Booth v. Wal-Mart Stores Inc , 201 F.3d 335 ( 2000 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
BARBARA A. BOOTH,
Plaintiff-Appellee,
v.
WAL-MART STORES, INCORPORATED
No. 98-2326
ASSOCIATES HEALTH AND WELFARE
PLAN, sued as Wal-Mart Stores,
Incorporated,
Defendant-Appellant.
BARBARA A. BOOTH,
Plaintiff-Appellant,
v.
WAL-MART STORES, INCORPORATED
No. 98-2348
ASSOCIATES HEALTH AND WELFARE
PLAN, sued as Wal-Mart Stores,
Incorporated,
Defendant-Appellee.
Appeals from the United States District Court
for the Western District of Virginia, at Danville.
Norman K. Moon, District Judge.
(CA-96-53-D)
Argued: October 27, 1999
Decided: January 14, 2000
Before MURNAGHAN, NIEMEYER, and TRAXLER,
Circuit Judges.
_________________________________________________________________
Reversed by published opinion. Judge Niemeyer wrote the opinion,
in which Judge Murnaghan and Judge Traxler joined. Judge Murnag-
han wrote a concurring opinion.
_________________________________________________________________
COUNSEL
ARGUED: Ashley Bryan Abel, JACKSON, LEWIS, SCHNITZLER
& KRUPMAN, Greenville, South Carolina, for Appellant. John How-
ard Heard, JOHN H. HEARD, P.C., Danville, Virginia, for Appellee.
ON BRIEF: Iwana Rademaekers, JACKSON, LEWIS, SCHNITZ-
LER & KRUPMAN, Dallas, Texas, for Appellant.
_________________________________________________________________
OPINION
NIEMEYER, Circuit Judge:
After seeking medical care for chest pain in late November 1994,
Barbara A. Booth received a left cardiac catheterization with coronary
angiography, followed by a coronary angioplasty to clear a 75%
blockage in her right coronary artery. She filed a claim for reimburse-
ment of her expenses under her employee benefit plan, in which she
had enrolled four months earlier, but the plan administrator denied the
claim under the plan's preexisting condition exclusion.
Claiming that the plan administrator wrongfully denied benefits to
which she was entitled, Booth filed this action against the plan under
§ 502(a)(1)(B) of the Employee Retirement Income Security Act of
1974 ("ERISA"), 29 U.S.C. § 1132(a)(1)(B). The district court con-
cluded, after a bench trial, that the plan administrator had abused its
discretion in denying benefits, remanded the matter to the administra-
tor for reconsideration in light of the court's opinion, and granted
Booth's motion for attorneys fees.
Because we conclude that the plan administrator could not be
found to have abused its contractually conferred discretion in the cir-
cumstances of this case, we reverse.
2
I
Barbara A. Booth, a full-time employee of Wal-Mart Stores, Inc.,
enrolled in Wal-Mart's self-funded employee benefit plan (the "Plan")
on July 29, 1994, when she became eligible to do so. The parties
agree that the Plan is governed by ERISA and constitutes an "em-
ployee welfare benefit plan" as defined by 29 U.S.C. § 1002(1). Wal-
Mart is the sponsor of the Plan but does not act as the Plan trustee.
The "administrator" of the Plan, as that term is defined in 29 U.S.C.
§ 1002(16)(A), is the Plan's Administrative Committee.
In late November 1994, roughly four months after subscribing to
the Plan, Booth experienced chest pain, which recurred over the
course of five days. Her general physician sent her to be examined by
Dr. Boshra G. Zakhary, a cardiologist, who recorded that Booth suf-
fered from hypertension, hypertensive cardiovascular disease, and
hyperlipidemia (excess fat in the blood). Because of Booth's chest
pain, which was consistent with angina, her multiple risk factors for
coronary artery disease, and her abnormal EKG, Zakhary performed
a left cardiac catheterization with coronary angiography and left ven-
triculography on December 2, 1994. Through the procedure (during
which a small catheter is inserted into the femoral artery in the groin
and threaded up into the arteries in the heart, allowing the cardiologist
to shoot dye into the coronary arteries and thereby spot blockages),
Zakhary learned that the middle segment of Booth's right coronary
artery had a 75% stenosis (blockage), prompting him to recommend
that Booth receive a coronary angioplasty (in which a small balloon
is inflated within the blockage in order to open the artery). Dr. Victor
S. Behar performed a coronary angioplasty to Booth's right coronary
artery on December 5, 1994. Upon her discharge, Booth was diag-
nosed with coronary artery disease with unstable angina, hyperli-
pidemia, hypertension, and anxiety.
Booth sought reimbursement from the Plan to cover the $30,887.18
in medical expenses that she incurred in relation to the coronary
angioplasty procedures. The Plan denied her claim after determining
that her condition existed before she enrolled in the Plan or was a sec-
ondary condition or complication of a preexisting condition and that
her expenses were therefore excluded by the Plan's preexisting condi-
tion provision. That provision reads:
3
Benefits shall not be payable for the following:
Pre-existing conditions.
Any charges with respect to any participant for any illness,
injury, or symptom (including secondary conditions and
complications) which was medically documented as exist-
ing, or for which medical treatment, medical service, pre-
scriptions or other medical expense was incurred within 12
months preceding the effective date of these benefits as to
that participant, shall be considered pre-existing and shall
not be eligible for benefits under this Medical Coverage,
until the participant has been continuously covered under
the Medical Coverage 12 consecutive months. (Pre-existing
conditions include any diagnosed or undiagnosed condi-
tion.)
Booth appealed the denial of her claim, asserting that she had been
treated previously for high blood pressure and cholesterol but not for
any heart condition. Also, Dr. Julian A. Koplen, Booth's general phy-
sician, who provided most of her medical care during the 12-month
exclusionary period before her enrollment in the Plan, sent a letter to
the Plan stating that he had reviewed Booth's records and found no
evidence of preexisting coronary artery disease. He explained that the
abbreviation "PVI," which appeared in his treatment records of Booth,
denoted "peripheral venous insufficiency" (incompetent veins in legs,
resulting in pooling of blood), not "peripheral vascular insufficiency"
(insufficient arterial blood supply, resulting in difficulty supplying
oxygenated blood to the limbs).
The Plan reviewed its denial of Booth's claims and, as part of its
normal appeal process, sought a medical review of its previous deter-
mination. The Plan sent Booth's medical records to Dr. William M.
Allen, a cardiologist, who was directed to "document any illness,
injury or symptom, including secondary conditions and complica-
tions" that were related to Booth's diagnoses in November and
December 1994 and that had been documented as existing during the
12-month exclusionary period. In summarizing his findings, Dr. Allen
related that "[t]he diagnoses of hypertensive heart disease and hyperli-
pidemia were clearly present" during the exclusionary period. He also
4
stated his belief that Booth had also been treated for coronary artery
disease during that period. He noted that, although none of the rele-
vant medical records diagnosed coronary artery disease, Dr. Behar,
who performed Booth's coronary angioplasty, had indicated that
Booth's coronary artery disease dated back to 1986 when she was
evaluated for chest pain.1 Allen noted that during the exclusionary
period Booth was taking Cardizem, a medicine "effective not only for
hypertension but also coronary artery disease and angina."
The Plan's Administrative Committee met on August 9, 1995, to
consider Booth's appeal and decided to postpone a decision until its
next meeting in order to obtain another medical review of the file by
a general practitioner, Dr. James H. Arkins. It made this decision
because Dr. Koplen was a general practitioner and had disputed the
conclusion of Dr. Allen, a cardiologist, that Koplen's records con-
tained evidence of preexisting coronary heart disease or symptoms to
suggest the condition.
After reviewing Booth's records, Dr. Arkins reported that he found
"numerous pages of documentation of treatment for heart disease and
hyperlipidemia" in Booth's medical records from the exclusionary
period. He specifically pointed to Dr. Koplen's documentation of
Booth's treatment for "HCVD," which Arkins defined as "hyperten-
sive coronary vascular disease," and to Booth's prescription for Card-
izem. Dr. Arkins advised the Plan's Administrative Committee,
however, that he found no evidence of preexisting hypopotassemia,
lung disease, or abnormal blood chemistry.
The Plan's Administrative Committee met again to review Booth's
_________________________________________________________________
1 Booth attempted to provide evidence to the district court that the 1986
episode was unrelated to heart problems. The district court properly
refused to consider this evidence, however, because it was not before the
Administrative Committee when it made its determinations. See Elliott
v. Sara Lee Corp., 190 F.3d 601, 608 (4th Cir. 1999) ("When a district
court reviews a plan administrator's decision under the abuse of discre-
tion standard, `an assessment of the reasonableness of the administrator's
decision must be based on the facts known to it at the time'") (quoting
Sheppard & Enoch Pratt Hosp., Inc. v. Travelers Ins. Co., 32 F.3d 120,
125 (4th Cir. 1994)).
5
appeal and determined that hypopotassemia, lung disease, and abnor-
mal blood chemistry were not preexisting conditions and that
expenses incurred by Booth for their treatment would therefore be
reconsidered for payment. But the Plan's Administrative Committee
again denied Booth's remaining claims relating to the coronary angio-
plasty, finding that they were related to preexisting conditions and
thus not eligible for coverage.
Booth continued to contest the decision of the Administrative
Committee. Dr. Koplen sent a second letter on her behalf to the Com-
mittee on October 12, 1995, and reiterated that Booth never had any
evidence of coronary disease while she was his patient. He also stated
that he believed confusion may have stemmed from a misunderstand-
ing of his abbreviation "HCVD." He stated that, while the Plan's
reviewers interpreted HCVD to signify "hypertensive coronary vascu-
lar disease," he used the abbreviation to denote"hypertensive cardio-
vascular disease," a term he asserted physicians use loosely to
describe high blood pressure. Also, on March 13, 1996, Booth's attor-
ney sent the Plan a request for another appeal. Thereafter, he for-
warded a letter written by Dr. Stephen V. Davis, which stated that
Booth was neither treated for nor diagnosed as having coronary artery
disease or angina prior to November 1994. Davis' letter also
explained that HCVD is a term used by physicians to denote either
hypertensive cardiovascular disease or hypertensive coronary vascular
disease.
A subcommittee of the Plan's Administrative Committee reviewed
Booth's case on June 19, 1996, but postponed a decision until a meet-
ing of the full Administrative Committee. On July 8, 1996, the Plan's
Administrative Committee met, reviewed the entire appeal file, and
again denied Booth's heart-disease-related claims because of the exis-
tence of a preexisting condition. The Administrative Committee based
this determination on three factors: (1) a Plan policy that hypertension
is a symptom of heart disease; (2) documentation in Booth's file indi-
cating she had been treated for heart disease; and (3) Booth's treat-
ment with Cardizem, which is prescribed for heart conditions.
Booth then filed this action in state circuit court in Danville, Vir-
ginia, to recover benefits under the terms of the Plan pursuant to
§ 502(a)(1)(B) of ERISA, 29 U.S.C. § 1132(a)(1)(B). Wal-Mart re-
6
moved the case to federal court. Following a bench trial, the district
court issued an opinion and order dated May 22, 1998, in which it
held that the Plan had abused its discretion in denying Booth's claims
for benefits. The court stated that the Plan's Administrative Commit-
tee "wrongfully assumed that evidence of hypertension was proof of
heart disease and that treatment with Cardizem was proof of heart dis-
ease" and that these assumptions "caused the Committee to accord
less weight to important evidence before it." The court remanded the
matter to the Plan's Administrative Committee for reconsideration in
light of its opinion. On August 4, 1998, the district court also awarded
Booth $7,000 in attorneys fees. This appeal followed.
II
Because the standard of judicial review is dispositive in this case,
we turn first to the proper standard for judicial review of a plan
administrator's decision to grant or deny benefits under an employee
welfare benefit plan regulated by ERISA.
Because ERISA does not specify the appropriate standard of judi-
cial review of a fiduciary decision, courts are instructed to develop a
federal common law, guided by principles of trust law. See Firestone
Tire & Rubber Co. v. Bruch, 489 U.S. 101, 109-11 (1989). Thus, as
a general proposition, ERISA plans, as contractual documents, see
Wheeler v. Dynamic Eng'g, Inc., 62 F.3d 634, 638 (4th Cir. 1995), are
interpreted de novo by the courts, which conduct their review "with-
out deferring to either party's interpretation." Firestone, 489 U.S. at
112. "If the plan [does] not give the employer or administrator discre-
tionary or final authority to construe uncertain terms, the court
review[s] the employee's claim as it would . .. any other contract
claim -- by looking to the terms of the plan and other manifestations
of the parties' intent." Id. at 112-13. Thus, we have held that in decid-
ing whether a plan provision for benefits is prescriptive or discretion-
ary, we review the Plan's language de novo. See Haley v. Paul Revere
Life Ins. Co., 77 F.3d 84, 89 (4th Cir. 1996). Similarly, in determining
the scope of contractually conferred discretion and whether a fidu-
ciary has acted within that scope, we act de novo. See id.When, however, a plan by its terms confers discretion on a fidu-
ciary and the fiduciary acts within the scope of conferred discretion,
7
we defer to the fiduciary in accordance with well-settled principles of
trust law: "Where discretion is 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."
Firestone, 489 U.S. at 111 (quoting Restatement (Second) of Trusts
§ 187 (1959)). Thus, a trustee's discretionary decision will not be dis-
turbed if reasonable, even if the court itself would have reached a dif-
ferent conclusion. See id.; de Nobel v. Vitro Corp., 885 F.2d 1180,
1185-86 (4th Cir. 1989).
A survey of our cases decided after Firestone reveals a certain
ambiguity about the appropriate standard of review of a fiduciary's
discretionary decision -- whether it is "abuse of discretion" or "arbi-
trary and capricious" and whether the two standards are equivalent.
In a number of decisions we stated expressly that we were not pre-
pared to decide whether the abuse of discretion standard differs from
the arbitrary and capricious standard. See Brogan v. Holland, 105
F.3d 158, 161 n.3 (4th Cir. 1997) (declining to resolve the issue
because any difference between the two standards in the case at hand
was inconsequential); Bernstein v. CapitalCare, Inc., 70 F.3d 783,
787 n.4 (4th Cir. 1995) (same); Sheppard & Enoch Pratt Hosp., Inc.
v. Travelers Ins. Co., 32 F.3d 120, 125 n.4 (4th Cir. 1994) (same);
Lockhart v. United Mine Workers of Am. 1974 Pension Trust, 5 F.3d
74, 77 n.5 (4th Cir. 1993) (same). In other cases, we sent conflicting
signals about the relationship between the two standards of review.
See Weaver v. Phoenix Home Life Mut. Ins. Co., 990 F.2d 154, 158-
59 (4th Cir. 1993) (equating the two standards, stating that plan deci-
sions "subject to the abuse of discretion standard . . . must be affirmed
if they are not arbitrary or capricious"); Richards v. United Mine
Workers of Am. Health & Retirement Fund, 895 F.2d 133, 135-36
(4th Cir. 1990) (stating that, although the "`abuse of discretion' stan-
dard is perhaps broader and less deferential than the `arbitrary and
capricious' standard, `arbitrary and capricious' definitely is encom-
passed by `abuse of discretion'"). See also Michael A. de Freitas,
Annotation, Judicial Review of Denial of Health Care Benefits Under
Employee Benefit Plan Governed by Employee Retirement Income
Security Act (ERISA) (29 USCS § 1132(a)(1)(B))-- Post Firestone
Cases, 128 ALR Fed. 1, 20 (1995) ("[F]ew cases differentiate
between the two most-frequently described standards of `arbitrary-
and-capricious' and `abuse-of-discretion'"); id. at 81-82 (collecting
8
cases supporting view that the standards are equivalent). We now put
to rest any doubt about the appropriate standard of judicial review of
a discretionary decision by a plan administrator or fiduciary and the
elements of that standard.
First, we continue to recognize that an "arbitrary and capricious"
standard is more deferential to the fiduciary than is an "abuse of dis-
cretion" standard. And second, we affirm that the abuse of discretion
standard, not the arbitrary and capricious standard, is the appropriate
one for judicial review of a fiduciary's discretionary decision under
ERISA. In de Nobel, we interpreted Firestone as "mandat[ing] total
abandonment of the `arbitrary and capricious' formulation," the stan-
dard we had previously applied to review benefit determinations of
plan administrators and fiduciaries under § 1132(a)(1)(B). 885 F.2d at
1186. We described the arbitrary and capricious standard as "more
deferential" to the fiduciary than the abuse of discretion standard and
noted that application of the former standard "would be inconsistent
with the manifest purposes of [ERISA]." Id. at 1185. In reaching
these conclusions, we were guided directly by Firestone's discussion
about the inappropriateness of applying, in the ERISA context, an
arbitrary and capricious standard which had been developed in cases
arising under the Labor Management Relations Act ("LMRA"). See
Firestone, 489 U.S. at 109-10 (noting that the reason for applying an
arbitrary and capricious standard in LMRA cases is not applicable to
ERISA cases). Accordingly, we repeat that the standard for review
under ERISA of a fiduciary's discretionary decision is for abuse of
discretion, and we will not disturb such a decision if it is reasonable.
See id. at 111; Ellis v. Metropolitan Life Ins. Co., 126 F.3d 228, 233
(4th Cir. 1997); Haley, 77 F.3d at 89; de Nobel, 885 F.2d at 1187.
In determining whether a fiduciary's exercise of discretion is rea-
sonable, numerous factors have been identified as relevant, both in the
cases applying ERISA and in principles of trust law. In Firestone, for
example, the Supreme Court indicated that the fact that a fiduciary
operates under a conflict of interest must be weighed in determining
whether there is an abuse of discretion. See Firestone, 489 U.S. at
115; accord Doe v. Group Hospitalization & Med. Services, 3 F.3d
80, 85 (4th Cir. 1993). In de Nobel we identified five factors that had
previously been considered in our opinions: (1) whether the adminis-
trator's interpretation is consistent with the goals of the plan; (2)
9
whether it might render some language in the plan documents mean-
ingless or internally inconsistent; (3) whether the challenged interpre-
tation is at odds with the procedural and substantive requirements of
ERISA; (4) whether the provisions at issue have been applied consis-
tently; and (5) whether the fiduciary's interpretation is contrary to the
clear language of the plan. See 885 F.2d at 1188. We have also recog-
nized that the adequacy of the record before the fiduciary is a factor
to be considered. See Bernstein, 70 F.3d at 788. Drawing on princi-
ples of trust law, as instructed by Firestone and as articulated in the
Restatement (Second) of Trusts § 187, on which Firestone relied, we
identified five other factors, which were somewhat different from, but
not inconsistent with, those listed in de Nobel: (1) the scope of the
discretion conferred; (2) the purpose of the plan provision in which
discretion is granted; (3) any external standard relevant to the exercise
of that discretion; (4) the administrator's motives; and (5) any conflict
of interest under which the administrator operates in making its deci-
sion. See Haley, 77 F.3d at 89; see also Ellis, 126 F.3d at 233.
Another important factor is furnished by the Restatement, which notes
that the integrity of the fiduciary's decisionmaking process may also
be considered. See Restatement (Second) of Trusts § 187, cmts. e-h
(1959).
Combining these various criteria for determining the reasonable-
ness of a fiduciary's discretionary decision, we conclude that a court
may consider, but is not limited to, such factors as: (1) the language
of the plan; (2) the purposes and goals of the plan; (3) the adequacy
of the materials considered to make the decision and the degree to
which they support it; (4) whether the fiduciary's interpretation was
consistent with other provisions in the plan and with earlier interpreta-
tions of the plan; (5) whether the decisionmaking process was rea-
soned and principled; (6) whether the decision was consistent with the
procedural and substantive requirements of ERISA; (7) any external
standard relevant to the exercise of discretion; and (8) the fiduciary's
motives and any conflict of interest it may have. 2
_________________________________________________________________
2 A fiduciary's conflict of interest, in addition to serving as a factor in
the reasonableness inquiry, may operate to reduce the deference given to
a discretionary decision of that fiduciary. We have held that a court, pre-
sented with a fiduciary's conflict of interest, may lessen the deference
given to the fiduciary's discretionary decision to the extent necessary to
"neutralize any untoward influence resulting from that conflict." Doe, 3
F.3d at 87; see also Ellis, 126 F.3d at 233; Bedrick v. Travelers Ins. Co.,
93 F.3d 149, 152 (4th Cir. 1996).
10
With these principles in hand, we now turn to the Plan before us
and the decision by the Plan's administrator to deny benefits.
III
As with any interpretation of a contractual trust document, we
begin by examining the language of the Plan to determine whether the
provision of benefits is prescriptive or discretionary and, if discretion-
ary, whether the plan administrator acted within its discretion. See
Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989);
Ellis v. Metropolitan Life Ins. Co., 126 F.3d 228, 233 (4th Cir. 1997);
Haley v. Paul Revere Life Ins. Co., 77 F.3d 84, 89 (4th Cir. 1996);
de Nobel v. Vitro Corp., 885 F.2d 1180, 1186 (4th Cir. 1989). This
review is conducted de novo.
The express terms of the Wal-Mart employee benefit plan give the
Plan's Administrative Committee "complete discretion to interpret the
provisions of the Plan, make findings of fact, correct errors, and sup-
ply omissions." And the scope of this discretion is unusually broad.
The Plan provides, "All decisions and interpretations of the Plan
Administrator made in good faith pursuant to the Plan shall be final,
conclusive and binding on all persons, subject only to the claims pro-
cedure, and may not be overturned unless found by a court to be arbi-
trary and capricious."
From this contractual language, it might be argued that the Plan is
attempting to limit courts in their review to the narrowest of circum-
stances, i.e., whether the administrator acted in bad faith. Moreover,
the Plan purports to return judicial review to the pre-Firestone/de
Nobel standard of "arbitrary and capricious." But to interpret the Plan
in this manner would impinge on the proper role of courts in enforc-
ing contracts and establishing principles of judicial review. Both
Firestone and de Nobel articulate standards of judicial review of dis-
cretionary decisions by fiduciaries in the context of ERISA and its
purposes. While the ERISA jurisprudence recognizes that parties have
broad authority through contractual language to agree on the scope of
benefits and the procedures to follow in applying for them, we do not
understand ERISA to allow a plan to alter the established standard of
judicial review of discretionary decisions for reasonableness.
11
Taking into account the entire Plan before us, however, we do not
interpret the Plan's language to authorize discretionary decisions that
would violate established principles of reasonableness. The Plan thor-
oughly delineates benefits to which its beneficiaries are entitled, and
it carefully details benefit eligibility requirements. It would be incon-
gruous to interpret the Plan documents before us as additionally
conferring such broad discretion on its administrator as to sanction
determinations that would not withstand analysis using the reason-
ableness factors that have been recognized by Firestone and
its progeny in the Fourth Circuit. The Plan does not authorize its
administrator to make determinations that are contrary to the plain
language of the Plan; that frustrate the purposes and goals of the Plan;
that are inconsistent with other provisions or earlier interpretations of
the Plan; that are rendered pursuant to arbitrary or uninformed deci-
sionmaking processes; that are inconsistent with the procedural and
substantive requirements of ERISA; or that are made in furtherance
of an interest that conflicts with that of the Plan beneficiaries.
Accordingly, we conclude that the Plan in this case provides its
administrator with discretion to interpret Plan language and to grant
or deny benefits in accordance with these interpretations, but we will
enforce the administrator's decisions only if they are reasonable,
applying the factors that we have previously identified. In addition,
we conclude that the Administrative Committee in interpreting the
Plan's preexisting-condition provision and in denying in part Booth's
claim for benefits acted within the scope of discretion conferred by
the Plan documents.
Because the administrator was given discretion to make the deci-
sions under review in this case and acted within the scope of this dis-
cretion, we will not disturb the administrator's decision if it is
reasonable, even if we independently would have come to a different
conclusion. See Firestone, 489 U.S. at 115; Ellis, 126 F.3d at 232.
Where a plan administrator has offered a reasonable interpretation of
disputed provisions, we may not replace it with an interpretation of
our own. See de Nobel, 885 F.2d at 1188. Thus, we are confined to
a review of whether a decision of the Plan's Administrative Commit-
tee to deny a large portion of Booth's claim for benefits was an unrea-
sonable exercise of its discretion, applying the factors set forth in Part
II, above.
12
IV
In the district court, Booth challenged the decision of the Plan's
Administrative Committee to deny in part her claim for benefits,
implicating two factors in our "reasonableness" inquiry under the
abuse of discretion standard of review: (1) the degree to which the
materials before the committee supported its decision, and (2) the pro-
cess by which the decision was made. The district court reversed the
Administrative Committee's partial denial of Booth's claim for bene-
fits, finding that the committee "failed to employ a rational and prin-
cipled approach when it wrongfully assumed that evidence of
hypertension was proof of heart disease and treatment with Cardizem
was proof of heart disease." The court concluded that these errors
"caused the Committee to accord less weight to important evidence
before it," warranting reversal of the committee's decision.
A review of the record reveals, however, that (1) the process by
which the Administrative Committee reached its decision was princi-
pled and reasoned, and (2) its conclusions were supported by the evi-
dence before it. While a plan administrator could conceivably act
unreasonably -- and thus abuse its discretion-- by following a pol-
icy that dictated a result contrary to the evidence before it, this is not
such a case. The Administrative Committee sought numerous reviews
by independent doctors; considered all the records and letters submit-
ted by Booth, Dr. Koplen, and Dr. Davis; and arrived at a determina-
tion based on three factors: (1) the Plan's policy that hypertension is
a symptom or secondary condition of coronary artery problems; (2)
documentation in Booth's file indicating she had been treated for
heart disease; and (3) the fact that Booth was treated with Cardizem,
a medicine for treating both heart disease and hypertension. The
Administrative Committee's partial reliance on its policy concerning
hypertension, even if we were to assume that the policy was flawed,
did not render its reasoning process unprincipled. The Administrative
Committee relied on other factors which alone could have supported
its decision. It is also telling that the Administrative Committee par-
tially reversed itself with respect to Booth's claim, awarding benefits
to Booth to cover her treatment relating to hypopotassemia, lung dis-
ease, and abnormal blood chemistry. We can find no evidence in the
record supporting a conclusion that the Administrative Committee
13
came to its decision through a process that was unprincipled or unrea-
sonable.
Moreover, the evidence before the Administrative Committee sup-
ported its determination that the Plan's preexisting-condition provi-
sion excluded Booth's claim for benefits. The Plan's preexisting-
condition provision is quite broad, excluding from coverage not only
conditions for which a beneficiary was treated during the exclusion-
ary period, but also any symptom or secondary condition of such a
condition. While the breadth of this provision could well take unwary
plan beneficiaries by surprise, it nonetheless is a valid contractual
provision.
The Administrative Committee had before it the report of Dr.
Allen, a cardiologist, who stated that "[t]he diagnoses of hypertensive
heart disease and hyperlipidemia were clearly present" during the
exclusionary period. Dr. Allen stated that during that same period he
believed that Booth was also treated for coronary artery disease. The
Plan also received a letter from Dr. Arkins, a general practitioner,
detailing "numerous pages of documentation of treatment for heart
disease and hyperlipidemia" in Booth's records from the exclusionary
period. These conditions observed during the exclusionary period are
the same for which Booth later sought benefits. Dr. Arkins pointed to
the indication in the records that Booth was treated for "HCVD,"
interpreting the abbreviation to mean "hypertensive coronary vascular
disease." Both Drs. Arkins and Allen found it significant that Booth
was treated with Cardizem, which Dr. Allen indicated"is effective
not only for hypertension but also coronary artery disease and
angina." Moreover, Dr. Arkins reviewed Booth's file a second time
after the Administrative Committee received a letter from Booth's
general practitioner disputing Arkins' interpretation of the "HCVD"
notation in Booth's records, and he affirmed his earlier opinions.
Letters from Booth, Dr. Koplen, and Dr. Davis presented evidence
to the Administrative Committee that conflicted with the opinions of
the reviewing Drs. Allen and Arkins. Dr. Koplen's letter disputed that
Booth had suffered from preexisting coronary heart disease or symp-
toms to suggest coronary heart disease. Dr. Koplen contended that his
abbreviations were misinterpreted and that "HCVD" represented "hy-
pertensive cardiovascular disease." He also stated that he prescribed
14
Cardizem merely to treat Booth's hypertension. Dr. Davis stated that
the abbreviation "HCVD" often causes confusion among doctors and
that there was no evidence in Booth's records that Booth was treated
for coronary artery disease prior to her enrollment in the Wal-Mart
employee benefit plan. Dr. Davis gave his opinion that Booth's rapid
development of symptoms of coronary artery disease was consistent
with the often rapid process by which blockages in a person's arteries
can develop. He also characterized high blood pressure as a risk factor
for, not a symptom of, coronary artery disease.
Confronted with this record of conflicting opinion, it was within
the discretion of the Administrative Committee -- indeed it was the
duty of that body -- to resolve the conflicts, and as we have previ-
ously recognized, "it is not an abuse of discretion for a plan fiduciary
to deny . . . benefits where conflicting medical reports were pre-
sented." Elliott v. Sara Lee Corp., 190 F.3d 601, 606 (4th Cir. 1999)
(citing Ellis v. Metropolitan Life Ins. Co., 126 F.3d 228, 234 (4th Cir.
1997) (finding no abuse of discretion in denial of benefits where ben-
eficiary's primary medical provider's finding of disability conflicted
with reports of independent medical panel)). Because sufficient evi-
dence is contained in the record to support the determination that
Booth was treated during the exclusionary period for either the same
condition later treated in November 1994 or a symptom or secondary
condition thereof, the district court clearly erred in concluding that the
Plan's Administrative Committee abused its discretion in denying
Booth benefits. In light of this evidence and the principled and rea-
soned process by which the Administrative Committee rendered its
decision, there is no basis to conclude that the Administrative Com-
mittee abused its discretion when it denied in part Booth's claim.
Accordingly, we reverse the judgment of the district court as well
as its award of attorneys fees.
REVERSED
MURNAGHAN, Circuit Judge, concurring:
I concur in Judge Niemeyer's majority opinion. The Plan's
preexisting-condition provision allows the Administrative Committee
to deny benefits for a condition, or symptom or secondary condition
15
thereof, for which the beneficiary was treated during the exclusion
period. Because there was evidence before the Administrative Com-
mittee that Booth was treated for hypertension during the exclusion
period, and because hypertension is a well-known risk factor and
arguably a secondary condition to coronary artery disease, that por-
tion of the Administrative Committee's decision which found that
Booth was treated for a symptom or secondary condition of coronary
artery disease during the exclusion period was reasonable.
For that reason alone, I would find that the Administrative Com-
mittee acted reasonably. I am nevertheless troubled by the way in
which the Administrative Committee ignored the statements by
Booth's own doctors that Booth was not treated for coronary artery
disease itself during the exclusion period. I cannot agree that it is rea-
sonable for a plan administrator to ignore credible evidence presented
by a claimant's own doctors and instead rely on the conflicting opin-
ions of reviewing doctors who have never treated the claimant and
who have no basis for correctly interpreting ambiguous or possibly
mistaken notations in the claimant's medical records.
16