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IN THE UNITED STATES DISTRICT COURT 

FOR THE SOUTHERN DISTRICT OF ALABAMA 

SOUTHERN DIVISION

DIANE G. MELECH, ) 

 Plaintiff, ) 

 ) 

vs. ) CIVIL ACTION NO.: 10-00573-KD-M 

 ) 

LIFE INSURANCE COMPANY OF ) 

NORTH AMERICA, et al., ) 

 Defendants. ) 

ORDER 

This matter is before the Court on Plaintiff Diane G. Melech’s Rule 72(a) “Statement of 

Appeal of the Magistrate Judge’s Order Denying D.E. 34 and D.E. 38-42” and brief (Docs. 68, 69), 

Defendant Life Insurance Company of North America’s Response in Opposition (Doc. 73) and 

Plaintiff’s Reply (Doc. 74). 

I. Background

 This action arises out of a dispute concerning Plaintiff Diane G. Melech’s (“Plaintiff”) 

entitlement to long-term disability benefits under a policy issued by Defendant Life Insurance 

Company of North America (“Defendant”) to her former employer, The Hertz Corporation. 

Defendant denied Plaintiff’s claim because she did not meet the Plan’s definition of “disabled,” and 

Plaintiff subsequently initiated this litigation to recover benefits under Section 502(a)(1)(B) of the 

Employee Retirement Income Security Act of 1974, as amended (“ERISA”). 

 According to Plaintiff, “[a]mong the issues the Court will be tasked with deciding when the 

parties file their respective motions for judgment will be (1) whether LINA’s claims denial was 

influenced by its inherent conflict of interest to such a degree that its decision to deny Melech’s 

claim becomes necessarily suspect under Metropolitan Life Ins. Co. v. Glenn, 554 U.S. 105 (2008); 

(2) whether LINA’s claims denial is subject to a de novo standard of review because of a lack of an 

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express grant of discretionary authority to the entity which actually administered the claim; (3) 

whether LINA breached fiduciary and statutory duties to provide certain documents for which 

production is mandatory under 29 C.F.R. § 2560.503-1; and (4) whether LINA’s claims decision 

was either wrong or the product of bad faith due to, among other things, the failure of its claims 

personnel to adhere to standardized Plan policies and procedures that its claims handlers were 

required to follow.” (Doc. 69 at 3-4). Plaintiff propounded discovery as to each of these issues, and 

it is the Court’s March 2012 rulings (Docs. 61, 66) denying her related motions to compel (Docs. 

34, 38-42) which constitutes the present appeal. 

At the heart of this contention is Plaintiff’s claim that the Magistrate Judge “misconstrued” 

ERISA case law and erroneously adopted Defendant’s rationale to incorrectly conclude that “there 

is no discovery beyond what [Defendant] elected unilaterally to include in its claim file.” (Doc. 69 

at 4-5). Specifically, Plaintiff contends that the Magistrate Judge’s conclusion that the requested 

discovery was precluded under Blakenship v. Metro. Life Ins. Co., 644 F.3d 1350 (11th Cir. 2011) is 

inconsistent with Metropolitan Life Ins. Co. v. Glenn, 554 U.S. 105 (2008). From this, Plaintiff 

asserts that the following rulings are contrary to law: 1) no discovery beyond the claim file is 

permitted in an ERISA case; 2) Defendant has no obligation (under Rule 26 or Department of Labor 

regulations) to produce documents related to the administration of plan benefits claims; 3) 

Defendant is not required to produce organizational documents relating to conflict issues and 

whether those participating in the claims decision acted under a proper grant of authority; 4) 

Defendant and its agents have no obligation to search for and produce documents they did not “rely 

on” is inconsistent with federal law and Department of Labor regulations; and 5) the sustaining of 

Defendant’s objections to Plaintiff’s requests for admission. According to Plaintiff, nearly all of 

these discovery requests go to the central question of whether Defendant, as the Plan administrator, 

complied with ERISA’s procedural regulations in matters such as ensuring the completeness of the 

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administrative record, and with regard to making a claims determination free from procedural 

conflict at the administrative level. 

II. Standard of Review of Magistrate Judge Discovery Ruling

A Magistrate Judge’s discovery rulings are a final decision which is not subject to a de novo

determination, as is a Report and Recommendation. See, e.g., Merritt v. International Broth. of 

Boilermakers, 649 F.2d 1013, 1017 (5th Cir. 1981); Featherston v. Metropolitan Life Ins. Co., 223 

F.R.D. 647, 650-651 (N.D. Fla. 2004). Instead, such final are subject to a “clearly erroneous or 

contrary to law” standard – one which is “extremely deferential.” See 28 U.S.C. § 636(b)(1)(A); 

Rule 72(a); S.D.Ala. LR 72.3(c); Pigott v. Sanibel Dev., LLC, 2008 WL 2937804, *5 (S.D. Ala. 

July 23, 2008). Plaintiff contends that Judge Milling’s discovery rulings on her motions to compel 

were both clearly erroneous and contrary to law. “Relief is appropriate under the ‘clearly 

erroneous’ prong of the test only if the district court ‘finds that the Magistrate Judge abused his 

discretion or, if after viewing the record as a whole, the Court is left with a definite and firm 

conviction that a mistake has been made.’” Pigott, 2008 WL 2937804, *5. A ruling is “contrary to 

law when it fails to apply or misapplies relevant statues, case law or rules of procedure.” Id. 

III. Discussion

A review of the March 2012 discovery hearing reveals that the parties agree that a structural 

conflict exists and that discretion is afforded Defendant under the Plan, such that the arbitrary and 

capricious standard would apply if the Court determines the decision to be de novo wrong. With 

this in mind, the issue before the Court is whether the Magistrate Judge’s denials of Plaintiff’s 

discovery requests in this ERISA case were clearly erroneous or contrary to law. 

“Discovery in an ERISA disability case is permissible on a limited basis, with focus on the 

claim administrator's decision-making.” Ricard v. International Business Machines Corp., Slip 

Copy, 2012 WL 1131996, *1 (M.D. Fla. Apr. 4, 2012). “Rule 26(b)(1) permits parties to a civil 

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case to conduct discovery regarding any matter, not privileged, that is relevant to the claim or 

defense of any party in the case. Like most discovery disputes, then, in this ERISA case, the scope 

of discovery will hinge on whether the discovery sought by the plaintiff is relevant to the ‘claim or 

defense of any party.’” Featherston, 223 F.R.D. at 651. “The standard of review in an ERISA case 

will dictate what facts or evidence the plaintiff must prove in order to successfully claim an 

entitlement to benefits under the terms of an employee benefit plan. Therefore, the applicable 

standard of review will also shape the permissible scope of discovery in ERISA cases.” Id. ERISA 

provides no standard for courts reviewing the benefits decisions of plan administrators or 

fiduciaries; thus, the Supreme Court established guidance for same in Firestone Tire & Rubber Co. 

v. Bruch, 489 U.S. 101, 109 (1989) and Metropolitan Life Ins. Co. v. Glenn, 554 U.S. 105 (2008). 

More recently, the Eleventh Circuit has reiterated a multi-step framework to guide lower courts 

when reviewing a plan administrator’s benefits decision. This framework consists of the following 

“six-step expanded Firestone” test: 

(1) Apply the de novo standard to determine whether the claim administrator's 

benefits-denial decision is “wrong” (i.e., the court disagrees with the administrator's 

decision); if it is not, then end the inquiry and affirm the decision. 

(2) If the administrator's decision in fact is “ de novo wrong,” then determine 

whether he was vested with discretion in reviewing claims; if not, end judicial 

inquiry and reverse the decision. 

(3) If the administrator's decision is “de novo wrong” and he was vested with 

discretion in reviewing claims, then determine whether “reasonable” grounds 

supported it (hence, review his decision under the more deferential arbitrary and 

capricious standard). 

(4) If no reasonable grounds exist, then end the inquiry and reverse the 

administrator's decision; if reasonable grounds do exist, then determine if he 

operated under a conflict of interest. 

(5) If there is no conflict, then end the inquiry and affirm the decision. 

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(6) If there is a conflict, the conflict should merely be a factor for the court to take 

into account when determining whether an administrator's decision was arbitrary and 

capricious. 

Blakenship v. Metropolitan Life Ins. Co., 644 F.3d 1350, 1355 (11th Cir. 2011) (citing Capone v. 

Aetna Life Ins. Co., 592 F.3d 1189, 1195 (11th Cir. 2010) and Williams v. BellSouth Telecomms., 

Inc., 373 F.3d 1132, 1137 (11th Cir. 2004), overruled on other grounds by Doyle v. Liberty Life 

Assurance Co. of Boston, 542 F.3d 1352 (11th Cir. 2008)). “All steps of the analysis are ‘potentially 

at issue’ where a plan vests discretion to the plan administrator to make benefits determinations. See 

id. at 1356 n 7. 

A. Conflict of Interest Discovery

Plaintiff sought discovery due to the presence of a structural conflict, which Defendant 

readily admits exists (that it both insures benefits and administers claims). Specifically, Plaintiff 

sought, inter alia, the manner in which claim handlers were compensated and evaluated. Per 

Blakenship, the existence of a conflict is one of the factors a reviewing must consider when 

deciding if an adverse benefits determination is arbitrary and capricious. As such, Plaintiff 

contends that the discovery she sought on the conflict question is necessary so the Court may fully 

and fairly conduct its required analysis, and moreover, because she bears the burden of showing the 

decision was tainted by conflict, such discovery is vital to her case. 

“[I]t is appropriate to permit discovery related to the conflict of interest because if it is 

necessary for the court to consider that factor, the court must weigh the varying circumstances of its 

existence and extent.” Moore v. Metropolitan Life Ins. Co., Slip Copy, 2011 WL 2559627, *4 

(M.D. Ala. Jun. 27, 2011) (citing Self v. Prudential Ins. Co. of Am., 2010 WL 996503, *3 (N.D. 

Fla. 2010) (finding that discovery under Glenn was “necessary to reveal those facts” related to the 

existence of a conflict of interest)). See also Crosby v. La. Heal Serv. and Indem. Co., 647 F.3d 

258, 263-264 (5th Cir. 2011) (noting that a claimant may question the existence and extent of a 

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conflict of interest created by a plan administrator’s dual role in making benefits determinations and 

funding the plan). 

In this instance the Defendant has provided a response concerning the manner in which 

claim handlers are compensated, including bonuses. The Defendant has not provided any 

information on the criteria used to evaluate claim handlers. Defendant is ORDERED to 

supplement its response with any written documentation, manuals, memorandum or policies which 

set forth the general guidelines for the evaluation and compensation of employees who handle 

disability claims. Otherwise, the Magistrate Judge’s ruling is affirmed as to the requested discovery 

regarding conflict of interest. 

B. Manuals, Guideline and Other Documents & Procedural Violations

Plaintiff sought discovery of the Defendant’s manuals, guidelines and similar documents 

(including service agreements) – whether relied upon or not1 -- for claims administration matters. 

The Court denied this request as presented, noting that the Defendant had produced the entire 

claims file and the service agreement. However, the Defendant did not produce the entire claims 

procedure manual, but rather offered to produce the index to same from which Plaintiff could 

decide which portions of the manual she wished to have produced. Defendant explained that the 

claims procedure manual covers all types of insurance claims, not just long term disability claims. 

Defendant also states that the manual is not organized by type of claim. Plaintiff contends that the 

index is too vague to be able to determine what is relevant. Upon consideration, the Defendant is 

ORDERED to produce, pursuant to the protective order (Doc. 62), the claims procedure manual in 

its entirety. 

 

1 Plaintiff contends that Defendant should produce all of this (and other items such as a checklist and list of 

information used from the Defendant’s library) because if its personnel ignored certain procedures that 

should have otherwise governed the claims process, Plaintiff should be allowed to discover that to show that 

her claim was handled/decided improperly – i.e., arbitrary and capricious because Defendant did not do what 

it should have done in deciding her claim. (Doc. 69 at 16-19).

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Otherwise, the Magistrate Judge’s rulings are affirmed in all respects. 

DONE and ORDERED this the 26th day of April 2012. 

 /s/ Kristi K. DuBose 

KRISTI K. DUBOSE 

UNITED STATES DISTRICT JUDGE 

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