Long-term disability (LTD) benefits; The Employee Retirement Income Security Act’s (ERISA) inapplicability to government employee benefit plans; 29 USC § 1003(b)(1); Contract breach & breach of fiduciary duty claims: “Arbitrary & capricious” standard; Motions for discovery; Whether the district court could look “beyond the administrative record”; O’Kelly v Federal Reserve Bank of Cleveland (Unpub 6th Cir); Moore v Lafayette Life Ins Co

The court held that the district court properly applied the “arbitrary and capricious” standard when denying plaintiff-Martin’s requests for discovery in this breach of contract and fiduciary duty action for LTD benefits under a non-ERISA benefit plan. Martin, an employee of defendant-Federal Reserve Bank of Cleveland, suffered from long-haul COVID-19. The Bank’s benefits administrator, defendant-Matrix Absence Management, denied her application for LTD benefits, and the denial was upheld on appeal. Because ERISA does not cover governmental employee benefit plans, she sued for contract breach and breach of fiduciary duty. The district court denied Martin’s motion for discovery “outside the administrative record,” and granted defendants judgment based on the record. Martin argued on appeal that her motions for discovery were improperly denied. But the court disagreed and upheld the denials. The arbitrary and capricious standard “applies both where an ERISA plan vests significant decision-making authority in an administrator and here, where a non-ERISA plan vests such authority in the administrator.” The court concluded that “the district court was correct to deny Martin’s request for open discovery because it could not review Matrix’s decision based on information that was not available to Matrix when it denied Martin’s benefits.” As to her request for limited discovery, under Moore, a district court may exercise discretion to look at evidence beyond the administrative record only if it “‘is offered in support of a procedural challenge to the administrator’s decision, such as an alleged lack of due process afforded by the administrator or alleged bias on its part.’” The court found that “Martin insufficiently alleged a conflict of interest[,]” or bias or another indicator “of a procedural defect in Matrix’s determination.” The court further held that Matrix did not arbitrarily deny Martin LTD benefits under the plan. The “core inquiry” was whether it “offered a ‘reasoned explanation, based on the evidence,’ for its denial” and the court found that “Matrix offered such an explanation for its denial and considered Martin’s medical evidence[.]” Affirmed.