In the

United States Court of Appeals

For the Seventh Circuit ____________

No. 01-4132

JAMES J. HACKETT,

 Plaintiff-Appellant,

v.

XEROX CORPORATION LONG-TERM DISABILITY INCOME PLAN,

XEROX CORPORATE REVIEW DISABILITY PANEL, PLAN

ADMINISTRATOR, for the Xerox Corporation Long-Term

Disability Plan, and HEALTH INTERNATIONAL, INC.,

 Defendants-Appellees.

____________

Appeal from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 00C3140—Charles R. Norgle, Sr., Judge.

____________

ARGUED OCTOBER 30, 2002—DECIDED JANUARY 6, 2003

____________

Before FLAUM, Chief Judge, and BAUER and DIANE P.

WOOD, Circuit Judges.

FLAUM, Chief Judge. James Hackett claims that the

defendants (collectively “Xerox”), who are responsible for

administering Xerox’s Long-Term Disability Plan (“the

Plan”), violated the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. §1001 et seq., when they terminated his long-term disability benefits. The district

court denied Hackett’s motion for summary judgment

and granted Xerox’s motion for summary judgment. Hackett
2 No. 01-4132

1 Because Hackett received payments from Social Security,

Xerox’s liability was reduced.

appeals. For the reasons stated herein, we reverse and

remand to the district court.

I. Background

James Hackett has worked for Xerox since 1985. Hackett

began to suffer from emotional problems in 1986. These

problems were caused by a personality disorder that

made it difficult for him to interact properly with others

in the work environment. After these problems worsened,

Hackett was advised by a Xerox physician to seek disability benefits under the Xerox Long-Term Disability

Plan. In the process Hackett was examined by his psychiatrist, Dr. Gerber, who diagnosed Hackett as suffering

from a serious psychiatric condition that prevented him

from doing any type of work. Hackett began receiving

benefits on March 2, 1987.

Subsequent to the grant of benefits, Xerox encouraged

Hackett to apply for Social Security disability benefits

and those benefits were granted.1

 Additionally, in the

first decade following the grant of benefits, Hackett was

examined by numerous experts, all of whom reached the

conclusion that Hackett was unable to work. As a result

of these examinations Hackett’s benefits were continued.

This state of affairs continued until 1998 when Xerox

asked Hackett to be examined by Dr. Holeman. Dr. Holeman, after examining Hackett and later reviewing the

prior findings of the other doctors, noted that Hackett

suffered from a personality disorder but found Hackett

able to return to work without restriction. As a result of

Dr. Holeman’s opinion Xerox terminated benefits in January 1999. The reason given for termination was, “Contin-
No. 01-4132 3

ued Disability not clinically supported.” Hackett appealed

the termination. Xerox then had Hackett’s medical record reviewed by Dr. Wolf, who concluded that Hackett

could return to work, but not in sales. Xerox, based on Dr.

Wolf’s review, denied Hackett’s appeal. The denial of appeal contained the same explanation as the original termination: “Continued Disability not clinically supported.”

While the review was underway Dr. Gerber sent in a report from an evaluation of Hackett conducted on March

28, 1999. Dr. Wolf reviewed this letter after his initial

determination; but his conclusion did not change. Xerox

advised Hackett of this. This time Xerox listed the reason

for termination as, “Consulting Physician did not concur.”

Hackett brought suit challenging the termination. The

district court denied Hackett’s motion for summary judgment and then granted Xerox’s motion for summary

judgment. Hackett appeals.

II. Discussion

We review a district court’s grant of summary judgment

de novo. O’Reilly v. Hartford Life & Accident Insurance

Co., 272 F.3d 955, 959 (7th Cir. 2001).

a. Standard of Reviewing the Decision to Terminate

A court reviews a plan administrator’s denial of benefits de novo unless the plan gives the administrator discretionary authority to determine eligibility for benefits.

Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989);

Herzberger v. Standard Ins. Co., 205 F.3d 327, 330 (7th Cir.

2000). Where the plan does grant discretionary authority

to the administrator, the court reviews the decision under

the arbitrary and capricious standard. Hess v. Hartford

Life & Accident Ins. Co., 274 F.3d 456, 461 (7th Cir. 2001).
4 No. 01-4132

2 The 1996 plan reads: “The determination of whether an Employee has incurred a covered disability and has complied with all

of the conditions for receiving, and continuation of, benefits

shall be made by either the Medical Case Manager or the Disability Administrator, as appropriate, in its sole discretion.”

In 1996 Xerox adopted a new long-term disability plan,

amending its 1977 plan by granting the disability administrator the sole discretion in determining whether an

employee meets the conditions for receiving benefits. The

parties agree that the 1977 plan contains no language

granting discretionary authority to the plan administrator; they also agree that the 1996 plan explicitly grants

such discretion.2

 The disagreement is over which plan

controls the decision to terminate Hackett’s benefits.

Though we have not directly addressed the question of

how to determine what plan controls a denial or termination of benefits, our decisions on closely related questions

are instructive. This court has held that there exists a

presumption against the vesting of benefits unless language

in the plan establishes some ambiguity on the issue.

Rossetto v. Pabst Brewing Co., 217 F.3d 539, 544 (7th Cir.

2000). If benefits have not vested, the plan participant

does not have an unalterable right to those benefits. The

fact that benefits have not vested suggests that the plan

is malleable and the employer is at liberty to change the

plan and thus change the benefits to which a participant

is entitled. Since the employer can change the plan, then it

must follow that the controlling plan will be the plan that

is in effect at the time a claim for benefits accrues. See, e.g.,

Grosz-Salomon v. Paul Revere Life Insurance Co., 237 F.3d

1154, 1159 (9th Cir. 2001) (applying this logic and reaching

the same conclusion). We have held that a claim accrues

at the time benefits are denied. Daill v. Sheet Metal Workers’ Local 73 Pension Fund, 100 F.3d 62, 65 (7th Cir. 1996).

Therefore, absent any language suggesting ambiguity on
No. 01-4132 5

the vesting question, the controlling plan must be the plan

in effect at the time the benefits were denied.

Hackett claims that the original plan contains language

that overrides the presumption against vesting. He therefore argues that his right to benefits did in fact vest

prior to the 1996 plan. He supports this claim by reference both to the 1977 plan and a 1987 personnel manual. Hackett correctly notes that the 1977 plan makes

clear that it cannot be amended in a way that would

“diminish any rights accrued for the benefit of the participants prior to the effective date of the amendment.” But

this does not add support to Hackett’s arguments. Rights

to benefits do not accrue prospectively. Hackett did not,

upon initial determination of eligibility, accrue a right

to benefits indefinitely; instead his right to those benefits accrues as the payments become due. Cf. Arndt v.

Security Bank S.S.B. Employees’ Pension Plan, 182 F.2d

538 (7th Cir. 1999). As a result the provision referenced

by Hackett in this context only says that no amendment

shall require Hackett to return benefits he has already

received or alter benefits for which the payments have

become due. For example if Xerox failed to send Hackett

his benefit check in September, they could not pass an

amendment in November reducing his benefits for September—his benefits for September had already accrued;

on the other hand Xerox is free to amend the policy in

November to change Hackett’s benefits for the following

January. As for the 1987 personnel manual, Hackett has

provided nothing to support the argument that the manual was a plan instrument; as such it is irrelevant to the

inquiry here.

Therefore, the 1996 policy controls the termination of

Hackett’s benefits. That policy grants the plan administrator discretion and we review the termination under

the arbitrary and capricious standard.
6 No. 01-4132

b. The Decision to Terminate

Review under the deferential arbitrary and capricious

standard is not a rubber stamp and deference need not

be abject. Hess, 274 F.3d at 461. Even under the deferential review we will not uphold a termination when there

is an absence of reasoning in the record to support it.

The termination decision here is just such a decision.

In reviewing the termination of benefits, we have noted

that “ERISA requires that specific reasons for denial be

communicated to the claimant and that the claimant be

afforded an opportunity for ‘full and fair review’ by the

administrator.” Halpin v. W.W. Grainger, 962 F.2d 685,

688-89 (7th Cir. 1992). We have further noted that substantial compliance is sufficient to meet this requirement.

Id. at 690.

Whether termination procedures substantially complied is a fact-intensive inquiry guided by the question of

whether the beneficiary was provided with a statement

of reasons that allows a clear and precise understanding

of the grounds for the administrator’s position sufficient

to permit effective review. Id. at 690 and 694. In Halpin

we explained that to meet this standard of substantial

compliance “the administrator must weigh the evidence

for and against [the denial or termination of benefits],

and within reasonable limits, the reasons for rejecting

evidence must be articulated if there is to be meaningful appellate review.” Id. at 695 (internal quotations omitted).

Applying this standard to Hackett’s case makes clear

that the termination procedures were arbitrary and capricious. After twelve years of paying out disability benefits, Xerox terminated those benefits simply on the basis

of an examination by Dr. Holeman, whose conclusion

that Hackett was able to work was contrary to numerous

prior opinions. Dr. Holeman provided no explanation for his
No. 01-4132 7

3 Alternatively Xerox likely could have met the standard of

substantial compliance despite the lack of reasoning in Dr. Holeman’s opinion had they provided a non-arbitrary explanation for

their decision to credit his opinion over those of the other doctors.

Unfortunately that too is missing from the record.

departure from the opinions of the previous doctors, and

Xerox provided no explanation for believing Dr. Holeman’s opinion over the opinions of the previous doctors.

There was no weighing of the evidence for and against, and

there were no articulated reasons given for Xerox’s rejection of the evidence that Hackett was unable to work.

Conclusions without explanation do not provide the requisite reasoning and do not allow for effective review. Id.

at 693. We are left without explanation as to why Dr.

Holeman’s opinion is different from Dr. Gerber’s. Had Dr.

Holeman referenced the previous opinions and explained

his deviation from them, we could have readily reviewed

this case. Any non-arbitrary explanation could show that

he had weighed the evidence for and against. We could,

therefore, assume that any decision by the administrator

took these factors into consideration.3

c. Remand

Having concluded that the denial of Hackett’s benefits

was reached in an arbitrary and capricious manner, we

must proceed to determine the appropriate remedy though

neither party addressed this issue. The question is whether we should remand the case to the plan administrator for further hearings or remand to the district court

with instruction to retroactively reinstate Hackett’s benefits. In answering this question a distinction must be

noted between a case dealing with a plan administrator’s

initial denial of benefits and a case where the plan administrator terminated benefits to which the administrator

had previously determined the claimant was entitled.
8 No. 01-4132

Compare Wolfe v. J.C. Penney Co., Inc., 710 F.2d 388, 393-

94 (7th Cir. 1983) (remanding to the administrator for

new hearing where initial denial of benefits was not procedurally adequate) with Halpin, 962 F.2d at 697 (affirming district court’s reinstatement of plan benefits where

termination was not procedurally adequate). The distinction focuses on what is required in each case to fully remedy the defective procedures given the status quo prior

to the denial or termination. See Quinn v. Blue Cross and

Blue Shield Ass’n, 161 F.3d 472 (7th Cir. 1998).

In a case where the plan administrator did not afford adequate procedures in its initial denial of benefits,

the appropriate remedy respecting the status quo and

correcting for the defective procedures is to provide the

claimant with the procedures that she sought in the

first place. Wolfe, 710 F.2d at 394. If the claimant prevails on remand before the plan administrator, then the

claimant would be entitled to retroactive benefits from

the time at which the initial denial occurred. Id. However the court is not in the place to make the determination of entitlement to benefits. The court must not substitute its own judgment for that of the administrator. Quinn,

161 F.3d at 478; see also Gallo v. Amoco Corp., 102 F.3d

918, 923 (7th Cir. 1996). The fact that the plan administrator failed to provide the adequate procedures does not

mean that the claimant is automatically entitled to

benefits—such a holding might provide the claimant “with

an economic windfall should she be determined not disabled

upon a proper reconsideration.” Quinn, 161 F.3d at 478.

On the other hand are cases where the plan administrator terminated benefits under defective procedures. In

these cases the status quo prior to the defective procedure was the continuation of benefits. Remedying the

defective procedures requires a reinstatement of benefits.

Thus in Halpin we affirmed the district court’s reinstatement of benefits where the plan administrator had arbi-
No. 01-4132 9

trarily and capriciously terminated benefits. Halpin, 962

F2d at 697. In doing so we distinguished Halpin from cases

dealing with an initial denial of benefits. Id. The distinction

was explained further in Quinn. There we dealt with an

administrator’s denial of continuing benefits where under

the plan the benefits automatically terminated unless the

administrator, after reviewing a claim for continuance,

found that continuation was proper. In remanding the case

to the administrator we distinguished the case from Halpin:

“Unlike Halpin . . . Quinn was not scheduled to continue

receiving benefits under the program.” Quinn, 161 F.3d at

478; see also Schleibaum v. Kmart Corp., 153 F.3d 496, 503

(7th Cir. 1998) (“A remand was not necessary in [Halpin]

because the administrator had previously determined

that the claimant was eligible for benefits.”) and 504

(“[R]einstatement under Halpin was not necessarily

appropriate because Mr. Schleibaum had never been

adjudged eligible for continuation of his life insurance

benefits in the first place.”). We noted in Quinn that reinstatement was appropriate in cases that, like Halpin,

“involve claimants who were receiving disability benefits,

and, but for their employers’ arbitrary and capricious

conduct, would have continued to receive the benefits.”

Quinn, 161 F.3d at 477. Hackett’s case is just such a

case—completely indistinguishable from Halpin. Hackett

had been previously determined to be disabled, and his

benefits would have continued unaltered but for the plan

administrator’s arbitrary and capricious conduct.

From a practical point of view this distinction makes

perfect sense. Hackett’s termination was the result of

arbitrary and capricious procedures, and therefore his

benefits could not have been terminated by those procedures. While a remand to the plan administrator may result in a finding that Hackett is no longer disabled, it

cannot result in a finding that the procedures in 1999

were anything other than arbitrary and capricious. Therefore nothing in the administrator’s decision could render
10 No. 01-4132

4 Hackett also raises challenges to the denial of various discovery

motions. Our holding today renders those challenges moot. 

Hackett’s benefits retroactively terminated. The best the

administrator could do is terminate Hackett’s benefits

on a going forward basis. This, of course, can be accomplished just as easily by initiating a new review of Hackett’s eligibility for benefits, which the administrator is

free to do after reinstatement of Hackett’s benefits. Indeed nothing in this opinion should be read as expressing

an opinion that Hackett’s benefits should not be terminated

in the future. We only address the issue of the procedures

necessary for such termination to accord with the statutory

requirement. Had Dr. Holeman explained his reasons

for disagreeing with Dr. Gerber, this appeal might likely

have been unnecessary and the termination might very

well have passed the arbitrary and capricious test.

Therefore we find that the appropriate remedy is to

remand to the district court with instruction to order

retroactive reinstatement of benefits and resolve all

other collateral issues.

III. Conclusion

The proper standard for reviewing the plan administrator’s termination of Hackett’s benefits was the arbitrary

and capricious standard. Because the termination was

arbitrary and capricious the district court erred in denying Hackett’s motion for summary judgment and in

granting Xerox’s motion for summary judgement. We

therefore REVERSE the denial of Hackett’s motion for

summary judgment and the grant of Xerox’s motion for

summary judgment and REMAND to the district court

with instructions to reinstate Hackett’s benefits and to

resolve all other collateral issues.4
No. 01-4132 11

A true Copy:

Teste: 

 ________________________________

Clerk of the United States Court of

Appeals for the Seventh Circuit 

USCA-02-C-0072—1-6-03