LOKEN, Circuit Judge.
This is an employee's action under ERISA, 29 U.S.C. §§ 1001 et seq., to review
I. Factual and Procedural Background
In December 1985, Cox had a heart attack that resulted in angioplasty surgery. He returned to his job as a full-time maintenance worker at Mid-America's milk plant on January 30, 1986, and continued to work until June 18, 1987, when he was laid off because of a plant closing. He initially requested recall and transfer to another plant. However, on July 28, 1987, he gave up his recall rights and terminated his employ in order to receive a pay-out from Mid-America's pension plan.
In February 1988, Cox applied to a different employer for a job that required heavy labor. Responding to an inquiry from another physician, Cox' cardiologist, Dr. John Best, wrote:
Cox was not hired for that position.
In March 1988, Cox applied for Social Security disability benefits, alleging a disability onset date of June 2, 1987. In May 1988, he had a medical re-evaluation at Dr. Best's clinic, which reported "recurrent angina, post angioplasty." In September 1988, just prior to Cox' Social Security hearing, Dr. Best wrote:
On October 18, 1988, the Social Security Administrative Law Judge ruled that Cox had been disabled for purposes of the Social Security Act since June 2, 1987; the ALJ's opinion did not discuss why he selected the disability onset date alleged by Cox, as opposed to a later date.
In December 1988, Cox applied for disability benefits under Mid-America's Retirement Plan. He alleged that he became disabled on May 1, 1987, and submitted a statement by Dr. Best as the attending physician that:
On December 27, 1988, Mid-America's Retirement Committee (the Plan trustees) denied Cox' application, explaining that "our records indicate you were continuously working until you were laid off on June 18, 1987 and that you were willing to transfer to another facility if work was available." As permitted by the Plan, Cox then appealed to the Retirement Committee and submitted a February 20, 1989 letter from Dr. Best to Cox' attorney stating:
The Retirement Committee submitted Cox' file to a "Physician Advisor who is board certified in cardiology,"
The Retirement Committee denied Cox' appeal, explaining in the minutes of its June 30, 1989, meeting "that there was not sufficient evidence to establish that Mr. Cox was disabled prior to the time his employment with Mid-Am terminated."
Cox then commenced this action "to recover benefits due to him under the terms of his plan," 29 U.S.C. § 1132(a)(1)(B). Mid-America conceded that Cox was disabled when he commenced this action, but defended the Retirement Committee's decision that he was not "totally and permanently disabled" — the key phrase in the Retirement Plan — when he left Mid-America's employ. The district court granted summary judgment in favor of Cox, concluding that the Retirement Committee had abused its discretion by:
This appeal followed.
II. The Standard of Review
ERISA expressly provides for judicial review of benefit denial decisions, but does not specify the appropriate standard of review. In Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 956, 103 L.Ed.2d 80 (1989), borrowing from traditional trust law principles, the Supreme Court stated that a deferential standard of review is appropriate under § 1132(a)(1)(B) if "the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." In this case, § 6.03 of Mid-America's Retirement Plan provides:
We agree with the district court that this Plan language requires that a deferential abuse of discretion standard be applied both to the Retirement Committee's interpretations of the Plan and to its fact-based disability determinations.
Although Bruch involved a trustee decision that was reviewed de novo, the Supreme Court provided considerable guidance in applying a deferential standard, first, by clarifying that traditional trust law principles are the relevant frame of reference, and second, by specifically citing the Restatement (Second) of Trusts § 187, Comment d, in briefly discussing how the deferential standard may be affected when the trustee is acting under a conflict of interest. 489 U.S. at 115, 109 S.Ct. at 956. Section 187 of the Restatement provides that discretion conferred upon a trustee "is not subject to control by the court, except to prevent an abuse by the trustee of his
This is essentially the deferential standard that we recently articulated in Finley v. Special Agents Mutual Benefit Ass'n, Inc., 957 F.2d 617, 621 (8th Cir.1992).
Cox relies upon Simmons v. Diamond Shamrock Corp., 844 F.2d 517, 522-23 (8th Cir.1988), in urging a stricter "reasonableness" standard of review. However, we conclude that such a standard would be inconsistent with the Supreme Court's later decision in Bruch. Trust law plainly does not permit a reviewing court to reject a discretionary trustee decision with which the court simply disagrees:
George G. Bogert & George T. Bogert, The Law of Trusts and Trustees § 560, at 201-04 (rev.2d ed. 1980), cited in Bruch, 489 U.S. at 111, 109 S.Ct. at 954. Thus, Bruch does not permit the rejection of "unreasonable" trustee decisions, except to the limited extent a reasonableness standard is rooted in established trust law principles.
III. An Issue of Plan Interpretation
In addition to defending the district court's decision, Cox presents us with a question of Plan interpretation. Section 2.49 of the Plan provides in part:
Cox argues that, under the plain language of § 2.49, he was entitled to benefits on the basis of the prior Social Security disability determination. We disagree.
The Plan defines "Total and Permanent Disability" to mean:
This is a more restrictive definition than the definition of "disability" in the Social Security Act. See 42 U.S.C. § 416(i)(1). For example, the Social Security Act does not require permanent disability; therefore,
Although § 2.49 provides that a Plan participant must apply for Social Security disability benefits to be eligible for Plan disability benefits, it does not equate Social Security disability with Plan disability. Thus, we conclude that Mid-America's Plan gives the Retirement Committee some discretion to deny a claim despite a Social Security determination of disability. See Madden v. ITT Long Term Disability Plan, 914 F.2d 1279, 1286 (9th Cir.1990), cert. denied, ___ U.S. ___, 111 S.Ct. 964, 112 L.Ed.2d 1051 (1991).
IV. Abuse of Discretion
The key issue before the Retirement Committee was not whether Cox was disabled, but when he had become disabled. On this issue, the evidence was conflicting.
The district court concluded that the Retirement Committee had abused its discretion in relying upon the consulting physician's review of the medical file instead of the ALJ's determination and the attending physician's conclusory assertions. In so doing, the district court went beyond the deferential standard of review and substituted its own weighing of the conflicting evidence for that of the Plan's trustees. In other words, we agree with Mid-America that the district court in effect conducted an improper de novo review. Compare Jett v. Blue Cross & Blue Shield of Ala., Inc., 890 F.2d 1137, 1139-40 (11th Cir. 1989).
However, we encounter serious problems in attempting to review the Retirement Committee's decision under the abuse of discretion standard. First, the reference to Social Security disability in § 2.49 raises questions of Plan interpretation, such as, under what circumstances does the Plan authorize the Retirement Committee to reach a different conclusion than the Social Security ALJ, and what weight should the Committee give to a relevant Social Security disability determination. The Committee's decision provides no clue as to how it interpreted the Plan in this regard, thus precluding judicial review of these important issues.
Second, the Retirement Committee's written notices to Cox gave only an unsatisfactory explanation of its decision.
We have previously noted that, in order to properly apply the deferential standard of review, a reviewing court must be provided the rationale underlying the trustee's discretionary decision. See Richardson v. Central States, S.E. & S.W. Areas Pension Fund, 645 F.2d 660, 664-65 (8th Cir. 1981). On this record, we conclude that the Retirement Committee has failed to provide a sufficient explanation of its rationale, in light of the Plan provisions that it was applying, to permit us to review its decision under the appropriate deferential standard of review. As we noted in Richardson, 645 F.2d at 664, reviewing courts should avoid unduly complicating the task of Plan trustees with unnecessary formal requirements. But when critical terms of the Plan are ambiguous and conflicting medical evidence could arguably support a decision either way, we believe that Congress in ERISA, as well as traditional trust law principles adopted in Bruch, require that ERISA trustees adequately explain the basis for their discretionary decisions.
Accordingly, we reverse the district court's award of benefits and attorneys fees in favor of Cox. The case is remanded to the district court with directions to remand to the Retirement Committee for reconsideration of Cox' application for disability benefits.
JOHN R. GIBSON, Circuit Judge, dissenting.
I respectfully dissent. I would affirm the judgment of the district court holding that the denial of disability benefits was an abuse of discretion.
In my view, the issue in this case was very narrow. Section 2.49 of the Plan provides: "The determination as to whether a Member is Totally and Permanently Disabled shall be made on evidence that the Member is eligible for disability benefits under the Social Security Act in effect at the date of disability."
The evidence was undisputed that Cox was eligible for disability benefits under the Social Security Act. The court today avoids application of this provision of the Plan by comparing the definition of disability in the Social Security Act with the definition of disability in the Plan. The chain of reasoning is ingenious, but it simply ignores the plain language of Section 2.49. Similarly, the committee's reliance on the report of the nonexamining physician and rejection of the opinion of Cox' treating doctor raise serious questions. Actually the report before the committee was written by a nurse with the title "Auditing Specialist," and simply quoted the opinion of an unnamed but board-certified physician advisor and closed by thanking the appellant's lawyer "for the opportunity to assist you in your cost containment efforts." On the basis of these facts, the district court concluded:
The district court did not err in its application of the correct standard of review. What the court today has done is to decide the issue de novo based upon its interpretation of several provisions of the Plan. In my view the court errs in doing so. We should conclude that the district court did not err in its determination that the denial was not supported by substantial evidence and was an abuse of discretion. I would affirm the judgment of the district court.
ON PETITION FOR REHEARING
June 11, 1992.
The petition for rehearing is denied. The panel majority in reversing the award of attorney's fee under 29 U.S.C. § 1132(g)(1) did not intend to preclude the district court from taking up the entire attorney's fee question at any subsequent stage of the proceedings.
Circuit Judge JOHN R. GIBSON would grant the petition for rehearing for the reasons stated in his dissenting panel opinion.