultant, Dr. Jack Greener, to review the medical history

in Semien’s file. Dr. Greener did not personally examine

Semien.

Dr. Greener’s report concluded that Semien’s depres-

sion was severe enough to prevent her from functioning in a

No. 04-3664 5

work setting from January 24, 2003, to February 21, 2003.

He stated that, “The psychiatric documentation demon-

strates a degree of depression of moderate severity and then

of severe degree, which would preclude the client from

performing her regular job according to the job description

supplied.” In an addendum to his original report, Dr.

Greener wrote, “After careful review it is evident that the

client is capable of performing a sedentary to light job,

which does not require irregular and unplanned hours,

evening meetings, responses 24 hours a day, [and] emer-

gency responses, which would require immediate attention

and travel.”

Dr. Eddie Sassoon, a physician retained by LINA, also

concluded from a review of Semien’s medical records that

she was capable of performing a sedentary or light duty

occupation. Semien contends that Dr. Sassoon did not

assess her psychiatric impairments or consider records from

Dr. Liu or Dr. Nagle. It is unclear from Dr. Sassoon’s

evaluation, which consisted of only two pages, exactly

what information he reviewed. Dr. Sassoon stated that “the

report was completed in the interest of time constraints,

based on the documentation provided, which was extensive

in nature.”

Lynne Lonberg, an independent senior rehabilitation

counselor and vocational expert retained by LINA, con-

ducted a Transferable Skills Analysis based on the physi-

cians’ appraisals. In this analysis, Lonberg listed several

“potential occupations Ms. Semien could perform within her

skills, education, physical/mental abilities and wage

requirement [of 80% of Indexed Covered Earnings.]”

Potential suitable occupations included employment as

a chemical engineer, chemical research engineer, or ab-

sorption and adsorption engineer.

In a letter dated June 27, 2003, LINA affirmed its

determination that Semien was not disabled under the

6 No. 04-3664

terms of the plan and therefore did not qualify for bene-

fits after November 14, 2002. On July 11, 2003, Semien

filed suit under the Employee Retirement Income Secu-

rity Act (“ERISA”), 29 U.S.C. § 1132(a)(1)(B), seeking

an order forcing LINA to award her disability benefits

under the Plan.

During the course of this litigation, LINA refused to

comply with five discovery requests: one interrogatory

and four document production requests related to the

relationship between LINA and the physicians consulted.

Semien filed a motion to compel discovery with the dis-

trict court. This motion to compel discovery was denied

in an opinion dated April 21, 2004.

On October 7, 2004, the district court entered summary

judgment for LINA, holding that LINA’s decision on

Semien’s claim for benefits was not arbitrary and capri-

cious. The district court also added in a footnote that “the

denial of benefits would survive even if we applied the

de novo standard.”

II. Discussion

We review a district court’s grant of summary judgment

using a de novo standard. See, e.g., Grun v. Pneumo Abex

Corp., 163 F.3d 411, 419 (7th Cir. 1998). “That is, we review

‘without deference for the view of the district judge and

hence almost as if the motion had been made to us directly.’”

Id. (quoting Tobey v. Extel/JWP, Inc., 985 F.2d 330, 332

(7th Cir. 1993)).

A. Appropriate Standard of Review Under ERISA

The initial question in this appeal is whether the dis-

trict court used the proper standard of review when evalu-

ating the plan administrator’s denial of benefits. The

No. 04-3664 7

standard of judicial review in civil actions under 29 U.S.C.

§ 1132(a)(1)(B) depends upon the discretion granted to

the plan administrator in the plan documents. See Firestone

Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989)

(“Consistent with established principles of trust law, we

hold that a denial of benefits challenged under

§ 1132(a)(1)(B) is to be reviewed under a de novo stan-

dard unless the benefit plan gives the administrator or

fiduciary discretionary authority to determine eligibility for

benefits or to construe the terms of the plan.”).

“[T]he presumption of plenary review is not rebutted by

the plan’s stating merely that benefits will be paid only

if the plan administrator determines they are due, or only if

the applicant submits satisfactory proof of his entitlement

to them.” Herzberger v. Standard Ins. Co., 205 F.3d 327, 331

(7th Cir. 2000). In order to lower the level of judicial review

from de novo to arbitrary and capricious, “the plan should

clearly and unequivocally state that it grants discretionary

authority to the administrator.” Perugini-Christen v.

Homestead Mortgage Co., 287 F.3d 624, 626 (7th Cir. 2002).

The district court found that the BP Long Term Disability

Plan granted discretionary authority to LINA. Therefore,

the plan administrator’s “decision had to be examined under

the ‘arbitrary and capricious’ standard of review.” The

district court provided two bases for its decision. In an April

21, 2004, opinion denying Semien’s motion to compel

discovery, the district court cited the Plan’s Employee

Benefits Handbook for authority to use an arbitrary and

capricious standard of review. In the October 7, 2004,

opinion granting summary judgment, the district court cited

the BP Long-Term Disability Plan and a subsequent

Administrative Services Agreement between BP and LINA

as mandating an arbitrary and capricious standard of

review.

Semien challenges the validity of the Employee Bene-

fits Handbook. She claims that because the handbook

8 No. 04-3664

was not published as part of the plan until after the ini-

tial denial of benefits, it may not be considered in evaluat-

ing her claim. See Hacket v. Xerox Corp. Long Term Disabil-

ity Income Plan, 315, F.3d 771, 774 (7th Cir. 2003); but see

Daill v. Sheet Metal Workers’ Local 73 Pension Fund, 100

F.3d 62 (7th Cir. 1996). We need not reach the question of

the handbook’s validity. Regardless of whether the hand-

book was properly considered, the BP Long-Term Disability

Plan, coupled with the Administrative Services Agreement

between BP and LINA, established LINA’s authority and

requires that decisions by the plan administrator be

reviewed under an arbitrary and capricious standard.

The BP Long-Term Disability Plan explicitly provides

for arbitrary and capricious review of plan administrator

determinations:

Plan Administration

The administration of the Long-Term Disability Plan is

the shared responsibility of the claims administra-

tor and the Plan Administrator. The claims administra-

tor receives, processes and pays all claims for benefits.

The claims administrator for the Plan is:

Prudential Life Insurance

....

The Plan Administrator and the claims administra-

tor have the sole discretion and authority to apply,

construe and interpret all Plan provisions, to grant

or deny all claims for benefits and to determine all

benefit eligibility issues.

. . . . All decisions or determinations made by the claims

administrator and the Plan Administrator will be final

and binding on all parties unless such party has acted

in an arbitrary and capricious nature.

No. 04-3664 9

The Plan Administrator is an officer of the Company

with responsibility for employee benefits, as designated

by the Board of Directors . . .

(emphasis added).

While there is no dispute that the quoted language

provides for arbitrary and capricious review, Semien claims

that BP never properly delegated its discretionary authority

to LINA, the new plan administrator. Unlike several of our

sister circuits, this Court has not addressed the question of

whether the delegation of a plan administrator’s discretion-

ary authority need be express. See, e.g., Nelson v. EG & G

Energy Measurements Group, Inc., 37 F.3d 1384, 1388-89

(9th Cir. 1994) (benefit decision by an employee not explic-

itly given discretion is reviewed de novo); Sanford v.

Harvard Indus., Inc., 262 F.3d 590, 597 (6th Cir. 2001)

(when a “decision is made by a body other than the one

authorized by the procedures set forth in a benefits plan,”

the standard of review is de novo); see also McKeehan v.

CIGNA Life Ins. Co., 344 F.3d 789, 793 (8th Cir. 2003)

(“[I]nsurers are accustomed to de novo judicial review of

their decisions, and therefore we do not infer discretionary

authority when an employer or plan sponsor has funded its

obligations under an ERISA plan by purchasing a stan-

dard-form group insurance policy. Rather, we require

‘explicit discretion-granting language’ in the policy or in

other plan documents to trigger the ERISA deferential

standard of review.” (citations omitted)). Because we find

that BP provided LINA with an express delegation of

discretionary authority to act as plan administrator, we

need not reach the question of whether an implied delega-

tion of authority would be sufficient to shift discretionary

authority from the original plan administrator to an

insurer.

Semien contends that only the original plan may be

considered in determining if LINA is a fiduciary entitled

10 No. 04-3664

to deference. That contention has been rejected by this

Court. Health Cost Controls of Illinois, Inc. v. Washington,

187 F.3d 703, 712 (7th Cir. 1999) (“[O]ften the terms of an

ERISA plan must be inferred from a series of documents

none clearly labeled as ‘the plan.’ ”); see also Ruiz v. Cont’l

Cas. Co., 400 F.3d 986, 990-91 (7th Cir. 2005). Under

ERISA, fiduciaries are allowed to designate other individ-

uals “to carry out fiduciary responsibilities . . . under the

plan.” 29 U.S.C. § 1105(c)(1)(B).

In a 2000 Plan Governance Amendment, BP sets out

“Procedures for Identification of an Administrative

Named Fiduciary.” An Administrative Named Fiduciary

may be identified by entering into an Administrative

Services Agreement with the Plan. LINA entered into

an Administrative Services Agreement with the Plan in

April 2000. The Administrative Services Agreement

states that “LINA will provide the initial and ongoing

screening of claims to determine whether benefits are

payable in accordance with the terms of the Plan.” Thus, by

the terms of the Administrative Services Agreement, LINA

agreed to exercise authority over the plan and was granted

the same discretionary authority as the original plan

administrator.

Additionally, this Court recently stated that the ques-

tion of whether an administrator is a fiduciary should

be “viewed ‘in functional terms of control and authority over

the plan.’ ” Ruiz, 400 F.3d at 990 (quoting Mertens v. Hewitt

Assocs., 508 U.S. 248, 262 (1993)). As in Ruiz, this Court

must determine whether the delegated entity, in this case

LINA, was a fiduciary. 29 U.S.C. § 1002(21)(A)(iii) (A

fiduciary is a person who “has any discretionary authority

or discretionary responsibility in the administration of such

plan.”). Based upon the language of the Administrative

Services Agreement, the district court correctly found that

LINA was a fiduciary and had discretionary authority over

the administration of the plan. Thus, LINA’s decisions as

No. 04-3664 11

plan administrator are entitled to review under an arbi-

trary and capricious standard.

B. LINA’s Denial of Benefits

On a motion for summary judgment, the moving party

must show that there is no genuine issue of material fact

and that the moving party is entitled to judgment as a

matter of law. FED.R.CIV.P. 56(c); Celotex Corp. v. Catrett,

477 U.S. 317, 322-23 (1986). In addition, at the sum-

mary judgment stage, all inferences are drawn in favor

of the non-moving party. See, e.g., Estate of Moreland v.

Dieter, 395 F.3d 747, 758 (7th Cir. 2005). In this case, to

affirm the district court’s grant of summary judgment, we

must find that when taken in the light most favorable

to Semien, there is no evidence LINA’s denial of benefits

was arbitrary and capricious.

“The arbitrary and capricious standard is the least

demanding form of judicial review of administrative ac-

tion, and any questions of judgment are left to the adminis-

trator of the plan. Absent special circumstances such

as fraud or bad faith, the [plan administrator’s] decision

may not be deemed arbitrary and capricious so long as it is

possible to offer a reasoned explanation, based on the

evidence, for that decision.” Trombetta v. Cragin Fed. Bank

for Savings Employee Stock Ownership Plan, 102 F.3d 1435,

1438 (7th Cir. 1996) (internal citations omitted).

To constitute a full and fair review under 29 U.S.C.

§ 1133(2), all the evidence that Semien submitted should

have been considered by LINA. See 29 C.F.R. § 2560.503-

1(h)(2)(iv) (Claims procedures must “[p]rovide for a re-

view that takes into account all comments, documents,

records, and other information submitted by the claim-

ant relating to the claim, without regard to whether

such information was submitted or considered in the initial

benefit determination.”).

12 No. 04-3664

The reports by the physicians LINA hired to review

Semien’s claim demonstrate a thorough consideration of the

available information. These physicians found Semien

capable of activities that would disqualify her from long-

term disability coverage. Although Semien’s treating

physicians reached different conclusions as to her abil-

ities, under an arbitrary and capricious review, neither this

Court, nor the district court, will attempt to make

a determination between competing expert opinions.

Instead, an “insurer’s decision prevails if it has rational

support in the record.” Leipzig v. AIG Ins. Co., 362 F.3d 406,

409 (7th Cir. 2004).

The two physician reports prepared for LINA, coupled

with the Transferable Skills Analysis prepared based upon

those reports, provide a sufficient basis and rational

support for the conclusion that Semien was ineligible

for long-term disability benefits. While the conclusions

in the medical reports submitted by Semien are also

rational, “[r]aising debatable points does not entitle [the

claimant] to a reversal under the arbitrary-and-capricious

standard.” Sisto v. Ameritech Sickness and Accident Disabil-

ity Benefit Plan, 429 F.3d 698, 701 (7th Cir. 2005).

No evidence in the record demonstrates bias by the

physicians LINA consulted. Nor has any evidence been

presented to convince this Court that the appraisals by

LINA’s physicians were so inherently flawed as to be

rendered arbitrary and capricious. The confines of the

ERISA statute and the constraints of judicial resources

do not permit this Court, nor the district courts, to engage

in the complex weighing of expert testimony when a plan

administrator has been granted discretionary authority.

Where an insurance plan gives discretionary authority

to a plan administrator, ERISA provides a limited Article

III review. Engaging in the type of in-depth review Semien

advocates not only runs contrary to statutory intent, but

No. 04-3664 13

would tax the judicial resources of the district courts

and magistrate judges beyond the breaking point.

C. Semien’s Discovery Requests

Given our determination that, based upon the evidence in

the record, the district court was correct to grant summary

judgment, the only remaining question for this Court is

whether the record relied upon was complete. Put another

way, did the district court err by denying Semien’s requests

to compel additional discovery?

Semien’s discovery requests sought information con-

cerning the relationship between LINA and the physi-

cians paid to evaluate Semien’s claim. LINA believed

that these discovery requests went beyond the scope of

discovery allowed in ERISA cases. The district court agreed

and refused to compel discovery.

“It is well-settled that district courts enjoy broad dis-

cretion in controlling discovery. A district court’s exercise of

discretion on discovery matters will only be reversed upon

a showing of a clear abuse of discretion.” McCarthy v.

Option One Mortgage Corp., 362 F.3d 1008, 1012 (7th Cir.

2004) (citing Leffler v. Meer, 60 F.3d 369, 374 (7th Cir.

1995)) (internal citation omitted). Generally, parties may

obtain discovery regarding any matter that is relevant and

not privileged. FED. R. CIV. P. 26(b)(1).

As discussed above, where a plan administrator possesses

discretionary authority, the district court reviews his or her

decisions under the “deferential ‘arbitrary and capricious’ ”

standard. Mers v. Marriott Int’l Group Accidental Death and

Dismemberment Plan, 144 F.3d 1014, 1019 (7th Cir. 1998)

(citing Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101,

111 (1989)).

The district court’s denial of Semien’s motion to com-

pel discovery relied primarily upon Perlman v. Swiss

14 No. 04-3664

Bank Corp. Comprehensive Disability Protection Plan, 195

F.3d 975 (7th Cir. 2000). In Perlman, this Court articulated

its reluctance to grant extensive discovery in ERISA cases:

[W]hen there can be no doubt that the application

was given a genuine evaluation, judicial review is

limited to the evidence that was submitted in support

of the application for benefits, and the mental processes

of the plan’s administrator are not legitimate grounds

of inquiry any more than they would be if

the decisionmaker were an administrative agency.

195 F.3d at 982.

A key component of the Perlman decision is the first

line above, “when there can be no doubt the application was

given a genuine evaluation.” Id. Thus, Perlman distin-

guishes cases in which no evidence of a failure to conduct a

“genuine evaluation” has been presented from those cases

in which a prima facie showing of bias or conflict of interest

has been made.

When a prima facie showing of misconduct or bias is

made, or a claimant demonstrates a good faith basis to

believe that limited discovery will produce such evidence,

the district court should engage in a more cautious review.

See Van Boxel v. Journal Co. Employees’ Pension Trust, 836

F.2d 1048, 1053 (7th Cir. 1987). “The existence of a sliding

scale in judicial review of ERISA trustees’ decisions is

suggested by the cases that, while purporting to

apply a uniform ‘arbitrary and capricious’ standard, in

fact give less deference to a decision the more the trustees’

impartiality can fairly be questioned.” Id.

When addressing the impact of a conflict of interest under

an “arbitrary and capricious” standard of review, the

Supreme Court stated, “Of course, if a benefit plan gives

discretion to an administrator or fiduciary who is operating

under a conflict of interest, that conflict must be weighed as

a ‘facto[r] in determining whether there is an abuse of

No. 04-3664 15

discretion.’ ” Firestone Tire & Rubber Co. v. Bruch, 489 U.S.

101, 115 (1989) (quoting RESTATEMENT (SECOND) OF TRUSTS,

§ 187, Comment d (1959)). When “impartiality can fairly be

questioned,” district courts should allow limited discovery.

By allowing limited discovery in cases where a prima facie

showing of impropriety has been made, district courts

ensure that the “arbitrary and capricious” standard of

review is not toothless.

In the instant case, a substantial amount of medical

evidence was analyzed by physicians compensated by LINA.

These physicians were not employees of the company, they

did not fail to analyze relevant medical evidence, and the

claimant has not presented any evidence to demonstrate a

prima facie case of misconduct or conflict of interest. The

fact that a plan administrator has compensated physicians

for their consulting services is not, in and of itself, sufficient

to establish a conflict of interest worthy of further discov-

ery. Although a plan administrator’s self interest may be a

“factor” to “weigh” in evaluating plan determinations, there

is no reason to assume independent consultants are not

impartial when evaluating medical records. See Perlman,

195 F.3d at 981. Thus, we have no basis to believe that the

physicians in this case did not conduct a full and fair

evaluation of Semien’s condition.

When reviewing a plan administrator’s decision in the

ERISA context, the district court has significant discre-

tion to allow or disallow discovery requests. This is a fact-

specific determination and will not be overturned by this

Court absent a clear abuse of discretion. See McCarthy, 362

F.3d at 1012. The ERISA statute does not “impose on plan

administrators a discrete burden of explanation when they

credit reliable evidence that conflicts with a treating

physician’s evaluation,” nor should district courts require

such an explanation following a claim denial. Black &

Decker Disability Plan v. Nord, 538 U.S. 822, 834 (2003).

16 No. 04-3664

Decisions by plan administrators are not cloaked with the

same level of authority as administrative agency determina-

tions. See Herzberger v. Standard Ins. Co., 205 F.3d 327,

332 (7th Cir. 2000). Once an ERISA plan grants a plan

administrator discretionary authority to evaluate claims,

however, the plan administrator’s motivations should not be

questioned absent a prima facie showing of some miscon-

duct or conflict of interest. See Perlman, 195 F.3d at 981-82.

Absent this initial showing, the strong warning of Perlman

remains intact: “We have no reason to think that [a plan

administrator’s] benefits staff is any more ‘partial’ against

applicants than are federal judges when deciding income-

tax cases.” Perlman, 195 F.3d at 981.

Although discovery is normally disfavored in the ERISA

context, at times additional discovery is appropriate

to ensure that plan administrators have not acted arbi-

trarily and that conflicts of interest have not contributed to

an unjustifiable denial of benefits. In these exceptional

cases, where a district court allows limited discovery based

upon what appears to be a sustainable allegation, the

district court must monitor discovery closely. In this

supervisory role, the district court should employ all

available tools, including the imposition of Rule 11 sanc-

tions against those who would abuse the discovery process.

Where a claimant makes specific factual allegations of

misconduct or bias in a plan administrator’s review proce-

dures, limited discovery is appropriate. See Bruch, 489 U.S.

at 115 (a conflict of interest is a factor to be considered

when reviewing a plan administrator’s denial of benefits);

see also Van Boxel, 836 F.2d at 1053 (less deference is

appropriate where a trustee’s impartiality can be fairly

questioned). A claimant must demonstrate two factors

before limited discovery becomes appropriate. First, a

claimant must identify a specific conflict of interest or

instance of misconduct. Second, a claimant must make a

prima facie showing that there is good cause to believe

No. 04-3664 17

limited discovery will reveal a procedural defect in the plan

administrator’s determination. See Bennett v. Unum Life

Ins. Co. of Am., 321 F. Supp. 2d 925, 932-33 (E.D. Tenn.

2004) (“Where . . . an ERISA plaintiff comes forward with a

reasonable basis to believe that this conflict of interest has

solidified into conscious, concrete policies, procedures, and

practices to promote the company’s financial welfare at the

expense of a full and fair evaluation of the plaintiff’s claim

for benefits, then the plaintiff should be allowed to conduct

limited discovery to determine whether such policies,

procedures, and practices do actually exist and, if so, to

what extent they interfered with the fair review of the

plaintiff’s claim for benefits. This information would

certainly be relevant to the Court when conducting its

review of the decision to deny benefits.”).

Semien is correct to note that this standard presents

a high bar for individuals whose claims have been denied by

a plan administrator with discretionary authority. Discov-

ery will be allowed into the motivations of a plan adminis-

trator or into the motivations of “independent” physicians

only where the claimant has made a prima facie showing of

misconduct or conflict of interest. While this standard

essentially precludes discovery without an affidavit or

factual allegation, we believe that this approach is the only

reasonable interpretation of ERISA. “Like a suit to chal-

lenge an administrative decision, a suit under ERISA is a

review proceeding, not an evidentiary proceeding.” Doe v.

Blue Cross & Blue Shield United of Wis., 112 F.3d 869, 875

(7th Cir. 1997). Thus, district courts are correct in limiting

discovery except in exceptional circumstances.

Congress has not provided Article III courts with the

statutory authority, nor the judicial resources, to engage in

a full review of the motivations behind every plan adminis-

trator’s discretionary decisions. To engage in such a review

would usurp plan administrators’ discretionary authority

and move toward a costly system in which Article III courts

18 No. 04-3664

conduct wholesale reevaluations of ERISA claims. Imposing

onerous discovery before an ERISA claim can be resolved

would undermine one of the primary goals of the ERISA

program: providing “a method for workers and beneficiaries

to resolve disputes over benefits inexpensively and expedi-

tiously.” Perry v. Simplicity Eng’g, 900 F.2d 963, 967 (6th

Cir. 1990) (internal citation omitted). While claimants who

believe they are the victims of arbitrary and capricious

benefits decisions should feel free to seek relief in federal

court, trial judges must exercise their discretion and limit

discovery to those cases in which it appears likely that the

plan administrator committed misconduct or acted with

bias.

In the instant case, Semien has presented no prima

facie evidence of misconduct or conflict of interest. As a

result, the district court lacked good cause to believe that

further discovery would reveal misdeeds by LINA or

improper motivations on the part of the consulting physi-

cians. Thus, the district court was correct to deny Semien’s

motion to compel.

III. Conclusion

For the foregoing reasons, the judgment of the district

court is AFFIRMED.

No. 04-3664 19

A true Copy:

Teste:

________________________________

Clerk of the United States Court of

Appeals for the Seventh Circuit

USCA-02-C-0072—2-6-06