Fortitude Surgery Center LLC v. Aetna Health Incorporated et al

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WO
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA
Fortitude Surgery Center LLC,
Plaintiff,
v.
Aetna Health Incorporated, et al.,
Defendants.
No. CV-24-02650-PHX-KML
ORDER
Plaintiff Fortitude Surgery Center LLC’s Motion for ERISA Discovery/Standard of
Review Determination (Doc. 69) and defendants Aetna Health, Inc.’s and Aetna Life
Insurance Company’s (collectively, “Aetna’s”) opposition (Doc. 135) contain two
disputes: (1) the standard of review applicable to Fortitude’s ERISA claim; and (2) the
appropriate scope of discovery for Fortitude’s ERISA claim. The proper standard of review
is abuse of discretion, and Fortitude may serve Aetna with certain limited discovery
requests listed in its motion.
I. Standard of Review
By default, district courts review an administrator’s ERISA denial of benefits de
novo. But if the plan unambiguously confers to the administrator discretion in determining
benefits, “the standard of review shifts to abuse of discretion.” Abatie v. Alta Health & Life
Ins. Co., 458 F.3d 955, 963 (9th Cir. 2006) (citing Firestone Tire and Rubber Co. v. Bruch,
489 U.S. 101, 115 (1989)). Aetna bears the burden of proving that the relevant plans grant
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sufficient discretion. Prichard v. Metropolitan Life Ins. Co., 783 F.3d 1166, 1169 (9th Cir.
2015).
Under the doctrine of judicial admissions, Fortitude has effectively conceded that
the standard of review should be abuse of discretion. Statements of fact in pleadings are
“judicial admissions” that are “conclusively binding” unless amended or otherwise
explained by the party to be error. Atencio v. TuneCore, Inc., 843 F. App’x 42, 44 (9th Cir.
2021) (quoting Am. Title Ins. v. Lacelaw Corp., 861 F.2d 224, 226 (9th Cir. 1988)). Judicial
admission of a fact withdraws that fact from issue and “dispens[es] wholly with the need
for proof of the fact.” In re Barker, 839 F.3d 1189, 1195 (9th Cir. 2016) (quoting Am. Title
Ins., 861 F.2d at 226)).
Fortitude’s Second Amended Complaint states that Aetna “exercised discretionary
authority or discretionary control respecting the management or disposition of Plan assets,
and Aetna has discretionary authority or discretionary responsibility in the administration
of the Plans.” (Doc. 52 at 52.) It continues: Aetna has “full discretionary authority to make
factual determinations, to determine eligibility for benefits, to determine the amount of
benefits for each claim received, and to construe terms of the Plan with respect to benefits.”
(Doc. 52 at 52.) Aetna’s answer admitted the same. (Doc. 62 at 44.)
Fortitude has not amended its Second Amended Complaint. Nor does its present
motion explain why its factual allegation was error. Fortitude contends it needs discovery
to evaluate the language of various plans relevant to the standard of review, but for ERISA
claims like this one the standard of review shapes discovery—not the other way around.
Abatie, 458 F.3d at 969. Fortitude’s allegation that the relevant plans conferred Aetna
discretion therefore constitutes a binding judicial admission and Aetna is relieved of its
burden of showing that fact. In re Barker, 839 F.3d at 1195. For present purposes,
Fortitude’s factual admission establishes that the applicable standard of review is abuse of
discretion.
II. Scope of Discovery
Fortitude seeks authorization to serve 25 interrogatories and 37 requests for
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production (“RFPs”) on Aetna. (Doc. 69 at 1.) Fortitude also wants to depose Kim Lajoie—
the Aetna Claim Investigator who sent a letter to Fortitude on May 1, 2020—and,
separately, Aetna under Fed. R. Civ. P. 30(b)(6). (Doc. 69 at 1.) Aetna has already agreed
to respond to interrogatories 2–4, 10, 11, 15, 22, and 25, and to produce documents
responsive to RFPs 4, 6, 12, 15–19, and 21–25. (Doc. 135 at 7.) The parties dispute whether
Aetna must respond to the remaining interrogatories, RFPs, and proposed depositions.
When reviewing an ERISA plan administrator’s decision for abuse of discretion,
district courts may admit evidence outside the administrative record “to decide the nature,
extent, and effect on the decision-making process of any conflict of interest.” Abatie, 458
F.3d at 970; Stambaugh v. Reliance Standard Life Ins. Co., 708 F. Supp. 3d 1388, 1394 (D.
Ariz. 2024). An insurer that is both the plan administrator and the funding source for
benefits operates under a structural conflict of interest. Abatie, 458 F.3d at 965. Although
Fortitude does not point to any specific plan for which Aetna is both administrator and
payer or otherwise under a conflict, Aetna’s motion and accompanying appendix identify
four plans where it is both administrator and payer. (Doc. 135 at 5 n.5; Doc. 139 at 16–17,
19–21, 26.) As to those plans, Aetna operates under a structural conflict of interest.
District courts may also order discovery when procedural irregularities “have
prevented full development of the administrative record.” Id. at 973. Fortitude alleges
“procedural failure” regarding the May 1, 2020 letter from Aetna’s Special Investigations
Unit (Doc. 69 at 4), but does not elaborate on how the letter’s purported deficiencies show
Aetna’s failure to fully develop the administrative record with documents about the claims
it actually denied.
This court will therefore permit discovery on “the nature, extent, and effect” of
Aetna’s structural conflict on Fortitude’s claim denials. Id. at 970. Fortitude may inquire
into “[f]acts involving [Aetna]’s processing and investigation of” its claims, “the reasons
given for the denial,” and other aspects of how Aetna’s status as both payer and
administrator may have impacted its review of Fortitude’s claims. Stambaugh, 708 F. Supp.
3d at 1394. But in keeping with the “limited discovery” afforded when reviewing for abuse
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of discretion, id. at 1392, the court cabins discovery to information about Fortitude’s
claims—not claims by other providers—and only those governed by the four plans where
Aetna disclosed a structural conflict. With those limitations to the information Aetna must
disclose in response, Fortitude may serve the following RFPs and interrogatories in
addition to those Aetna has agreed to respond to:
1. RFPs 8, 20, 27–31, and 35–36.
2. Interrogatories 5, 8, 13, and 16.
Fortitude may also depose—only on the structural conflict of interest—Kim Lajoie
and Aetna’s designees under Fed. R. Civ. P. 30(b)(6). The remaining proposed discovery
requests are not permitted.
Accordingly,
IT IS ORDERED the Motion for Discovery (Doc. 69) is GRANTED IN PART.
Fortitude may serve Aetna with RFPs 8, 20, 27–31, and 35–36 and interrogatories 5, 8, 13,
and 16 listed in their Motion for Discovery/Standard of Review Determination. (Doc. 69.)
Aetna may limit its responses to these RFPs and interrogatories to information applicable
to Fortitude’s claims governed by the four plans where Aetna disclosed a structural conflict
in the appendix accompanying its opposition. (Doc. 139.) Fortitude may also serve Aetna
with the RFPs and interrogatories Aetna has agreed to respond to.
IT IS FURTHER ORDERED that Fortitude may take the deposition of Kim
Lajoie and one Fed. R. Civ. P. 30(b)(6) deposition of Aetna concerning claim-adjudication
systems, Flags, automation, the May 1 process, and conflict-mitigation measures, which
are the only proposed topics that appear to relate to Fortitude’s claims governed by the four
plans where Aetna disclosed a structural conflict. Aetna may designate multiple corporate
representatives as necessary to provide complete testimony.
IT IS FURTHER ORDERED that the parties shall complete fact discovery no
later than December 15, 2026.
IT IS FURTHER ORDERED that all parties and their counsel shall meet in person
and engage in good faith settlement talks no later than January 12, 2027. Upon completion
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of such settlement talks, and in no event later than five working days after the deadline set
forth in the preceding sentence, the parties shall file with the court a joint report on
settlement talks executed by or on behalf of all counsel. The report shall inform the court
that good faith settlement talks have been held and report on the outcome of such talks.
The parties shall promptly notify the court if settlement is reached.
IT IS FURTHER ORDERED that dispositive motions shall be filed no later than
February 1, 2027. Responses shall be filed no later than March 11, 2027. Replies shall be
filed no later than April 8, 2027.
Dated this 6th day of October, 2026.
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