Diane G. Melech v. Life Insurance Company of North America, 739 F.3d 663

Background

Diane Melech, a Hertz employee, applied for long-term disability benefits under a LINA-issued ERISA plan after stopping work in May 2007 for cervical degenerative disc disease and shoulder tendonitis.
LINA required claimants to apply for Social Security Disability Insurance (SSDI), could deduct actual or “assumed” SSDI from plan benefits, and ran a Social Security Assistance Program to participate in claimants’ SSDI processes.
Melech applied for SSDI in October 2007; LINA denied her ERISA claim in November 2007 (before SSA decision) and referred her to a SSAP vendor; SSA later awarded SSDI in February 2008 after independent exams.
Melech appealed LINA’s denial twice; LINA denied both appeals without requesting or reviewing the SSA award letter or the SSA medical reports (Drs. Jackson and Bass) that contributed to the SSA award.
The district court affirmed LINA on summary judgment, reviewing only the administrative record LINA had when it made its decision; Melech appealed to the Eleventh Circuit.
The Eleventh Circuit vacated and remanded, holding LINA should have considered the evidence generated by the SSA process because LINA had actively steered claimants into that process and could obtain SSA materials under its authorization.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether LINA was required to consider evidence generated during Melech’s SSA/SSDI process when denying her ERISA claim	Melech: LINA urged and assisted her to pursue SSDI and can obtain SSA records under its authorization, so LINA must consider SSA evidence it helped generate before denying benefits	LINA: It only needed to consider evidence that was submitted to LINA during the claim; because Melech did not submit SSA materials to LINA during adjudication, LINA had no obligation to consider them	Court: LINA should have considered the SSA-generated evidence; remand to LINA for consideration (vacating district court judgment)
Whether the district court may review evidence not before the administrator at the time of decision	Melech: The administrative record was incomplete without SSA materials; fairness requires remand so administrator can consider them	LINA: Judicial review is limited to the record before the administrator; district court correctly declined to consider SSA file	Court: Agreed that review ordinarily is limited to administrator’s record, but because LINA induced and participated in the SSA process and could have obtained SSA records, failing to consider that evidence created procedural unfairness; remand required
Whether LINA’s initial denial before SSA decision made SSDI evidence irrelevant	Melech: LINA’s selective use — favoring SSA evidence when it helps LINA but ignoring it when it doesn’t — is inconsistent and procedurally unfair	LINA: Once it denied the claim, SSDI outcome was irrelevant to its decision; it need not await SSA or obtain SSA evidence	Court: Rejected selective-use approach; LINA cannot ignore SSA evidence it helped produce simply because it initially denied benefits
Appropriate remedy when administrator fails to consider relevant SSA evidence	Melech: Remand to administrator to consider SSA materials before judicial merits review	LINA: District court should resolve merits based on record it had; no remand needed	Court: Vacated summary judgment for LINA and remanded to district court with instructions to remand claim to LINA for consideration of SSA evidence (no prejudice to outcome)

Key Cases Cited

Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (framework for judicial review of ERISA benefit denials)
Blankenship v. Metropolitan Life Ins. Co., 644 F.3d 1350 (Eleventh Circuit — limitation of review to administrator’s record)
Jett v. Blue Cross & Blue Shield of Ala., Inc., 890 F.2d 1137 (remand appropriate when administrator lacks opportunity to consider evidence)
Levinson v. Reliance Standard Life Ins. Co., 245 F.3d 1321 (remand to plan fiduciary when administrator did not consider evidence)
Glenn v. Metropolitan Life Ins. Co., 461 F.3d 660 (considered procedural unfairness where administrator encouraged SSDI applications then denied ERISA benefits)
DeLisle v. Sun Life Assur. Co. of Canada, 558 F.3d 440 (SSA decision relevant; inconsistency between insurer’s encouragement of SSDI and later denial supports arbitrariness claim)
Black & Decker Disability Plan v. Nord, 538 U.S. 822 (treatment of treating physician opinions under ERISA vs. SSA standards)