Jay M. Feder v. the Paul Revere Life Insurance Company

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
JAY M. FEDER,
Plaintiff-Appellant,
v.
No. 97-2346
THE PAUL REVERE LIFE INSURANCE
COMPANY,
Defendant-Appellee.
Appeal from the United States District Court
for the Eastern District of Virginia, at Alexandria.
Leonie M. Brinkema, District Judge.
(CA-96-1797-A)
Argued: April 8, 1998
Decided: September 21, 2000
Before WIDENER, MURNAGHAN,* and MICHAEL,
Circuit Judges.
_________________________________________________________________
Vacated and remanded with instructions by published opinion. Judge
Widener wrote the opinion, in which Judge Michael joined.
_________________________________________________________________
COUNSEL
ARGUED: David Christopher Tobin, TOBIN, O'CONNOR &
_________________________________________________________________
*Judge Murnaghan heard oral argument in this case but died prior to
the time the decision was filed. The decision is filed by a quorum of the
panel. 28 U.S.C. § 46(d).

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EWING, Washington, D.C., for Appellant. Mark Eugene Schmidtke,
EBENSTEIN & SCHMIDTKE CONSULTANTS, Valparaiso, Indi-
ana, for Appellee. ON BRIEF: Alicia D. Mew, TOBIN, O'CONNOR
& EWING, Washington, D.C., for Appellant. David E. Constine, III,
MAYS & VALENTINE, Richmond, Virginia, for Appellee.
_________________________________________________________________
OPINION
WIDENER, Circuit Judge:
This case arises on appeal by plaintiff, Dr. Jay M. Feder, for rein-
statement of disability benefits under a policy provided and adminis-
tered by defendant, Paul Revere Life Insurance Co. (Paul Revere).
Capital Area Permanente Medical Group, P.C. (Capital) employed Dr.
Feder as a surgeon from 1989 through 1993, and Capital's Group
Long Term Disability Policy (the Capital Plan) covered Dr. Feder. In
October 1993, Dr. Feder submitted a claim to Paul Revere for disabil-
ity benefits under the Capital Plan because he developed a disabling
mental illness. Paul Revere determined that Dr. Feder was totally dis-
abled as defined by the Capital Plan and began making monthly dis-
ability payments to Dr. Feder in February 1994. Paul Revere
continued to make those monthly payments until June 1996, when
Paul Revere notified Dr. Feder of its decision to terminate his disabil-
ity payments because he no longer qualified under the Capital Plan.
Dr. Feder filed a complaint against Paul Revere in the district court
for improper termination of benefits in violation of the Employee
Retirement Income Security Act ("ERISA"), 29 U.S.C. §1001, et seq.
The parties then filed cross motions for summary judgment, and the
district court granted Paul Revere's motion on the grounds that Paul
Revere did not abuse its discretion in denying Dr. Feder benefits. For
the reasons stated herein, we hold that the district court erred in
applying an abuse of discretion standard of judicial review. Therefore,
we vacate the district court's decision and remand this case for further
consideration consistent with this opinion.
Capital employed Dr. Feder as a general surgeon from 1989
through 1993. In the summer or early fall of 1993, Capital terminated
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Dr. Feder, and shortly thereafter Dr. Feder submitted a claim for total
disability benefits as a consequence of having developed a disabling
mental illness. As a Capital employee, Dr. Feder was covered by the
Capital Plan, which Paul Revere provided and administered.
The Capital Plan's terms stated that a physician was eligible for
benefits if he became totally disabled and unable to perform the
required duties of his occupation. The Capital Plan defined the criteria
for classifying a physician as totally disabled:
Totally disabled from the employee's own occupation or
total disability from the employee's own occupation means:
1. For doctors,
a. that because of injury or sickness the
employee cannot perform the important
duties of his specialty in the practice of
medicine, and
b. the employee is under the regular care of
a doctor; and
c. the employee does not work at all.
The Capital Plan contained under long-term disability benefits a pro-
vision for psychiatric disorders and limited the payment of disability
benefits for such a condition to a maximum of five years. This provi-
sion is mentioned only in passing, for Paul Revere stopped the pay-
ments well before five years after the 1993 dates involved.
After reviewing Dr. Feder's claim for benefits and an initial report
diagnosing Dr. Feder's mental condition by Dr. Feder's attending
psychiatrist, Dr. Charles Ragan, Paul Revere's staff concluded that
Dr. Feder was totally disabled as defined by the Capital Plan. Dr.
Feder's treating physicians identified the mental illnesses as
Dysthymia and Mixed Personality Disorder. Paul Revere began to
make monthly disability payments in February 1994, and Dr. Feder
received medication and psychotherapy for his illness. His treating
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physicians, first Dr. Ragan and then Dr. Martin Allen, submitted
progress reports to Paul Revere, concluding that Dr. Feder's psychiat-
ric condition made his performance of his surgical duties impossible.
Several months later, Dr. Feder entered an unpaid residency program
to retrain himself as a radiologist, a specialty that he and his physi-
cians believed was more compatible with his psychiatric condition.
In May 1995, a psychiatric specialist in Paul Revere's medical
department, Dr. Cheryl Richardson Eder, reviewed Dr. Feder's record
and concluded that he continued to be totally disabled from perform-
ing the duties required of a surgeon. Then, in January 1996, Paul
Revere acquired a report from Dr. Neil Blumberg, a psychiatrist
retained by Dr. Feder's private disability insurer. Dr. Blumberg's
report, which was dated August 24, 1994 and prepared for Dr. Feder's
private insurer, concluded that although Dr. Feder did suffer from a
personality disorder, which was "rampant among the surgeons with
whom he was familiar," Dr. Feder was not disabled in his ability to
practice as a surgeon. Dr. Blumberg was of opinion that it would "ide-
ally suit" Dr. Feder to be "[w]orking, for example, in an academic
environment frequently populated by professors with obsessively per-
fectionistic and narcisisstic features." Paul Revere then referred Dr.
Feder's entire file, including Dr. Blumberg's report and updated
reports by Drs. Ragan and Allen, to a consulting psychiatrist, Dr. Ste-
phen Greenberg, for a new evaluation. Dr. Feder also submitted inde-
pendent evaluations, which confirmed his disabled condition,
prepared by Dr. Eroll Segall for consideration by Dr. Greenberg.
Upon reviewing all of the relevant medical reports and without per-
sonally examining Dr. Feder, Dr. Greenberg concluded that Dr. Feder
was not totally disabled from practicing as a surgeon. Accordingly,
Paul Revere terminated Dr. Feder's disability payments in June 1996.
Dr. Feder appealed the initial denial of benefits to Paul Revere, and
in September 1996, Paul Revere affirmed its denial. Dr. Feder then
filed his complaint in this case in the district court. That court granted
Paul Revere's motion for summary judgment because Paul Revere did
not abuse its discretion in denying disability payments to Dr. Feder.
Dr. Feder appeals, challenging the district court's application of the
abuse of discretion standard of review to its denial of disability bene-
fits and requesting that this Court remand the case for consideration
under the proper standard of review.
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This court has established a framework for reviewing the denial of
disability benefits under ERISA plans. We review the district court's
decision de novo. Sheppard & Enoch Pratt Hosp. v. Travelers Ins.
Co., 32 F.3d 120, 123 (4th Cir. 1994); Ellis v. Metropolitan Life Ins.
Co., 126 F.3d 228, 232 (4th Cir. 1997). In cases in which a court
reviews an ERISA plan administrator's decision to deny benefits, a
reviewing court must initially decide de novo whether the plan's lan-
guage grants the administrator discretion to determine the claimant's
eligibility for benefits, and if so, whether the administrator acted
within the scope of that discretion. See Haley v. Paul Revere Life Ins.
Co., 77 F.3d 84, 89 (4th Cir. 1996). If the reviewing court determines
that the language of the plan confers discretion on the administrator
to determine eligibility or to construe terms of the plan, then a court
reviews the decision to deny benefits for abuse of discretion. See
Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 111, 115
(1989); Ellis, 126 F.3d at 232; Haley , 77 F.3d at 89. This deferential
standard of review requires that a reviewing court not disturb an
administrator's decision if it is reasonable, even if this Court would
have reached a different conclusion. See Bruch , 489 U.S. at 115;
Haley, 77 F.3d at 89.
Initially we must determine de novo whether the Capital Plan's
terms confer discretionary authority on Paul Revere to make eligibil-
ity decisions. See Haley, 77 F.3d at 89; Ellis, 126 F.3d at 232.
Because ERISA plans are contractual documents, although regulated,
their interpretation is "governed by established principles of contract
and trust law." Haley, 77 F.3d at 88; see Bruch, 489 U.S. at 109-11.
As with other contractual provisions, courts construe the plan's terms
without deferring to either party's interpretation. Bruch, 489 U.S. at
112; see Wheeler v. Dynamic Eng'g Inc., 62 F.3d 634, 638 (4th Cir.
1995) (stating that ERISA plans are interpreted"under ordinary prin-
ciples of contract law").
This Court does not require specific phrases to trigger a particular
standard of review. Rather, we examine the terms of the plan to deter-
mine if it vests in its administrators discretion either to settle disputed
eligibility questions or construe doubtful provisions of the Plan. See
deNobel v. Vitro Corp., 885 F.2d 1180, 1187 (4th Cir. 1989). We will
find discretionary authority in the administrator if the plan's language
expressly creates discretionary authority. See Doe v. Group Hosp. &
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Med. Serv., 3 F.3d 80, 85 (4th Cir. 1993) (applying abuse of discre-
tion standard of review when the plan at issue gave"full power and
discretionary authority to control and manage the operation and
administration of the Contract . . . [and] all powers necessary [in] . . .
determining all questions relating to Employee . . . eligibility and ben-
efits"); Ellis, 126 F.3d at 230 (finding discretionary authority when
the plan vests a fiduciary with "discretionary authority to interpret the
terms of the plan and to determine eligibility for and entitlement to
plan benefits in accordance with the terms of the plan").
We have not, however, always required an explicit grant of discre-
tionary authority. Rather, we have recognized that a plan's terms can
create discretion by implication. In Boyd v. Trustees of the United
Mine Workers Health and Retirement Funds, 873 F.2d 57, 59 (4th
Cir. 1989), we found discretionary authority because the plan granted
the administrators the "full and final determination as to all issues
concerning eligibility for benefits" and "authorized [them] to promul-
gate rules and regulations to implement this plan." See Lockhart v.
United Mine Workers of America 1974 Pension Trust , 5 F.3d 74 (4th
Cir. 1993). Further, in Bernstein v. Capitalcare, Inc., 70 F.3d 783,
788 (4th Cir. 1995), we found that the agreement at issue created dis-
cretion in the administrator because the terms stated that the adminis-
trator "may adopt reasonable policies, procedures, rules and
interpretations to promote the orderly and efficient administration of
this agreement" and that benefits will be paid"only if [the administra-
tor] determines" that certain conditions are met. See also deNobel,
885 F.2d at 1187 (finding discretion when the terms of the plan
empower the administrator to "determine all benefits and resolve all
questions pertaining to the administration, interpretation and applica-
tion of the Plan provisions"). Therefore, if the terms of a plan indicate
a clear intention to delegate final authority to determine eligibility to
the plan administrator, then this Court will recognize discretionary
authority by implication.
Paul Revere contends, Br. p. 24-25, that the Capital Plan either
expressly or impliedly grants it final authority to resolve eligibility
disputes and for that conclusion relies on several provisions in the
Capital Plan. First is the right to require written proof of Dr. Feder's
disability. The Capital Plan states that "written notice of a claim for
disability must be given to us [Paul Revere]." Next in the provisions
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is the Capital Plan which requires that "written proof should establish
facts about the claim such as occurrence, nature and extent of the dis-
ability, injury or sickness or the loss involved." Third, the Capital
Plan reserves for Paul Revere the "right to require additional written
proof to verify the continuance of any disability," and fourth, the right
to "request this additional proof as often as we feel is necessary,
within reason."
The third and fourth defenses just above mentioned were consid-
ered in terms in Haley, supra, Part II, 77 F.3d at 87. In that case, we
held against Paul Revere in its claim of discretion accorded to the
administrator, and we adhere to our holding in Haley as to those two
items without further discussion.
The first item mentioned, the requirement of written notice of a
claim for disability, fares no better on its face. There is nothing dis-
cretionary in the Capital Plan or otherwise about a requirement to
submit a disability claim in writing. Indeed, if such language could be
construed to award administrative discretion, claimants would be pro-
vided less protection than they enjoyed before ERISA was enacted,
a construction not favored. See Bruch, 489 US. at 114.
With reference to the second requirement, that the written proof
should establish facts about the claim such as occurrence, nature and
extent of the disability, etc, the Capital Plan contains no discretionary
language with respect to that requirement. As is the requirement of
written notice of a claim of disability, the requirement of a statement
of facts to support the claim is simple, straight-forward and unquali-
fied, leaving nothing to be construed or subject to administrative dis-
cretion.
Finally, Paul Revere urges us to follow the decisions, deciding in
favor of administrative discretion, in Snow v. Standard Ins. Co., 87
F.3d 327, 330 (9th Cir. 1996) (holding discretionary that "what it [the
administrator] considers to be satisfactory written proof"); Patterson
v. Caterpillar, Inc., 70 F.3d 503, 505 (7th Cir. 1995) (holding discre-
tionary "such notice and such due proof as shall be from time to time
required"); and Donato v. Metropolitan Life Ins. Co., 19 F.3d 375,
379 (7th Cir. 1994) (holding discretionary "[a]ll proof must be satis-
factory to us."). With respect to those cases, it is sufficient to say that
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they are not necessarily, or even probably, contrary to our holding
here, for the Capital Plan at issue in this case contains no such discre-
tionary language.
In sum, we are of opinion that the Capital Plan in this case does
not require a deferential standard of review because Paul Revere was
not exercising discretion in ascertaining eligibility for benefits. In the
Capital Plan, Paul Revere does not have ". . . the power to construe
uncertain terms or that [its] eligibility determinations are to be given
deference." Bruch, 489 U.S. at 111. That being true, we hold that the
"denial of benefits challenged . . . is to be reviewed under a de novo
standard." Bruch, 489 U.S. at 115.
The judgment of the district court must be vacated and the case
remanded for further proceedings consistent with this opinion.
VACATED AND REMANDED WITH INSTRUCTIONS*
_________________________________________________________________
*We have considered that Paul Revere was the insurer as well as the
administrator of the Capital Plan, but have arrived at our decision with-
out considering any edge that fact may have given the claimant. See
Bruch, 489 US. at 115.
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