## Facts

- Giovanna Reichard worked as a nurse and participated in her employer’s group long-term disability plan administered by United of Omaha Life Insurance Company.
- Reichard stopped working due to multiple conditions, including headaches, arthritis, Crohn’s disease, and fibromyalgia, and initially received long-term disability benefits.
- The plan’s definition of disability changed after an initial period from inability to perform her “own occupation” to inability to perform “any gainful occupation” for which she was reasonably fitted by training, education, or experience.
- When the plan shifted to the “any occupation” standard, the insurer reevaluated Reichard’s eligibility and obtained reviews from four healthcare professionals based on her file.
- Relying on the reviewers’ conclusions that she could perform sedentary or light work, the insurer terminated benefits and identified specific types of jobs it believed she could do.
- Reichard appealed internally; the appeal was denied after review that included involvement by a company senior vice president who also served as a medical reviewer.
- Reichard sought discovery in subsequent ERISA litigation to probe alleged bias and conflict of interest related to that reviewer’s dual executive/medical role, including data about outcomes in other appeals; the district court denied the motion to compel.
- The district court applied arbitrary-and-capricious review and granted summary judgment to the insurer, finding the denial supported by substantial evidence.

## Issues

1. Whether the district court abused its discretion by denying discovery aimed at establishing a claimed conflict of interest of the insurer’s appeal reviewer.
2. Whether the insurer’s termination of long-term disability benefits under the plan’s “any occupation” definition was arbitrary and capricious under ERISA.

## Decision

- The Third Circuit affirmed the judgment for the insurer.
- The court held the district court did not abuse its discretion in denying the requested conflict-of-interest discovery.
- The court held the benefits denial was not arbitrary and capricious because it was supported by substantial evidence, including multiple medical reviews finding capacity for sedentary or light work.

## Legal Principles

- When an ERISA plan grants discretionary authority to the administrator, a benefits determination is reviewed under the deferential arbitrary-and-capricious standard and is upheld if supported by substantial evidence.
- An administrator may reasonably credit medical opinions supporting work capacity over a contrary opinion, including where the contrary report appears internally inconsistent.
- A structural conflict of interest is considered as one factor in evaluating whether a benefits decision was arbitrary and capricious; it does not automatically justify expanded discovery or heightened scrutiny.
- Discovery rulings are reviewed for abuse of discretion, and a district court may reasonably limit discovery where the requested material is unlikely to yield evidence material to the outcome beyond the administrative record.

## Conclusion

The Third Circuit affirmed both the denial of conflict-of-interest discovery and the summary judgment for the insurer, concluding that the plan administrator’s termination of benefits under the “any occupation” standard was supported by substantial evidence and was not arbitrary and capricious.


Reichard v. United of Omaha Life Ins. Co., No. 18-2952 (3d Cir. 2020)