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Blackwell v. Liberty Life Assurance Co.

United States District Court, W.D. Kentucky, Louisville Division

March 7, 2017

GREGORY BLACKWELL, Plaintiff,
v.
LIBERTY LIFE ASSURANCE COMPANY OF BOSTON, Defendant.

          MEMORANDUM OPINION AND ORDER

          DAVID J. HALE, JUDGE UNITED STATES DISTRICT COURT

         This action arises under the Employee Retirement Income Security Act (ERISA). Plaintiff Gregory Blackwell claims that Defendant Liberty Life Assurance Company of Boston improperly denied him disability benefits. (Docket No. 1, PageID # 3) Liberty has moved for partial summary judgment on those claims asserted by Blackwell pursuant to 29 U.S.C. § 1132(a)(3). (D.N. 23) Liberty also objects to Magistrate Judge Dave Whalin's May 20, 2016 order addressing Blackwell's motion to compel discovery. (D.N. 27) The Court will address the motion to compel and the motion for partial summary judgment in turn. After careful consideration, the objections to Judge Whalin's discovery order will be overruled, but the motion for partial summary judgment will be granted.

         I. BACKGROUND

         Plaintiff Gregory Blackwell was insured under a long-term disability insurance policy that was underwritten, issued, and administered by Defendant Liberty Life Assurance Company of Boston. (D.N. 1, PageID # 2) In his complaint, Blackwell states that he ceased working in April 2014 because physical limitations prevented him from engaging in full-time, gainful employment. (Id.) He submitted a claim to Liberty for disability benefits, which Liberty initially approved. (Id.) Liberty paid benefits to Blackwell on a short-term disability plan and then under the long-term disability policy until October 2014. (Id.) Blackwell alleges that Liberty denied any further benefits after October 2014. (Id.) He claims that this denial occurred despite his ongoing disability and without any evidence that his physical condition improved. (Id.) Blackwell unsuccessfully appealed to Liberty's appeals unit. (Id.) Having exhausted his administrative remedies, he seeks relief from this Court. (Id.)

         Soon after filing this action, Blackwell served Liberty with a set of interrogatories and requests to produce documents, as well as requests to take depositions. (Id., PageID # 276) However, the parties disagree over the permissible scope of discovery in ERISA cases, thereby putting the adequacy of Liberty's discovery responses in issue. (Id., PageID # 277) Blackwell filed a motion to compel discovery and challenges Liberty's responses to certain interrogatories and requests for production, as well as its refusal to schedule the requested depositions. (D.N. 16) In response to the motion to compel, Liberty maintains that discovery should not be permitted here based upon the mere allegation of a conflict of interest. (D.N. 21, PageID # 162)

         This type of discovery dispute is nearly identical to others that have come before courts in the Western District of Kentucky. See, e.g., Scott-Warren v. Liberty Life Assurance Co. of Bos., No. 3:14-cv-738-CRS, 2016 WL 5661774 (W.D. Ky. Sept. 29, 2016) (Scott-Warren I); Myers v. Anthem Life Ins. Co., 316 F.R.D. 186 (W.D. Ky. 2016) (Myers I); Owens v. Liberty Life Assurance Co. of Bos., No. 4:15-cv-71-JHM, 2016 U.S. Dist. LEXIS 51350 (W.D. Ky. Jan. 15, 2016) (Owens I); Davis v. Hartford Life & Accident Ins. Co., No. 3:14-cv-507-TBR, 2015 WL 7571905 (W.D. Ky. Nov. 11, 2015); Gluc v. Prudential Life Ins. Co. of Am., 309 F.R.D. 406 (W.D. Ky. 2015); Mullins v. Prudential Ins. Co. of Am., 267 F.R.D. 504 (W.D. Ky. 2010). Consistent with these cases, Judge Whalin's May 20, 2016 order granted Blackwell's motion to compel on nearly all items, except for where Blackwell's desired scope of discovery exceeded the limits permitted by prior decisions.

         Liberty timely objected to Judge Whalin's order, arguing that “Judge Whalin departed from Sixth Circuit guidance.” (D.N. 27, PageID # 308) Liberty argues that Johnson v. Conn. Gen. Life Ins. Co., 324 F. App'x 456 (6th Cir. 2009) is controlling here. Citing Johnson, Liberty maintains that review of a decision denying ERISA benefits is limited to the administrative record. (D.N. 27, PageID # 307) However, Liberty concedes that discovery may be permitted “in furtherance of a colorable procedural challenge.” (D.N. 27, PageID # 308 (quoting Johnson, 324 F. App'x at 467))

         II. DEFENDANT'S OBJECTIONS TO JUDGE WHALIN'S DISCOVERY ORDER

         A.

         Pursuant to Fed.R.Civ.P. 72(a), Liberty objects to Judge Whalin's May 20, 2016 order granting in part Blackwell's motion to compel. (D.N. 27, PageID # 307) Rule 72(a) provides that the Court must “modify or set aside any part of the [magistrate judge's] order that is clearly erroneous or is contrary to law.” “The magistrate judge's factual findings are reviewed under the clearly erroneous standard.” Scott-Warren I, 2016 WL 5661774, at *3. Clear error exists “when the reviewing court is left with the definite and firm conviction that a mistake has been committed.” Max Trucking, LLC v. Liberty Mut. Ins. Corp., 802 F.3d 793, 810 (6th Cir. 2015) (citing Anderson v. City of Bessemer City, 470 U.S. 564, 573 (1985)). On the other hand, the magistrate judge's legal conclusions are reviewed under the “contrary to law” standard. Scott-Warren, 2016 WL 5661775, at *3. “A legal conclusion is contrary to law when it contradicts or ignores applicable legal principles found in the Constitution, statutes, and case precedent.” Id. (citing Gandee v. Glaser, 785 F.Supp. 684, 686 (S.D. Ohio 1992)).

         The Court finds that Judge Whalin's order is not clearly erroneous. The Court also finds that the order is not contrary to law, given that the weight of authority supports his conclusion. Therefore, Liberty's objections will be overruled.

         B.

         The scope of discovery in ERISA actions is substantially limited. Davis, 2015 WL 7571905, at *1. However, courts permit the plaintiff to conduct some discovery beyond the administrative record when a conflict of interest exists. See McQueen v. Life Ins. Co. of N. Am., 595 F.Supp.2d 752, 755 (E.D. Ky. 2009). The U.S. Supreme Court has held that a conflict of interest exists when “a plan administrator both evaluates claims for benefits and pays benefits claims.” Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 112 (2008).

         The Sixth Circuit has declined to create special evidentiary rules relating to such conflicts of interest. See Johnson, 324 F. App'x at 466. “This does not mean, however, that discovery will automatically be available any time the defendant is both the administrator and the payor under an ERISA plan.” Id. at 467. Courts may permit discovery “when consideration of that evidence is necessary to resolve an ERISA claimant's 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.” Wilkins v. Baptist Healthcare Sys., Inc., 150 F.3d 609, 618 (6th Cir. 1998). “District courts are well-equipped to evaluate and determine whether and to what extent limited discovery is appropriate in furtherance of a colorable procedural challenge under Wilkins.” Johnson, 324 F. App'x at 467.

         Given the lack of precise standards in this area, district courts have come to different conclusions as to when discovery is permissible. Davis, 2015 WL 7571905, at *2. In addition to showing that a conflict of interest exists, some courts require that the plaintiff show sufficient facts to support their claim. See, e.g., Donovan v. Hartford Life & Accident Ins. Co., No. 1:10-2627-PAG, 2011 WL 1344252, at *2 (N.D. Ohio Apr. 8, 2011); Greer v. Hartford Life & Accident Ins. Co., No. 08-12837-DAS, 2009 WL 1620402, at *5 (E.D. Mich. June 9, 2009). This is the approach Liberty urges the Court to follow. (D.N. 27, PageID # 309) However, in the Eastern and Western Districts of Kentucky, the mere existence of a conflict of interest has typically been a sufficient basis on which to allow limited discovery outside of ...


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