You know that in ERISA cases most courts typically will limit review to the administrative record, absent special circumstances. Courts may also allow limited discovery when assessing whether a “conflict of interest” affected the claim determination. A conflict of interest can arise, for example, when the insurer of the ERISA governed benefit is both the “evaluator and the payor.”

But watch out when Plaintiff asserts a breach of fiduciary duty claim. There is very strong precedent to obtain early dismissal of these claims. See, e.g., Rochow v. LINA, 780 F. 3d 364 (6th Cir. 2015).

AND…if you don’t move early to dismiss these dubious claims, the court may allow very broad discovery.

Here’s the case of Milby v. Liberty Life Assurance Co. of Boston, 2016 WL 4599919 (W. D. Ky. September 2, 2016)(Since the dubious breach of fiduciary duty claim had not been dismissed, the court allowed broad discovery).

FACTS: Plaintiff sought broad discovery in a claim involving ERISA-governed long term disability benefits. Plaintiff alleged Liberty Life was both the evaluator and payor of the claim and therefore sought discovery into Liberty’s conflict of interest. Liberty argued review of the claim denial should be limited to the administrative record, and there should be no discovery, or significantly limited “conflict” discovery.

ISSUE: What discovery is allowed when Plaintiff asserts a breach of fiduciary duty claim?

U.S. DISTRICT COURT HELD:

1. “An ERISA plaintiff may pursue a claim under § 1132(a)(3), but only when it “is based on an injury separate and distinct from the denial of benefits or where the remedy afforded by Congress under § [1132](a)(1)(B) is otherwise shown to be inadequate.” Op. at 3.
2. Plaintiff “alleges numerous flaws in Hartford’s claims process, but only one injury: the denial of benefits. He contends that without discovery, it is impossible to determine what remedies are adequate…. But [Plaintiff’s] alleged injury—the denial of benefits—can be remedied by § 1132(a)(1)(B), which allows [Plaintiff] “to recover benefits due to him.” 29 U.S.C. § 1132(a)(1)(B). No discovery is necessary to make this determination. …[Plaintiff]… has failed to allege “an injury separate and distinct from the denial of benefits” or show why “the remedy afforded by Congress under § [1132](a)(1)(B) is … inadequate,” the Court will dismiss his § 1132(a)(3) claim. Op. at 3.
3. “Despite Liberty’s strenuous arguments in favor of the eventual dismissal of Milby’s breach of fiduciary duty claim, it has not filed any motion that could potentially dispose of the claim. Even if Liberty might succeed if it filed the long-promised motion for partial judgment on the pleadings, it cannot escape the fact that Milby currently has a pending cause of action pursuant to Section 1132(a)(3).” Op. at 5.
4. Since the breach of fiduciary duty claim has not been dismissed yet, the scope of discovery will not be limited to the administrative record. [T]his Court finds that discovery is permissible in this case due to the existence of a breach of fiduciary duty claim pursuant to § 1132(a)(3). Op. at 5.

KEY TAKE AWAY: When Plaintiff asserts a breach of fiduciary duty claim (like the one in Rochow v. LINA), move to dismiss the claim early. This can help foreclose arguments for broad discovery.