Discovery in LTD Cases

When a group long term disability (“LTD”) claim is litigated, insurance companies argue that no discovery should be allowed because the court’s decision has to be based on the administrative record, that is, the claim file, that the insurer used. The insurance companies oppose discovery because they know it will reveal evidence that they improperly decided to deny or terminate a claim.

Last week, I received a decision that rejected the insurance company’s argument that no discovery should be allowed in an LTD case, even though the magistrate judge who issued the decision had previously ruled against discovery in a similar situation. The court ruled that while no evidence had been presented to admit additional evidence outside of the administrative record, the claimant was entitled to determine who the decision makers were, why certain pieces of evidence were deemed more credible than others, and whether the administrative record was complete.

Obtaining the type of discovery approved by the court is critical for two reasons. First, the discovery helps show why the insurer’s decision was unreasonable. Second, because of what discovery is likely to reveal, it frequently pressures the insurer into settling the litigation.