UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

KENNETH W. MORRISON,

CIVIL ACTION NO. 09-11948

Plaintiff,

DISTRICT JUDGE NANCY G. EDMUNDS

v.

MAGISTRATE JUDGE DONALD A. SCHEER

UNUM LIFE INSURANCE 

COMPANY OF AMERICA,

Defendant.

_________________________________/ 

ORDER

This case is before the magistrate judge on Order of Reference for determination

of Plaintiff’s Motion to Permit Discovery Re: Controlling Standard of Review. The parties

agree that the disposition of this Motion must precede the court’s consideration of the

pending dispositive motions. For the reasons stated below, I conclude that the Motion must

be denied.

This case is an appeal from an ERISA plan administrator’s decision. Plaintiff is the

personal representative of the Estate of Mark T. Lowe, deceased. Prior to his death, on

September 8, 2006, Mr. Lowe was a full-time employee of PlastiPac, a Division of

Absopure Water Company, located in Westland, Michigan. As an employee, Lowe was

insured under a group insurance policy (“the UNUM policy”) issued by UNUM Life

Insurance Company of America (“UNUM”) to Absopure on January 1, 2006. The plan

provided both life insurance and accidental death and dismemberment benefits to eligible

employees. It was administered by UNUM, and was to be renewed on its anniversary date. 

The plan contains a paragraph entitled “discretionary acts” which states as follows:
In exercising its discretionary powers under the plan, the plan

administrator and any designee (which shall include UNUM as

a claims fiduciary) will have the broadest discretion permissible

under ERISA and any other applicable laws, and his decisions

will constitute final review of your claim by the plan. Benefits

under the plan will be paid only if the plan administrator or its

designee (including UNUM) decides in its discretion that the

applicant is entitled to them.

The Michigan Office of Insurance Services (“OFIS”) issued regulations invalidating

discretionary clauses that became effective June 1, 2007. The regulations state, in

pertinent part, as follows:

(c) On an after the first day of the month following the effective

date of these rules, a discretionary clause issued or delivered

to any person in this state in a policy, contract, rider,

endorsement, certificate, or similar contract document is void

and of no effect. This does not apply to contract documents in

use before that date, but does apply to any such document

revised in any respect on or after that date.

***

(c) “Discretionary Clause” is a provision in a form that purports

to bind the claimant to or grant deference in subsequent

proceedings to the insurers decision, denial, or interpretation

on terms, coverage, or eligibility for benefits including, but not

limited to, a form provision that does any of the following:

***

(vi) Provides that or gives rise to a standard of

review on appeal that gives deference to the

original claim decision.

(vii) Provides that or gives rise to a standard of

review on appeal other than de novo review.

A timely claim was submitted for benefits due under the UNUM Plan as a

consequence of Lowe’s death. The Plan Administrator determined that Plaintiff’s decedent

was only eligible for benefits as a “Group 1” beneficiary, rather than a “Group 2”

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beneficiary. Plaintiff’s administrative appeal from that decision was denied by UNUM, and

this action pursuant to ERISA §502 ensued.

Plaintiff’s Complaint was filed on May 21, 2009. Defendant filed its Answer on July

1, 2009. One week later, the court issued its Scheduling Order. The Order was entered

pursuant to the guidelines issued by the Sixth Circuit in Wilkens v. Baptist Healthcare

System, Inc., 150 F.3d 609, 619 (6th Cir. 1998). The court specifically declared that it “may

consider the party’s arguments concerning the proper analysis of the evidentiary materials

contained in the administrative record, but may not admit or consider any evidence not

presented to the administrator.” The Order further provided that the court “may consider

evidence outside of the administrative record only if that evidence 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. This also means that any

prehearing discovery at the district court level should be limited to such procedural

challenges.” Each party was ordered to file a pleading entitled “Statement of Procedural

Challenge in ERISA Case” or “Statement of No Procedural Challenge in ERISA Case” on

or before August 10, 2009. Plaintiff filed a Statement of No Procedural Challenge in ERISA

Case on August 6, 2009, and Defendant filed a similar document on August 10, 2009.

Plaintiff argues that his Motion to Permit Discovery does not violate the court’s

Scheduling Order, or contradict his own Statement of No Procedural Challenge, because

“the pending issue is not ‘procedural’ as that term is defined in the Pretrial Order and arises

within the context of the pending Motions for Summary Judgment.” In response, Defendant

cites the district judge’s declaration, in Paragraph 2 of the Scheduling Order, that “[t]he

district court may consider evidence outside of the administrative record only if that

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evidence is offered in support of a procedural challenge to the administrator’s decision . .

..” Defendant maintains that Plaintiff’s admission that he seeks discovery in a nonprocedural context must defeat the motion. In reply, Plaintiff argues that the precedential

effect of Wilkins v. Baptist Healthcare, which is the basis of this court’s restriction on

evidence outside of the administrative record to the support of procedural challenges, has

been eroded by subsequent decisions.

Substantively, Plaintiff argues that discovery is necessary to determine whether the

contract of insurance in issue was renewed in 2008, or in subsequent years. He maintains

that any such renewal would constitute a post June 1, 2007 revision within the meaning of

the Michigan OFIS Regulations, and thus invalidate the discretionary clause retroactively.

Plaintiff responds that the OFIS Regulations upon which the Motion relies are

inapplicable to this contract, even if a revision did occur in 2008 or later. Defendant

maintains that such a revision would be irrelevant to the issues in this case because: (a)

the policy applicable to Plaintiff’s claim became effective January 1, 2006, and appears in

the record without amendment; (b) the policy was issued, signed and delivered by UNUM

to Absopure in the State of Maine, and provides that the governing jurisdiction is Maine;

and (c) the death of Mark Lowe, which forms the basis of Plaintiff’s claim under the policy,

occurred in September 2006, ten months before the Michigan OFIS Regulation became

effective.

Upon my review of the briefs, and the arguments advanced by counsel at the

hearing, I am persuaded that the law is with the Defendant and against the Plaintiff. 

Movant concedes that the issue raised in his Motion is nonprocedural. The court has

already determined that Wilkins precludes discovery under such circumstances. While

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Plaintiff argues in his Reply Brief that the discovery is, at its essence, directed to an issue

of conflict of interest and, presumably, procedural in nature, it is clear that he failed to

initiate a procedural challenge within the deadline imposed in the Scheduling Order. His

filing of a Statement of No Procedural Challenge effectively waives any entitlement to

discovery.

I agree, as well, with Defendant’s assertion that, to the extent state law is not preempted by ERISA, Maine law applies to this dispute, by the terms of the contract. As a

general proposition, the law of the state chosen by the parties to govern their contractual

rights and duties will be applied if the particular issue is one which the parties could have

resolved by an explicit provision in their agreement directed to that issue. Restatement of

Conflicts 2d, Section 187. To the extent that state regulations are not preempted by the

ERISA statute, Plaintiff has offered no authority for the proposition that Michigan law should

be applied where the plan provides otherwise. There is no evidence in the record to

suggest that discretionary clauses are not valid under the standards of Maine law.

Finally, I am persuaded that, even if Michigan law were to be applied, the death of

Mr. Lowe fixed the legal relationship of the parties under the policy of insurance, such that

the subsequent enactment of the OFIS regulation precluding discretionary clauses would

have no effect upon the dispute in this case. I find that Plaintiff’s reading of the regulation,

while not technically inconsistent with the language employed, is inconsistent with its most

logical intent. I am satisfied that the intended purpose of the regulation was to invalidate

discretionary clauses in contracts which existed prior to its effective date, but only from and

after any revision occurring on or after June 1, 2007. Under both Michigan and federal law,

statutes that affect substantial rights in respect to transactions or occurrences already past,

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are not applied retroactively. See People v. Conyer, 281 Mich.App. 526; 762 N.W. 2nd 198

(Mich.App. 2008); Thaqi v. Jenifer, 377 F.3d 500 (6th Cir. 2004). The rights of the parties

in this action should be determined by the state of the law at the time of the event triggering

the entitlement to benefits. The language of the regulation here does not compel a contrary

result.

For all of the above reasons, Plaintiff’s Motion to Permit Discovery Re: Controlling

Standard of Review is denied.

s/Donald A. Scheer

DONALD A. SCHEER

UNITED STATES MAGISTRATE JUDGE

DATED: March 15, 2010

______________________________________________________________________

CERTIFICATE OF SERVICE

I hereby certify on March 15, 2010 that I electronically filed the foregoing paper with

the Clerk of the Court sending notification of such filing to all counsel registered

electronically. I hereby certify that a copy of this paper was mailed to the following nonregistered ECF participants on March 15, 2010: None.

s/Michael E. Lang 

Deputy Clerk to 

Magistrate Judge Donald A. Scheer

(313) 234-5217

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