Paramore v. Delta Air Lines, Inc. , 129 F.3d 1446 ( 1997 )

PUBLISH
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
_______________
No. 96-8299
_______________
D. C. Docket No. 1:94-CV-1539-JEC
JACQUELINE PARAMORE,
Plaintiff-Appellant,
versus
DELTA AIR LINES, INC.,
Defendant,
DELTA FAMILY-CARE DISABILITY AND SURVIVORSHIP PLAN,.
______________________________
Appeal from the United States District Court
for the Northern District of Georgia
______________________________
(December 2, 1997)
Before BIRCH, Circuit Judge, HILL and FARRIS*, Senior Circuit
Judges.
*
Honorable Jerome Farris, Senior U. S. Circuit Judge for the
Ninth Circuit, sitting by designation.
BIRCH, Circuit Judge:
Jacqueline Paramore, a former flight attendant for Delta Air
Lines, Inc. (“Delta”), filed this action under the Employee Retirement
Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1132(1)(b) and
(e), in which she sought an award of long-term disability benefits
pursuant to the Delta Family Care Disability and Survivorship Plan
(“the Plan”). Paramore contended that the Administrative
Committee, acting in its capacity as administrator and fiduciary,
violated the terms of the Plan and the governing federal law
embodied in ERISA by denying the requested benefits. The district
court determined that the Administrative Committee’s decision to
deny long-term disability benefits was neither arbitrary nor capricious
and granted summary judgment in favor of Delta. For the reasons
that follow, we conclude that the “arbitrary and capricious” standard
of review is the appropriate standard by which to evaluate a plan
administrator’s factual findings in cases involving the denial of
benefits under ERISA. We further conclude that the district court
2
properly applied this standard of review to the facts of this case in
upholding the Administrative Committee’s decision. We therefore
affirm.
I. BACKGROUND
For the limited purpose of resolving the issues presented in this
appeal, the following facts are found to be undisputed: Jacqueline
Paramore worked for approximately eleven years as a flight
attendant for Delta. In 1991, while performing her job during the
course of a flight, Paramore was involved in an incident that resulted
in injury to her neck and shoulder. After an initial period of
recuperation at home, Paramore returned to work sporadically for
approximately one year. Paramore subsequently sought and
received short-term disability benefits pursuant to the Plan; these
benefits were awarded based on certifications from two treating
physicians, Dr. Kenneth Lazarus and Dr. Patricia Tewes, who
affirmed that Paramore had experienced a cervical strain. Paramore
3
next requested long-term disability benefits and sought certification
for such benefits from Dr. Tewes. Dr. Tewes, however, indicated
that Paramore could perform some light clerical work. Based on Dr.
Tewes’ observations, the request for long-term disability benefits
was denied.
In accordance with the Plan’s procedural framework, Paramore
appealed this decision to the Administrative Subcommittee (“the
Subcommittee”). Paramore specifically requested the
Subcommittee to afford greater weight to the opinion of Dr. Lazarus,
her treating physician, rather than Dr. Tewes, to whom she had been
referred. At the Subcommittee’s request, Paramore also was
examined by Dr. Nicol, who withheld his opinion concerning
Paramore’s long-term prognosis pending further tests; Dr. Nicol did
note his initial impressions of Paramore’s condition as follows:
Difficult to know exactly what’s going on with
this lady. She has symptoms of cervical strain
and sprain, but no focal organic neurological
deficits and, in fact, she has some “deficits” that
would lead me to believe that there is a very
4
large functional component to her disorder at
the present time.
Exh. 11 at 3. Dr. Lazarus forwarded to the Subcommittee a letter
stating his belief that Paramore would be “unable to work in any
capacity on even a part-time basis” and that her condition likely
would “continue indefinitely despite maximum treatment.” Exh. 12.
Paramore also received a psychological examination by Dr. Wright,
who rendered the following findings:
Psychological testing results with this patient
suggest considerable stress, but very little
subjective psychological discomfort. Most of
her stress and psychological pressures are
being diverted into somatic symptoms, and she
is quite preoccupied with her somatic
processes while attempting to deny and
repress any subjective psychological
discomfort. I could not rule out the possibility of
a conversion disorder. She has developed
most of the classic signs of “chronic pain
syndrome.” Test indications regarding
cognitive and intellectual abilities show the
patient to be functioning within the bright-
normal range with no problems. There were
indications of organic brain dysfunction on
testing.
5
Exh. 17. Pursuant to these observations, Dr. Wright recommended
that Paramore would benefit from psychotherapy in addition to any
other treatment she was receiving for chronic pain. Dr. Nicol
subsequently wrote to the Subcommittee after reviewing both Dr.
Wright’s report and the results of the tests he previously had
ordered. With respect to psychological aspects of Paramore’s
condition, Dr. Nicol stated: “I don’t think that Ms. Paramore is
suffering from any major physical disability, but psychosomatic
aspects of her illness have supervened and are causing the majority
of her problems at the present time.” Exh. 20. In a separate letter,
Dr. Nicol stated, in pertinent part:
At the present time it would be my
professional opinion that she is disabled, but I
can’t say as a result of demonstrable injury,
because there was no demonstrable injury, at
least from a purely physical standpoint. I think
there probably is demonstrable injury from a
psychological standpoint.
I hope that this answers your questions
satisfactorily. I hope that you will be able to get
Ms. Paramore some ongoing psychological
6
help so that she will [be] able to get back to
work full time in the not too distant future as a
flight attendant once these other issues have
been addressed.
Exh. 21. Dr. Nicol further observed that although Paramore, in his
view, was not capable of performing her customary job on a full time
basis without limitations, she nonetheless was physically capable of
performing sedentary work. See id.On the same date on which Dr. Nicol filed his report with the
Subcommittee, Dr. Tewes notified the Subcommittee that Paramore
was no longer under her care and that Dr. Lazarus should make any
further decisions regarding her capacity to work. Dr. Lazarus
subsequently wrote a letter to a Subcommittee representative
concerning Paramore’s case and stated:
With regard to Ms. Paramore’s disability status,
I believe that it would be appropriate for Ms.
Paramore to return to some sort of sedentary
work activity. I think this would be helpful to
her, both with regard to her self-esteem and
her recovery from her injury. . . . [I]n an
appropriately supportive environment, I believe
7
that Mrs. Paramore could and should return to
some form of sedentary work.
Exh. 27.
After reviewing the doctors’ submissions, the Subcommittee
affirmed the denial of benefits and determined that Paramore’s
entitlement to disability benefits terminated as of November 14,
1992. Paramore appealed this decision to the Administrative
Committee. Shortly thereafter, Dr. Lazarus wrote to the
Administrative Committee a letter stating, in relevant part:
I have been the treating physician for Mrs.
Paramore and have been primarily responsible
for her care. Decisions on her benefit status
were apparently made with reference to forms
filled out from other treating physicians, despite
the fact that I have been the primary treating
physician in this case. I am not certain on what
basis the other physicians made their
determination. It is my opinion that Mrs.
Paramore was unable to return to any sort of
gainful employment, even on a part-time basis
prior to February 22, 1993. From that time
forward, however, I do believe she has been
capable of part-time sedentary work.
8
Exh. 33. The Administrative Committee determined, “[b]ased on
information obtained from Dr. Tewes and from independent
examinations performed by Dr. Nicol and Dr. Wright, Ms. Paramore
could perform some type of work; . . .” Exh. 46 at 3. Consistent with
this determination, the Administrative Committee decided that
Paramore’s disability benefits were correctly denied as of November
14, 1992.
II. DISCUSSION
The district court’s grant of summary judgment is subject to
plenary review. See Canadyne-Georgia Corp. v. Continental Ins.
Co., 999 F.2d 1547, 1554 (11th Cir. 1993). We therefore apply the
same legal standards as those controlling the district court. Id. The
standard that properly should have governed the district court’s
evaluation of the Administrative Committee’s findings, however, is
disputed by the parties. Paramore contends that, although the
Administrative Committee’s interpretation of the Plan’s terms are
9
subject to an arbitrary and capricious standard of review, the court
should have reviewed the Administrative Committee’s factual
determinations de novo. Delta responds that the court appropriately
examined the propriety of the Administrative Committee’s factual
and interpretive conclusions solely to ascertain whether the denial
of benefits in this instance constituted either an abuse of discretion
or an arbitrary and capricious resolution of Paramore’s claim.
ERISA does not provide a standard to review decisions of a
plan administrator. In Firestone Tire and Rubber Co. v. Bruch, 489
U.S. 101, 109 S. Ct. 948, 103 L. Ed. 2d 80 (1989), the Supreme
Court looked to the principles underlying trust law as largely defining
the role and responsibilities of a plan fiduciary or administrator;1
more specifically, the Court reasoned that, “where discretion is
1
Our discussion of the standard of review refers primarily to
the proper level of deference afforded a plan administrator; our
conclusions in this regard obtain with equal force, however, to
plan fiduciaries. We previously have noted that the Supreme
Court’s treatment in Firestone of the possible standards of review
that might apply to determinations rendered under ERISA-governed
plans “applies equally to the decisions of fiduciaries and the plan
administrator.” Brown v. Blue Cross & Blue Shield of Ala. , 898
F.2d 1556, 1560 (11th Cir. 1990).
10
conferred upon the trustee with respect to the exercise of a power,
its exercise is not subject to control by the court except to prevent an
abuse by the trustee of his discretion.” Id. at 111, 109 S. Ct. at 954(internal citation and quotation marks omitted). Applying these
principles, the Court established a range of standards that pertain to
benefits determinations under ERISA:
a denial of benefits challenged under §
1132(a)(1)(B) is to be reviewed under a de
novo standard unless the benefit plan gives the
administrator or fiduciary discretionary authority
to determine eligibility for benefits or to
construe the terms of the plan. . . . Of course,
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.
Firestone, 489 U.S. at 115, 109 S. Ct. at 956-57 (citations and
quotation marks omitted).
Consistent with the Court’s directive in Firestone, we have
adopted three standards of review for plan interpretations: (1) de
novo, applicable where the plan administrator is not afforded
11
discretion, (2) arbitrary and capricious when the plan grants the
administrator discretion, and (3) heightened arbitrary and capricious
where there is a conflict of interest. Buckley v. Metropolitan Life,
115 F.3d 936, 939 (11th Cir.), rehearing denied, ___ F.3d ___ (11th
Cir. 1997) (citing Maracek v. BellSouth Services, Inc., 49 F.3d 702,
705 (11th Cir. 1995).
Paramore and Delta agree that the plan at issue in this case
affords the Administrative Committee discretion to construe the
Plan’s terms. For instance, the Plan expressly mandates that
eligibility for disability benefits “shall be determined by the
Administrative Committee or its designees,” R1-1, Exh. A at 23, and
confers on the Administrative Committee the power
[t]o interpret the Plan, and decide all questions
of eligibility of any Eligible Family Member to
participate in the Plan or to receive benefits
under it, its interpretation thereof in good faith
to be final and conclusive; [t]o determine the
amount, manner, and time of payment of
benefits which shall be payable to any
Employee or Dependent, . . . [and] to decide all
questions concerning the Plan; . . .
12
Id. at 48-49.
Neither party contends that the Administrative Committee’s
interpretation of the plan’s terms is at issue here; rather, the parties
ask us to decide what constitutes the proper standard of review with
respect to the Administrative Committee’s factual determinations as
incorporated in its ultimate conclusion that Paramore was not
entitled to long-term disability benefits.
Our court has not yet conclusively stated the standard
applicable to an ERISA plan administrator’s factual findings.
Significantly, we consistently have applied the arbitrary and
capricious standard to eligibility determinations – without necessarily
distinguishing the factual from the legal, interpretive bases of those
decisions – in all instances in which a plan vested the administrator
or fiduciary with discretion to interpret the plan’s terms or to resolve
questions of eligibility. See, e.g., Hunt v. Hawthorne Assoc., Inc.,
119 F.3d 888, 912 (11th Cir. 1997) (“The arbitrary and capricious
standard is the appropriate standard of review in this case
13
because the Plan contains express language conferring
discretionary authority upon the administrator to construe its
terms.”); Shannon v. Jack Eckerd Corp., 113 F.3d 208, 210 (11th
Cir. 1997) (“Denial of benefits under an ERISA plan that gives the
plan administrator discretionary authority to determine eligibility
for benefits or to construe the terms of the plan is reviewed by the
district court for abuse of that discretion.”); Jett v. Blue Cross and
Blue Shield of Alabama, 890 F.2d 1137, 1139 (11th Cir. 1989) (“The
plan in this case does give the administrator of the plan discretionary
authority to determine eligibility for benefits and to construe the
plan’s terms. . . . Accordingly, the arbitrary and capricious standard
of review applies here.”) (internal citations, markings, and quotation
marks omitted).2 Indeed, in only one case have we differentiated
2
It is worth noting that our decisions involving the review of
administrative decisions under ERISA-governed plans do not
distinguish between the terms “arbitrary and capricious” and “abuse
of discretion.” See Jett, 890 F.2d at 1139 (“When conducting a
review of an ERISA benefits denial under an arbitrary and
capricious standard (sometimes used interchangeably with an abuse
of discretion standard), the function of the court is to determine
whether there was a reasonable basis for the decision. . . .”).
Although we hereinafter refer to the proper standard of review
regarding the Administrative Committee’s factual findings by the
term “arbitrary and capricious,” we recognize that, for purposes of
14
explicitly between an administrator’s plan interpretations and fact-
based findings; our resolution of that case, however, rendered a
decision regarding the standard of review with respect to factual
determinations to be unnecessary. See Maracek, 49 F.3d at 707(“We decline to decide which standard of review should be applied
for factual findings by a plan administrator as BellSouth’s decision
does not survive the most deferential standard of review.”).
Other circuits that have addressed the question of the level of
deference to which factual findings of an ERISA plan administrator
are due uniformly have held that, where the plan confers
discretionary authority to determine eligibility and to construe the
plan’s terms, the arbitrary and capricious standard of review applies.
See, e.g., Rowan v. Unum Life Ins. Co. of America, 119 F.3d 433,
436 (6th Cir. 1997) (“The de novo standard of review applies only
when the plan does not explicitly vest fact-finding discretion in the
evaluating a plan determination, there is no substantive
distinction between the terms “arbitrary and capricious” and “abuse
of discretion.”
15
plan administrator.”); Mitchell v. Eastman Kodak Co., 113 F.3d 433,
438-39 (3rd Cir. 1997) (where broad discretion afforded plan
administrator was undisputed, court applied Supreme Court’s
analysis in Firestone and held that “the appropriate standard of
review . . . depends on whether the terms of this Plan grant the
Administrator discretion to act as a finder of facts. . . . [W]e conclude
that the Plan Administrator’s decision to deny . . . [long-term
disability] benefits should be reviewed under an arbitrary and
capricious standard.”) (citations and quotation marks omitted).3 Cf.
Pierre v. Connecticut Gen. Life Ins. Co., 932 F.2d 1552, 1562 (5th
3
Interestingly, the Sixth Circuit has voted to rehear en banc
a case involving the denial of benefits under an ERISA plan. In
its order granting en banc rehearing, the court expressly noted
that it would consider and resolve the following issue:
Whether the decision of the U.S. Supreme Court
in Firestone . . . , setting the standards for
the review of an administrator’s discretion in
making ERISA plan decisions, encompasses
decisions both of fact and of law, or whether
the Supreme Court’s decision should be limited
only to setting standards with regard to an
administrator’s decisions of legal
interpretation, while allowing unfettered
discretion in all cases with respect to
factual decisions.
Perez v. Aetna Life Ins. Co., 106 F.3d 146 (6th Cir. 1997) (en
banc).
16
Cir. 1991) (holding that, regardless of discretionary authority of plan
administrator to interpret terms of plan, “for factual determinations
under ERISA plans, the abuse of discretion standard of review is the
appropriate standard; that is, federal courts owe due deference to an
administrator’s factual conclusions that reflect a reasonable and
impartial judgment.”).
As noted, an examination of our own decisional law reveals that
we consistently have upheld application of the abuse of discretion
standard of review to determinations involving both plan
interpretations and factual findings under ERISA. The consistency
of our decisions in this arena strongly suggests that our court has
interpreted the Supreme Court’s analytical framework in Firestone,
particularly in regard to the application of trust law principles to the
level of deference due an administrator or fiduciary, to mean that,
where an ERISA plan grants discretion to a plan administrator to
interpret the express terms of the plan or to determine eligibility for
benefits, we review both the administrator’s construction of the plan
17
and concomitant factual findings with respect to each case under an
arbitrary and capricious standard of review. See Buckley, 115 F.3d
at 939 (“Given that the . . . Plan at issue here vests the
administrator with discretion, the district court properly employed
the arbitrary and capricious guidelines in judging the
administrator’s factual conclusions.”). We are cognizant of the fact
that other circuits to have decided this issue similarly have found the
arbitrary and capricious standard to obtain when the plan
unambiguously affords discretionary authority on the administrator.
We further find persuasive the Third Circuit’s observation in Mitchell
that “‘application’ of the Plan, like judicial ‘application’ of the law,
must encompass the resolution of factual disputes as well as the
interpretation of the governing provisions of the Plan.” Mitchell, 113
F.3d at 439.
Thus, where the plan affords the administrator discretion, the
administrator’s fact-based determinations will not be disturbed if
reasonable based on the information known to the administrator at
18
the time the decision was rendered. See Hunt, 119 F.3d at 912(“Under the arbitrary and capricious standard of review, the court
seeks ‘to determine whether there was a reasonable basis for the
[administrator’s] decision, based upon the facts as known to the
administrator at the time the decision was made.’”) (quoting Jett, 890
F.2d at 1139).
Applying this standard of review to the facts presented in this
case, we conclude that the Administrative Committee’s decision to
deny Paramore’s request for long-term disability benefits was
reasonable based on the facts known to the Administrative
Committee at all times relevant to this action. Under the Plan at
issue, an employee may qualify for long-term disability benefits if the
following conditions are met:
The Employee shall be eligible for Long Term
Disability provided he is disabled at that time as
a result of demonstrable injury or disease
(including mental or nervous disorders) which
will continuously and totally prevent him from
engaging in any occupation whatsoever for
compensation or profit, including part-time
19
work, but not including work performed in
connection with a rehabilitation program
approved by the Administrative Committee. . .
. The Employee shall be eligible for Long Term
Disability benefits so long as he remains
disabled in accordance with this subsection
and Section 4.01.
R1-1, Exh. A at 21.
As described earlier, the Administrative Committee initially
received conflicted information from Dr. Tewes, indicating that
Paramore was capable of sedentary work, and Dr. Lazarus, stating
that Paramore’s condition was likely to require long-term disability
due to her pain disorder. In an attempt to gather further information,
the Administrative Committee sought evaluations from several other
physicians, including a neurologist, Dr. Nicol, and a psychologist, Dr.
Wright. Although these doctors’ medical evaluations both contained
sporadic, internally inconsistent statements concerning both the
degree to which Paramore suffered from a physiological – rather
than stress-related – condition and the degree to which she was
20
capable of returning to work on some basis,4 the Administrative
Committee’s function was to evaluate the various reports in tandem
and render a determination as to Paramore’s ability to engage “in
any occupation whatsoever for compensation or profit, including
part-time work.” See R1-1, Exh. A at 21. We cannot say that the
Administrative Committee’s appraisal of the available medical
information was unreasonable or inconsistent with the data with
which the Committee had been provided. Stated differently, we
conclude that there existed a reasonable basis to support the
Administrative Committee’s factual determination that, based on the
administrative record examined in its entirety, Paramore was not
entitled to long-term disability benefits.5 The Administrative
4
For instance, Dr. Nicol’s report stated both that “[a]t the
present time it would be my professional opinion that [Paramore] is
disabled” and that ”I hope you will be able to get Ms Paramore some
ongoing psychological help so that she will [be] able to get back
to work full time in the not too distant future . . . “. Exh. 21.
Dr. Wright similarly noted that “[p]sychological testing results
with this patient suggest considerable stress, but very little
subjective psychological discomfort,” while at the same time
observed, “I could not rule out the possibility of a conversion
disorder . . . . [and] there were indications of organic brain
dysfunction on testing.” Exh. 17.
5
We find unpersuasive Paramore’s assertion that the district
court should have given greater weight to the Social Security
21
Committee’s decision to deny benefits in this case thus was neither
arbitrary nor capricious.
III. CONCLUSION
Paramore asks that we reverse the district court’s order
granting summary judgment in favor of Delta. Paramore contends
that the district court applied an incorrect standard of review in
evaluating the Administrative Committee’s factual determinations
and improperly found these determinations to be supported by the
record. We conclude that (1) where an ERISA-governed plan
confers discretion on an administrator to interpret plan terms and
decide eligibility for benefits, we review the administrator’s fact-
Administration’s determination that Paramore was totally disabled.
Although a court may consider this information in reviewing a plan
administrator’s decision regarding eligibility for benefits under
an ERISA-governed plan, see Kirwan v. Marriott Corp., 10 F.3d 784,
790 n.32 (11th Cir. 1994), an award of benefits by the Social
Security Administration is not dispositive of the issue before us,
particularly given the measure of deference that we afford a plan
administrator’s decision. Moreover, as noted by Delta, the
decision of the Social Security Administration to award benefits
was rendered after the Administrative Committee denied Paramore
benefits; that determination consequently was not available to the
Administrative Committee during the relevant time frame.
22
based conclusions regarding eligibility to determine whether these
conclusions are arbitrary or capricious and (2) although the medical
reports submitted to the Administrative Committee in this case were
not a model of clarity, the Administrative Committee’s overall
evaluation of these reports was rational. Its factual determinations,
therefore, were neither arbitrary nor capricious. The district court’s
order granting summary judgment in favor of Delta is AFFIRMED.
23