Duhon v. Texaco, Inc. ( 1994 )

IN THE UNITED STATES OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 92-4843
_____________________
CLIFFORD DUHON,
Plaintiff-Appellee,
Cross-Appellant,
versus
TEXACO, INC., ET AL.,
Defendants-Appellants,
Cross-Appellees.
_________________________________________________________________
Appeals from the United States District Court for the
Western District of Louisiana
_________________________________________________________________
( February 22, 1994 )
Before JOHNSON, JOLLY, and JONES, Circuit Judges.
E. GRADY JOLLY, Circuit Judge:
This case presents us with a rather typical question
pertaining to ERISA benefits: the plaintiff, Clifford Duhon,
claims he was improperly denied long-term disability benefits by
his employer and moved for summary judgment in the district court.
The district court granted summary judgment in favor of Duhon. It
found that the evidence was insufficient because the plan
administrator determined disability based only on the reports of
medical doctors when the opinion of a vocational rehabilitation
expert was required. The district court ordered the plan
administrator to pay Duhon all past due benefits as well as future
benefits. On appeal, we attempt to wade through the procedural
thicket of the case and focus on the central inquiry that should be
made in these cases: Did the decision of the plan administrator
denying long-term disability benefits to Duhon constitute an abuse
of discretion? Because we find that it did not, we reverse the
district court's grant of the plaintiff's summary judgment motion
and remand the case for further proceedings.
I
Appellee Clifford Duhon, now sixty-six years old, was employed
by appellant Texaco Trading and Transportation, Inc. ("Texaco")
from July 1985 through February 1989 as a truck driver. On March
1, 1989, Duhon ended his employment as a truck driver because of a
degenerative back condition. That date marked his separation from
work for purposes of Texaco's employee benefits plan; he began
receiving disability payments of $652.35 per month. Under Texaco's
disability plan, an employee may receive disability payments for
the first twenty-four months after the disability begins if the
employee is unable to perform the normal duties of his regular job
assignment or a comparable one. Neither party disputes that Duhon
qualified for these disability payments for the first twenty-four
months following his separation from work. After this initial
twenty-four month period passes, disability payments cease under
the plan "if the employee is able to perform any job for which he
or she is, or may become, qualified by training, education, or
experience." (Emphasis ours).
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Three doctors evaluated Duhon's condition in 1991 in order to
determine if his disability benefits should continue beyond the
initial twenty-four month period. Duhon was first evaluated by his
family physician, Dr. Charles Ray, who executed a disability
statement concluding that Duhon was unable to work as a truck
driver and that his condition was permanent. Dr. Jacob Lahasky,
also a general practitioner, next examined Duhon at Texaco's
request. Dr. Lahasky executed a disability statement in which he
concluded that Duhon should not drive trucks or do any heavy
lifting. He also stated that Duhon's condition was permanent.
Finally, in July 1991, Duhon was seen by an orthopedist, Dr. Thomas
Ford, at Texaco's request. Dr. Ford's report concluded that Duhon
had degenerative lumbar disc disease, which rendered him unable to
squat, stoop, bend, or lift more than twenty-five pounds. Dr. Ford
agreed with the two general practitioners that Duhon could not
return to work as a truck driver, but stated that Duhon was capable
of doing "sedentary to light work."
In October 1991, in accordance with the terms of the plan, the
plan administrator and Texaco's chief medical officer reviewed all
of the medical evidence and determined that Duhon did not qualify
for continuing long-term disability payments beyond the initial
twenty-four month period. Duhon appealed the decision to the plan
administrator, but the appeal was denied. He then filed suit in
federal district court against Texaco and the plan administrator,
claiming a violation of ERISA. Shortly after filing suit, Duhon
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moved for summary judgment. The court granted Duhon's motion for
summary judgment, and additionally ordered Texaco to pay Duhon
$652.35 for each month since it terminated his disability payments,
plus interest, and to continue paying those benefits to Duhon every
month thereafter. The court denied Duhon's request for attorney's
fees. Texaco now appeals the summary judgment granted in favor of
Duhon.1
II
In his motion for summary judgment, Duhon argued that
additional information was required before the plan administrator
could properly determine that Duhon was not disabled and deny him
benefits under the plan. Duhon pointed out that the plan required
the administrator to find that Duhon was or may have become
"qualified by training, education or experience" to perform "any
job." He argued that the mere fact that a medical doctor had
concluded that he was capable of doing "sedentary to light work"
did not mean that he was "qualified by training, education or
experience" to do any such job. The district court agreed, finding
that "Dr. Ford's statement that Duhon was physically capable of
performing sedentary work says nothing as to whether Duhon was or
could become qualified to perform such a job." District Court's
Memorandum Ruling at 4.
1
Duhon cross-appeals the district court's denial of
attorney's fees. Because we find that the district court erred
in granting summary judgment to Duhon, his cross-appeal seeking
attorney's fees is denied.
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Summary judgment is appropriate if "the record discloses ``that
there is no genuine issue as to any material fact and that the
moving party is entitled to a judgment as a matter of law.'"
Rodriguez v. Pacificare, Inc., 980 F.2d 1014, 1019 (5th Cir. 1993)
(quoting Fed. R. Civ. P. 56(c)). We review a district court's
grant of summary judgment de novo, FDIC v. Ernst & Young, 967 F.2d
166, 169 (5th Cir. 1992), and apply the same standard of review as
did the district court. Rodriguez, 980 F.2d at 1019. In this
case, where the district court's only task was to review the
decision of the plan administrator, the only summary judgment
question before the district court was one of law: what was the
proper standard of review to be applied to the plan administrator's
denial of benefits, and, under that standard, should the denial be
upheld?
III
A
We must begin our inquiry with a determination of the standard
of review to be applied to the plan administrator's denial of
benefits. The plaintiff couched his argument, and the court
couched its holding, in terms that failed to speak to the standard
of review to be applied in analyzing the decision of the plan
administrator. The district court entered summary judgment
ordering benefits be paid to Duhon, which reversed the plan
administrator's denial of those benefits. A denial of ERISA
benefits by a plan administrator challenged under § 502(a)(1)(B) of
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ERISA, 29 U.S.C. § 1132(a)(1)(B), is reviewed by the courts under
a de novo standard unless the plan gives the administrator
"discretionary authority to determine eligibility for benefits or
to construe the terms of the plan." Firestone Tire & Rubber Co. v.
Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 956, 103 L.Ed.2d 80(1989). Challenges to the plan administrator's interpretation of
plan terms, like the one presented in this case, are reviewed under
an abuse of discretion or "arbitrary and capricious" standard if
the plan grants the administrator the authority to make a final and
conclusive determination of the claim. Id. Texaco correctly
asserts that its plan grants such authority to the administrator,
and, thus, the administrator's decision is subject to an abuse of
discretion standard of review. The plan addresses the discretion
of the plan administrator in Article 8.04, which states that "[t]he
decisions of the Plan Administrator shall be final and conclusive
with respect to every question which may arise relating to either
the interpretation or administration of this Plan." Additionally,
the section entitled "Claims Procedure" provides in part that
"[a]fter you undergo the necessary physical examination(s) and upon
review of all facts in the case, the Plan Administrator will make
the decision to authorize or deny payments."
Applying the Bruch analysis to this language, it is clear that
the plan administrator has the discretionary authority to make a
final and conclusive determination of the claim. This court has
not imposed a linguistic template to satisfy this requirement,
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Wildbur v. ARCO Chemical Co., 974 F.2d 631 (5th Cir. 1992),
modified, 979 F.2d 1013 (5th Cir. 1992), but in this case the
plan's plain language provides that the administrator may make an
independent and final determination of eligibility. See also, Lowry
v. Bankers Life & Casualty Retirement Plan, 871 F.2d 522, 524-25
(5th Cir. 1989).
Duhon argues that any discretion afforded Texaco under the
abuse of discretion standard of review is limited because of
Texaco's conflict of interest as both the administrator of its own
plan and the payor of the disability benefits. He cites Bruch,
where the Court stated that "if a benefit plan gives discretion to
an administrator or fiduciary who is operating under a conflict of
interest, that conflict must be weighed as a facto[r] in
determining whether there is an abuse of discretion." Bruch, 489
U.S. at 115, 109 S.Ct. at 957 (citation and internal quotes
omitted). Duhon contends that the conflict of interest in this
case is so great that the abuse of discretion standard of review
should be transformed into a de novo standard of review. He states
in his brief, without more, that "[t]he history of this claim
indicates the conflict indeed influenced the decision and the
processing of the claim."
We fail to find Duhon's argument on this point fully
convincing. Texaco's plan administrator was apparently also an
employee of the company. Although we agree that this fact raises
the possibility of a conflict of interest, we will follow the
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Supreme Court's direction in Bruch and weigh this possible conflict
as a factor in our determination of whether the plan administrator
abused his discretion, instead of adopting ex cathedra Duhon's
suggestion of altering the applicable standard of review. Thus,
the standard of review we apply in our review of the plan
administrator's decision is the arbitrary and capricious or abuse
of discretion standard, with due consideration given to the fact
that the plan administrator in this case was also apparently an
employee of Texaco and therefore possibly operated under a conflict
of interest.
B
We now turn to the merits of the arguments presented in this
appeal. Duhon sought summary judgment arguing that the plan
administrator did not properly interpret the terms "qualified" for
"any" job, and that the evidence was insufficient to determine that
Duhon was qualified for any job. Thus, as the proponent of the
motion for summary judgment, Duhon had the burden of establishing
that the plan administrator abused his discretion by (1)
misinterpreting the terms of the plan or by (2) concluding that the
medical opinions presented by Texaco constituted insufficient
evidence upon which to determine Duhon's disability status. We
conclude that Duhon established neither, and thus was not entitled
to summary judgment.2
2
Although the dissent seems to suggest otherwise, the
question of whether Texaco's plan administrator abused his
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We begin our analysis with an examination of the evidence
before the plan administrator--as that evidence was presented to
the district court on summary judgment--at the time he made his
decision to terminate Duhon's benefits. The district court was
presented with six documents; the parties stipulated that these six
documents were a "fair representation of all documents which
comprise[d] the administrative record."
In order of presentation to the court, the first exhibit is a
report from Duhon's family physician, Dr. Ray, stating that Duhon
"will probably be permanently disabled from driving." The second
document is a report from Dr. Lahasky, a family practitioner who
examined Duhon at Texaco's behest, which describes Duhon's
limitations as: "No driving of trucks. No heavy lifting." Third
is a letter from Dr. Ford, an orthopedist selected by Texaco who
saw Duhon subsequent to Drs. Ray and Lahasky, stating that Duhon
suffers from degenerative lumbar disc disease and cannot return to
work as a truck driver, but "is capable of doing sedentary to light
work." The fourth exhibit is a medical report showing that Duhon
has two ruptured disks in his back.
discretion was expressly argued by Texaco. As our opinion notes,
whether underlying grounds are argued for supporting or rejecting
the plan administrator's decision, the ultimate question
presented in this case comes down to whether the denial of
Duhon's benefits was an abuse of discretion. The failure of the
parties to analyze properly the issues before the court is not
the same as failing to raise the issue. Nor are we required to
articulate the issues or read the statutory and case authority
presented in an appeal in precisely the same manner employed by
the parties.
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The final two documents are evaluations by Dr. Robert Shaw,
Texaco's chief medical officer, and Dr. Burton Miller, another
Texaco staff doctor, of the medical findings of the three doctors
who examined Duhon. Both doctors concur in the plan
administrator's decision to discontinue disability benefits. In
Dr. Miller's report, he notes that "[t]here is a distinct paucity
of physical findings and in fact, [Duhon] appears to have little
difficulty with flexion, extension or lateral bending." He further
refers to the only document that Duhon presented before the
administrator: a letter from his attorney, Mark Ostrich, declaring
that Duhon "cannot stand for more than 30 minutes, has a special
chair to sit in and...has only a high school education." Dr.
Miller stated in his evaluation:
With respect to Mr. Ostrich's letter, I cannot find any
medical reference to support his contention that the
employee "cannot stand for more than 30 minutes" or that
he requires a "special chair to sit in." Furthermore,
his initial disability was only for his usual job,
driving a truck, and this was the basis for his receiving
benefits. He was never found disabled from "doing
sedentary to light work," as noted in the opinion of his
orthopedic surgeon, Dr. Thomas B. Ford.
We emphasize that no other evidence--only the above exhibits from
the administrative record--was presented to the district court by
either Texaco or Duhon. We further emphasize that it is on this
record that this appeal must be decided.
C
The plaintiff argues that the district court properly granted
summary judgment in his favor because there is no evidence in the
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administrative record illustrating that he can actually perform any
identifiable job. The defendants counter that the plan does not
require the availability of an alternate job as a prerequisite to
termination of long-term disability benefits; they argue that the
medical evidence presented was more than sufficient to justify
their decision to terminate Duhon's benefits, especially in the
light of the abuse of discretion standard of review.
The Formal Text of the Long-Term Disability Plan of Texaco
Inc., Article 5, deals with cessation of benefits under the plan.
It states in pertinent part:
5.01 Payments under this Plan shall cease upon the
earlier of:
(d) expiration of the 24-month period following the
Employee's LTD separation date or upon any date
thereafter, if the Employee is able to perform any job
for which he or she is, or may become, qualified by
training, education, or experience....
(Emphasis ours.)
The question before us is whether the plan administrator
abused his discretion in interpreting the phrase "any job for which
he...is, or may become qualified" actually to include any job that
required only "sedentary to light work" for which Duhon was
otherwise qualified. When we apply the applicable standard of
review to the administrator's determination, we cannot say that he
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abused his discretion in terminating Duhon's long-term disability
benefits.3
The administrator possessed medical evidence indicating that
Duhon was able to perform "sedentary to light work." The plan
clearly states that benefits will be discontinued after the twenty-
four month initial period "if the Employee is able to perform any
job for which he or she is, or may become, qualified by training,
education, or experience." As Dr. Miller noted in his report, no
evidence has been presented that Duhon is incapable of performing
3
Some cases in our circuit that have analyzed questions
similar to the one before us today have suggested a two-step
analysis. First, the reviewing court determines the legally
correct interpretation of the plan. If the administrator did not
give the plan the legally correct interpretation, then the court
must determine whether the administrator's decision was an abuse
of discretion. See, e.g., Wildbur v. ARCO Chemical Co., 974 F.2d
631, 637 (5th Cir. 1992); Jordan v. Cameron Iron Works, Inc., 900
F.2d 53, 56 (5th Cir. 1990), cert. denied, 498 U.S. 939, 111
S.Ct. 344, 112 L.Ed.2d 308 (1990); Dennard v. Richards Group,
Inc., 681 F.2d 306, 314 (5th Cir. 1982). These cases further
suggest factors the reviewing court may consider when
appropriate. However, the reviewing court is not rigidly
confined to this two-step analysis in every case. As noted in
Wildbur v. ARCO Chemical Co., 974 F.2d at 637, "[a]pplication of
the abuse of discretion standard may involve [the] two-step
process." (emphasis supplied). In this case, the administrator
concluded that Duhon was able to work. The record contains
evidence of Duhon's age, education, work experience, and physical
capabilities and limitations. On this record, the administrator
did not abuse his discretion, especially in the light of the fact
that Duhon -- the plaintiff and the claimant -- presented no
evidence that rebuts or otherwise challenges the evidence
demonstrating that he was qualified for sedentary jobs that
persons with high school educations can perform. Thus, on the
basis of this record, because the administrator clearly did not
abuse his discretion, it is unnecessary for the court to conduct
the two-step analysis.
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any job; the evidence before the plan administrator--and the
district court--merely stated that he is unable to return to his
former position as a truck driver. It was not an abuse of
discretion for the plan administrator to conclude that a sixty-five
year old man with a high school diploma and plenty of experience in
the work-a-day world, although unable to squat, stoop, bend, or
lift more than twenty-five pounds, would be able to perform the
functions of some identifiable job. Indeed, to find otherwise
would be blindly and deliberately to ignore a common -- and
uncontested -- truth: people in their sixties and seventies who
have similar physical and job limitations established by this
record are employed and employable throughout the workplace today.
D
We now turn to the plaintiff's closely aligned argument that
the evidence of disability was insufficient because the testimony
of a vocational rehabilitation expert was required, instead of that
of a medical doctor, to determine whether he was capable of
performing "any job for which he...is, or may become, qualified by
training, education, or experience." The district court, relying
on Gunderson v. W.R. Grace & Co. Long Term Disability Income Plan,
874 F.2d 496, 499 (8th Cir. 1989), found that the report of a
vocational rehabilitation expert, although "perhaps . . . merely an
additional formality given Duhon's background and capacity,"4 was
4
District Court's Memorandum Ruling, p. 4 n.2.
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nonetheless necessary in this case. In short, the argument we turn
to address is whether the plan administrator abused his discretion
in determining, without expert testimony, that Duhon was not
permanently disabled.
We are aware that the circuits are split on the issue of
whether a plan administrator may be required to obtain vocational
rehabilitation evidence before he makes a final determination of
disability. In Gunderson, the Eighth Circuit reviewed a plan
similar to Texaco's and found that "before terminating benefits,
the Plan should have obtained a vocational expert's opinion to
determine if Mr. Gunderson is presently capable, in light of his
physical impairment, to perform ``any occupation'...." We agree,
however, with the reasoning of then-Judge Ruth Bader Ginsburg
writing for the District of Columbia Circuit in Block v. Pitney
Bowes Inc., 952 F.2d 1450 (D.C. Cir. 1992).
In Block, the plaintiff complained that the administrator
presented no vocational evidence of jobs for which he was
"reasonably fitted by education, experience, capability or
training."5 Block, 952 F.2d at 1455. The court found that no
provision of the plan in question required Pitney Bowes, "as a
condition of terminating Block's compensation, to ensure the
availability of an alternative job." Id. (Citations & internal
5
We should note that in Block, as in most of these cases, it
was the plan administrator and not the claimant who moved for
summary judgment and who thus had the concomitant burden of
proof.
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quotes omitted.) The court concluded that "[t]he medically-
indicated limitations--[Block could work a full day subject to
limitations on standing (two hours), walking, lifting (20 pounds),
and bending (four out of eight hours)]--were not so great, nor
Block's occupation so specialized, that the Committee could be
called unreasonable for refusing to conclude that sales positions
in the D.C. area for which Block could qualify were scarce." Id.Similarly, we will not hold that absent vocational
rehabilitation evidence a plan administrator necessarily abuses his
discretion in making a final determination of disability. Instead,
we will allow the reviewing court to decide, on a case-by-case
basis, whether under the particular facts the plan administrator
abused his discretion by not obtaining the opinion of a vocational
rehabilitation expert.
In this case, we find that it was not an abuse of discretion
for the plan administrator to conclude that Duhon was capable of
performing some type of occupation without obtaining the opinion of
a vocational rehabilitation expert.6 Duhon was a sixty-five year
6
As we noted earlier, pursuant to the Supreme Court's
direction in Bruch, we have considered the possible conflict of
interest on the part of the plan administrator in our
determination of whether he abused his discretion in terminating
Duhon's benefits. In short, the presence of a possible conflict
does not affect the outcome in this case. Duhon has offered no
evidence or grounds for suspicion that the decision was
improperly influenced by the fact that the administrator was in
some fashion an employee of Texaco; he adduced no evidence of the
financial and employment arrangements between the administrator
and Texaco that would illuminate the nature of the alleged
conflict. In any event, on the record before us, the merits of
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old man in overall good health with a high school diploma and
moderate restrictions on his physical activity. The plan only
required a finding that Duhon could perform "any job for which he
is, or may become, qualified by education, training, or
experience." Given this undemanding language and the medical
evidence in this case, the plan administrator could competently
determine disability without vocational testimony. Texaco's
disability benefits plan is not a form of employment insurance; it
was not necessary under this plan that the administrator "insure
the availability of an alternative job" for Duhon before
terminating his benefits.
Additionally, we note that it was Duhon who moved for summary
judgment in this case, and, thus, it is Duhon who has the burden of
illustrating that he is entitled to judgment as a matter of law.
The summary judgment evidence in this administrative proceeding
showed that he chose not to present any evidence whatsoever in
support of his claim that he was "totally and permanently
disabled." Instead, he relied only on his attorney's unsupported
statements that Duhon was unable to stand for more than 30 minutes
and needed a special chair in which to sit. At the time of the
administrative proceeding, Duhon was aware of Dr. Ford's opinion
that Duhon was in fact "capable of sedentary to light work." He
this case are not so close that the possibility of a conflict of
interest on the part of the administrator could be a
determinative factor.
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had the opportunity to present evidence to refute this opinion or
call it into question, but chose not to do so.
As the Fourth Circuit has noted, "Congress intended plan
fiduciaries, not the federal courts, to have primary responsibility
for claims processing." Makar v. Health Care Corp., 872 F.2d 80,
83 (4th Cir. 1989). Claimants must present their strongest
available case to the plan administrator, because the primary
decision is made at that point. "Congress' apparent intent in
mandating these internal claims procedures was to minimize the
number of frivolous ERISA lawsuits; promote the consistent
treatment of benefit claims; provide a nonadversarial dispute
resolution process; and decrease the cost and time of claims
settlement." Makar, 872 F.2d at 83. Duhon's attempt to circumvent
congressional mandate by failing fully to argue his claim and
provide supporting evidence during the administrative appeal
process, in the hopes that his case could be decided instead in the
federal courts, must fail.
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IV
In sum, after a review of the district court's decision, we
find that it erred in granting Duhon's motion for summary
judgment.7 We therefore REVERSE the district court's grant of
summary judgment and REMAND the case to the district court for
further proceedings not inconsistent with this opinion.8
REVERSED and REMANDED.
JOHNSON, Circuit Judge, Dissenting:
Were the issue before this Court and the facts within this
case as the majority portrays them, this writer would be
constrained to concur. However, Texaco has not asked this Court to
determine whether its plan administrator abused his discretion by
finding that Mr. Duhon was, in fact, qualified or could become
qualified to perform a job. Texaco instead asks this Court to
7
We also note that the district court erred in the relief it
granted to Duhon. The district court, in its role as a reviewing
court, was in no position to award disability benefits to him
when it merely found that the evidence was insufficient to
support a finding of disability, and not that the plan terms
required the granting of benefits to Duhon as a matter of law.
Even if the district court had been correct in its finding that
the plan administrator had insufficient evidence before him to
determine whether Duhon met the plan definition of disability,
the appropriate relief in this instance would have been to remand
the case to the plan administrator with instructions to take
additional evidence.
8
Texaco did not move for summary judgment and consequently
it would be procedurally inappropriate for us to direct judgment
in favor of Texaco in this opinion.
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decide that the plan administrator was not required to make such a
finding. In Texaco's view, as long as an employee is physically
capable of performing a job——even if unqualified and incapable of
becoming qualified to perform that job——he is no longer disabled
under Texaco's Long Term Disability Plan. The majority ignores
this, the true issue, before the Court. It creates another, less
defensible, issue; ignores evidence in the administrative and
appellate record; and disregards Fifth Circuit precedent which, if
applied, compels affirmance of the district court's decision. This
writer cannot concur and therefore respectfully dissents.
By disregarding Texaco's point of error here, the majority
reviews this case as if a factual finding were in dispute.
However, there is no disputed fact finding at issue in this case.
Texaco's plan administrator did not find that Mr. Duhon was
actually qualified or could become qualified to perform a job.9
Texaco's sole claim is that it correctly interpreted the Long Term
Disability Plan as requiring no finding that an employee is or can
become qualified to perform work.
This Court has specifically set out a two-step process for
reviewing plan-interpretation cases. Contrary to the majority's
portrayal of Wildbur v. ARCO Chemical Co., the application of this
process is not discretionary. Fifth Circuit case law——which is
9
Even if there were such a finding——and there is not——Texaco
waived any alleged error with respect to that finding, for it did
not appeal on that ground.
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binding on this Court——makes it abundantly clear that the
application of the two-step process in plan-interpretation cases is
mandatory. Courts reviewing an administrator's interpretation of
a plan must first determine whether the plan administrator provided
a legally correct interpretation of the plan. If the
administrator's interpretation is not legally correct, courts must
then determine whether the administrator abused his or her
discretion in interpreting the plan. Jones v. SONAT, Inc., 997
F.2d 113, 115, 116 (5th Cir. 1993) ("In analyzing [the] Committee's
interpretation of [the plan], we must first decide whether the
Committee's interpretation of the plan was ``legally correct.' . .
. Having decided that the Committee's interpretation was ``legally
incorrect,' we must next determine whether the Committee abused its
discretion." (emphasis added)); Jordan v. Cameron Iron Works, Inc.,
900 F.2d 53, 56 (5th Cir.), cert. denied, 498 U.S. 939 (1990)
("First, the court must determine the legally correct
interpretation of the Plan's provisions. . . . If the administrator
has not given a plan the legally correct interpretation, the court
must then determine whether the administrator's interpretation
constitutes an abuse of discretion." (emphasis added, quotation
marks deleted)); Batchelor v. International Board of Electric
Workers Local 861 Pension and Retirement Fund, 877 F.2d 441, 444-45
(5th Cir. 1989) ("First, the court must determine the [legally]
correct interpretation of the Plan's provisions. . . . [Then w]e
must determine whether the [administrators'] interpretation rises
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to an abuse of discretion." (emphasis added; quotation marks
deleted)).10 Cases decided prior to Firestone Tire and Rubber Co.
v. Bruch, though reviewed under the arbitrary and capricious
standard, also determined that application of the two-step process
was mandatory. See, e.g., Denton v. First National Bank, 765 F.2d
1295, 1304 (5th Cir. 1985) ("First, the court must determine the
correct interpretation of the Plan's provisions. Second, the court
must determine whether the Plan administrators acted arbitrarily or
capriciously." (emphasis added)).
To establish the legally correct interpretation of a benefit
plan, courts are to consider 1) whether the plan administrator has
given the plan a uniform construction, 2) whether the
interpretation comports with a fair reading of the plan, and 3)
whether different interpretations of the plan will result in
unanticipated costs. Jordan, 900 F.2d at 56; Wildbur v. ARCO
Chemical Co., 974 F.2d 631, 637-38 (5th Cir. 1992). We have no
information as to the Texaco plan administrator's previous
interpretations of the benefit plan. However, it seems clear——and
the majority apparently agrees——that Texaco's Long Term Disability
Plan requires Texaco to prove two things: Texaco must prove that
the employee in question is physically capable of performing a job
10
The majority's explanation for disregarding these
cases——asserting that the plan administrator did not abuse his
discretion in finding that Mr. Duhon was or could become
qualified to perform a job——is misleading. As explained earlier,
the administrator made no such finding.
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("physical-capability element"), and it must prove that "he or she
is, or may become, qualified [to perform a job] by training,
education, or experience" ("qualification element").11
Texaco completely ignores the qualification element in the
plan's "permanent total disability" definition. It does not argue
that the "plan does not require the availability of an alternate
job as a prerequisite to termination of long-term disability
benefits," as the majority asserts. Maj. Op. at 12. Texaco
instead argues that its plan does not contain a qualification
element at all. Texaco proffers one, and only one, point of error:
The District Court erred in holding that the Texaco Long-
Term Disability Plan required the determination of
whether plaintiff was or could become qualified to
perform work for which he was physically capable of
performing prior to any termination of disability
benefits under the Plan.12 (Emphasis added).
11
Article 2.07 of the plan reads:
"Permanent total disability" or "disabled" means that
during the first 24 months following an Employe's LTD
separation date, the Employe is unable to perform the
normal duties of his or her regular or comparable job
assignment with the Company. Thereafter, "disabled" or
"permanent total disability" means the Employe is
unable to perform any job for which he or she is, or
may become, qualified by training, education, or
experience.
12
Hence, the majority postures the issue it addresses. The
plan administrator did not interpret "the phrase ``any job for
which he . . . is, or may become qualified' actually to include
any job that required only ``sedentary to light work.'" Maj. Op.
at 12 (emphasis in original). Texaco makes clear the fact that
the administrator interpreted the qualification phrase as being
completely non-existent.
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Texaco, Inc. Brief at iv, 16.
Texaco's deletion of the second element——one of only two
elements in the "permanent total disability" definition——is
anything but a "fair reading" of the plan. Additionally, Texaco
has not claimed that administering the plan under the correct
construction will result in the expenditure of unanticipated costs.
Thus, under Jordan and Wildbur, Texaco's interpretation of the plan
is legally, indeed patently, incorrect. It directly conflicts with
the clear language in the Long-Term Disability Plan by rendering
totally nugatory a required element in the plan.
A legally incorrect interpretation does not automatically
signal an abuse of discretion. Courts must consider the following
in reviewing plan interpretations for abuse of discretion: 1)
whether the plan is internally consistent under the administrator's
interpretation, 2) the existence of any relevant regulations
formulated by appropriate administrative agencies, and 3) the
factual background of the plan administrator's determination and
any inferences of a lack of good faith. Wildbur, 974 F.2d at 638.
Additionally, "[w]hen [the administrator's] interpretation of a
plan is in direct conflict with express language in a plan, this
action is a very strong indication of arbitrary and capricious
behavior." Id. (quoting Batchelor v. International Brotherhood of
Electrical Workers Local 861 Pension and Retirement Fund, 877 F.2d
441, 445 (5th Cir. 1989)). Moreover, unless a plan administrator
shows that his interpretation benefits all plan participants, his
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reasonable, but incorrect, interpretation of the plan constitutes
an abuse of discretion if it advances the fiduciary's interest at
the expense of the affected beneficiary. Id; Brown v. Blue Cross
and Blue Shield of Alabama, Inc., 898 F.2d 1556, 1566-67 (11th Cir.
1990), cert. denied, 498 U.S. 1040 (1991); accord Jones v. SONAT,
Inc., 997 F.2d 113, 116 (5th Cir. 1993).
In my view, the application of each of these rules to the
facts of this case points emphatically to an abuse of discretion.
The administrator's omission of an entire element of the permanent
disability definition is completely inconsistent and directly
conflicts with the plain language of the plan. Texaco's
interpretation is therefore anything but reasonable. Even if such
a construction were reasonable——and it certainly is not——a finding
of abuse of discretion would still be inevitable, for the
administrator's construction of the plan promotes Texaco's
interests at the expense of Mr. Duhon. The administrator's
interpretation makes Texaco's job of proving no disability
inordinately easier and therefore raises an inference of a lack of
good faith.
Further, as the majority acknowledges, a possible conflict in
interest exists here. This Court faced a similar conflict-in-
interest situation in Jones v. SONAT, Inc. There, the plaintiff
sued his employer, Southern Natural Gas Co. ("SONAT"), challenging
SONAT's denial of disability benefits. After determining that the
benefit review committee had incorrectly construed the plan, this
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Court relied upon three facts to decide that SONAT had abused its
discretion: 1) the members of the benefit review committee were
all SONAT corporate officers, 2) the committee's interpretation of
the plan reduced benefit outlays and therefore advanced SONAT's
interests at the employee's expense, and 3) the committee failed to
properly justify its interpretation of the plan by showing that
plan participants would be benefitted thereby. 997 F.2d at 116.
The facts in Jones are strikingly similar to the facts in this
case. The plan administrator here was a Texaco employee.13 Also,
as in Jones, Texaco's interpretation of the plan advances its
interests of reducing benefit outlays at the expense of disabled
employees: That interpretation allows Texaco to discontinue
disability payments to those employees who, though physically
capable of performing a job, are unqualified and unable to become
qualified to perform a job. Finally, Texaco has not attempted to
justify its interpretation of the plan by showing that plan
participants are benefitted by the deletion the qualification
element. Thus, under Jones, Wildbur, and Brown, Texaco has
undoubtedly abused its discretion in interpreting the plan. The
district court therefore correctly granted Mr. Duhon's motion for
summary judgment.
13
In fact, the Long-Term Disability Plan specifically states
that "[t]he Company shall, in any case, determine what
constitutes permanent and total disability, when the same
commenced, and at any time reverse or alter any such
determination." (Emphasis added).
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Had Texaco sufficiently proved that Mr. Duhon was or could
have become qualified to perform a job——and appealed on that
ground——this writer might agree with the majority's disposition of
this case. However, Texaco could never have sufficiently proved
that Mr. Duhon was or could become qualified to perform a job on
the record before the plan administrator. The record belies the
majority's conclusion that Mr. Duhon is "able to perform the
functions of some identifiable job."14 Maj. Op. at 14. Mr. Duhon's
family physician and one of Texaco's own physicians concluded
without contradiction that Mr. Duhon was physically and permanently
incapable of performing "any job for which he is qualified."15
Hence, Texaco, bearing the burden of proof on both the physical-
capability element and the qualification element, was required to
prove that Mr. Duhon could have become qualified to perform a job.
14
The record also belies the majority's "emphasis" that only
six exhibits were made a part of the administrative record. The
administrative record included at least 18 exhibits. It may have
contained even more, for Texaco was not forthcoming in turning
over the administrative record to Mr. Duhon. In fact, counsel
for Mr. Duhon complained several times to the district court
about Texaco's refusal to comply with his requests for the
administrative record. The appellate record does not
affirmatively indicate that Texaco completely complied with those
discovery requests.
15
Interestingly, after reviewing the conclusions of all
three doctors consulted here, Texaco's own health department
advised Texaco to continue Mr. Duhon's long-term disability
benefits.
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However, Texaco failed——indeed refused——to show that Mr. Duhon
could have become so qualified. Contrary to the majority's
rendition of the facts, the record provides no information whatever
as to Mr. Duhon's prior experience in the "work-a-day world" other
than the fact that he drove a truck for Texaco from July 29, 1985,
to March 1, 1989. All three doctors consulted in this case agreed
that Mr. Duhon could no longer drive trucks, so the record contains
no evidence that Mr. Duhon is physically capable of performing a
job which he once performed in the "work-a-day" world. Further,
while it is true that Mr. Duhon is a high school graduate, the fact
of the matter is that many moons have passed since his graduation
in 1947.16 Nothing in the record reveals that Mr. Duhon ever used
or honed any of the skills he gained in school——whether reading,
writing, or otherwise. Yet the majority presumes that Mr. Duhon——a
man with limited work experience and limited education, who cannot
bend, stoop, squat, or lift more than twenty-five pounds,17 who
cannot stand for longer than thirty minutes at a time and requires
a special chair for sitting,18 and who is physically incapable of
16
Texaco did not even direct the district court's attention
to Mr. Duhon's high school education. Texaco instead rested its
case in the district court, as it has in this Court, on its
position that the benefit plan does not require proof that an
employee is or can become qualified to perform a job.
17
Dr. Lahasky, a Texaco physician, determined that Mr. Duhon
could not lift anything at all.
18
The majority correctly notes that no medical records
support Mr. Duhon's statement that he cannot stand for longer
than 30 minutes and requires a special chair for sitting.
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performing any job for which he is qualified——is "employable
throughout the work place today." That presumption is, at best,
specious. This writer is more than confident that senior citizens
are engaged in fruitful employment throughout this nation; however,
those citizens are not hindered by limitations——physical and
otherwise——which Mr. Duhon endures.
Mr. Duhon properly pointed to the lack of evidence of the
qualification element to the district court, and Texaco did not
contend that such evidence existed. Under the Supreme Court's
clear mandate in Celotex Corp. v. Catrett, Mr. Duhon sufficiently
met his burden of proving that no genuine issue of material fact
existed. 477 U.S. 317, 325 (1986) (holding that "the burden on the
moving party [in summary judgment cases] may be discharged by
``showing'——that is, pointing out to the district court——that there
is an absence of evidence to support the nonmoving party's case"
(emphasis added)). Thus, the district court correctly granted
summary judgment in Mr. Duhon's favor. That decision should be
affirmed.
However, Texaco, which shouldered the burden of proving that Mr.
Duhon was not permanently disabled, proffered no evidence which
rebutted Mr. Duhon's claim. His claimed standing and sitting
limitations are therefore undisputed.
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