In the

United States Court of Appeals

For the Seventh Circuit ____________

No. 03-3911

ALFREDO RUIZ,

Plaintiff-Appellant,

v.

CONTINENTAL CASUALTY COMPANY

and STERLING, INCORPORATED, LONG

TERM DISABILITY PLAN,

Defendants-Appellees.

____________

Appeal from the United States District Court for the

Northern District of Indiana, Hammond Division.

No. 02 C 73—Rudy Lozano, Judge.

____________

ARGUED OCTOBER 27, 2004—DECIDED MARCH 11, 2005

____________

Before FLAUM, Chief Judge, and MANION and WILLIAMS,

Circuit Judges.

MANION, Circuit Judge. Alfredo Ruiz worked as a production supervisor for Application Engineering Corp. (“AEC”),

a subsidiary of Sterling, Inc. (“Sterling”), where he participated in Sterling’s long-term disability plan. When he was

denied long-term disability benefits he sued the insurance

company, Continental Casualty Co. (“Continental”) and
2 No. 03-3911

Sterling’s disability plan. The district court granted summary

judgment for the defendants, holding that Continental’s

decision to not extend long-term disability benefits to Ruiz

was neither arbitrary nor capricious. We affirm.

I.

A. Ruiz’s Injury, Medical Examinations, and Continental’s

Decisions Regarding Benefits

In late 1998, Ruiz aggravated a prior back injury when he

fell down a flight of stairs. This was not Ruiz’s first back

problem. Ruiz had apparently experienced problems with

his back since 1981 and underwent surgery that year, and

again in 1987, for the problems. On July 14, 1999, Ruiz

submitted a claim to Continental for disability benefits. Ruiz

was forty-one years old when he submitted his claim and

had not worked since February 9, 1999.

Ruiz’s claim form he submitted to Continental stated that

he was totally disabled and could not perform his job

because he was unable to walk, stand, or sit. Ruiz also submitted a “Physician’s Statement” completed by Dr. Ronald

Pavelka. Dr. Pavelka diagnosed Ruiz with “marked generalized bulging” of a spinal disc. Dr. Pavelka included with

his statement an MRI of Ruiz’s spine. Dr. Pavelka’s statement also included a comment that because of physical

limitations Ruiz “may not work” and suggested that Ruiz’s

prognosis was indefinite.

During the second half of 1999, Continental received more

medical records from doctors who had evaluated Ruiz

(Dr. Pavelka and a second doctor, Dr. Marc Levin), as well

as assessments from these doctors concerning Ruiz’s physical and occupational limitations. Dr. Pavelka continued to

assert that Ruiz could not work and that he could not sit,
No. 03-3911 3

stand, or walk for any time during an eight-hour workday.

Dr. Levin initially concluded that Ruiz had some limited

ability to sit, walk, and stand during an eight-hour workday. Dr. Levin later reconsidered his evaluation, however,

and suggested that Ruiz could sit up to three hours at one

time and could stand and walk for up to two hours at one

time. On January 21, 2000, Continental approved Ruiz’s

claim, retroactive to August 9, 1999 (six months after Ruiz’s

last day at work). Under the terms of the insurance policy

issued by Continental, this approval entitled Ruiz to up to

twenty-four months of disability benefits.

Continental’s policy has two phases of disability benefits.

During the first phase, an employee is considered disabled

if he is unable to perform the duties of his job at Sterling (or

in Ruiz’s case, the subsidiary, AEC). The second phase

begins if an employee has been disabled, as defined by the

first phase, for twenty-four months. In the second phase,

however, an employee is disabled only if he is unable to

engage in any job for which he is qualified, as measured by

his education, training, or experience.

Continental’s January 2000 approval, therefore, was a recognition that Ruiz was unable to return to his job at AEC.

Continental continued, however, to monitor Ruiz’s progress.

In July 2000, Continental wrote to Ruiz to inform him that

it believed he was capable of performing alternate work

(thus disqualifying Ruiz for the longer-term benefits under

the second phase of the policy) and that Ruiz’s benefits

would be terminated on August 8, 2001 (twenty-four

months after his benefits began).

In November 2000, Ruiz submitted a supplemental claim

form. As part of that form, a new physician, Dr. Kathryn

Hanlon, diagnosed Ruiz with an “intervertebral disc disorder” and “postlaminectomy syndrome.” Dr. Hanlon also
4 No. 03-3911

indicated that Ruiz was totally disabled but that he would

“recover sufficiently to perform duties” as of December 1,

2000.

On August 31, 2001, after his entitlement to benefits had

ended, Continental received an appeal letter from Ruiz. The

letter included medical records from a new doctor, Dr.

Ramesh Kanuru. The records indicated that Dr. Kanuru

performed surgery to implant a spinal cord stimulator in

Ruiz. The records also noted that Ruiz was using a “spine

patch.” Continental reviewed these records but decided that

they did not change its decision to terminate Ruiz’ benefits.

B. Sterling’s Plan for Disability Benefits and Continental’s

Insurance Policy

The Summary Plan Description (“SPD”) for Sterling’s longterm disability plan (the “Plan”) lists the Plan Administrator

as Sterling and named subsidiaries (including AEC). The

SPD also states that “[t]he Plan is administered by the Plan

Administrator through an insurance contract purchased

from [Continental].” In addition, the SPD provided that

“[t]he Administrator and other Plan fiduciaries have discretionary authority to interpret the terms of the Plan and to

determine eligibility for and entitlement to benefits in

accordance with the Plan.”

Continental issued to each eligible employee of Sterling a

policy certificate (the “Certificate”). The Certificate states

that “[w]hen making a benefit determination under the policy,

We [defined in the policy as Continental] have discretionary

authority to determine Your [defined in the policy as the

employee] eligibility for benefits and to interpret the terms

and provisions of the policy.” (Emphasis in the original.)

The Certificate also notes that “[t]he policy is delivered in

and governed by the laws of the governing jurisdiction and
No. 03-3911 5

to the extent applicable by the Employee Retirement Income

Security Act of 1974 (ERISA) and any amendments.” There

are no other documents relevant to the Plan.

C. The Present Action

On February 27, 2002, Ruiz filed the present action in

the district court seeking damages for wrongful denial of

benefits under the Employment and Retirement Income

Security Act of 1974, 29 U.S.C. § 1132(a)(1)(B) (“ERISA”).

Continental moved for summary judgment which the district court granted. The district court held that under ERISA,

Continental was a fiduciary. The district court also held that

Continental’s decision to deny Ruiz benefits was subject to

an arbitrary and capricious standard of review. Finally, the

district court concluded that the decision was neither arbitrary nor capricious and granted summary judgment in

favor of Continental. This appeal followed.

II.

We review a grant of summary judgment de novo. Vallone

v. CNA Fin. Corp., 375 F.3d 623, 631 (7th Cir.), cert. denied,

125 S. Ct. 670 (2004). A party is entitled to summary judgment in its favor when “there is no genuine issue of material

fact and that he or she is entitled to judgment as a matter of

law.” Id.; Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477

U.S. 317, 322 (1986).

A. The Standard of Review of Continental’s Decision

As a preliminary matter, the standard of review we utilize

with respect to the underlying decision of Continental to

deny benefits to Ruiz is vigorously disputed by the parties.
6 No. 03-3911

This court recently explained the possible standards of

review in cases asserting a wrongful denial of benefits:

Ordinarily, “[a] denial of benefits will be reviewed

de novo ‘unless the benefit plan gives the administrator

or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan.’ ”

Militello v. Cent. States, Southeast & Southwest Areas Pension

Fund, 360 F.3d 681, 685 (7th Cir. 2004) (quoting Firestone

Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct.

948, 103 L.Ed.2d 80 (1989)). If the plan’s language

“indicates with the requisite if minimum clarity that a

discretionary determination is envisaged,” Herzberger v.

Standard Ins. Co., 205 F.3d 327, 331 (7th Cir. 2000), “then

a denial of benefits will be reviewed under an arbitrary

and capricious standard.” Militello, 360 F.3d at 685

(citing Hess v. Hartford Life & Accident Ins. Co., 274 F.3d

456, 461 (7th Cir. 2001)).

Vallone, 375 F.3d at 631.

Our analysis has two parts. First, is Continental a fiduciary?

Second, assuming Continental is a fiduciary, are fiduciaries

granted sufficient discretionary authority under the terms

of Sterling’s Plan? If the answer to either of these questions

is no, we will review Continental’s decision to deny Ruiz

benefits de novo. If, on the other hand, the answer to both

questions is yes, we will review Continental’s decision under the highly deferential arbitrary and capricious standard.

Continental argues, and the district court held, that it is a

fiduciary for the Plan and that the Plan vests fiduciaries

with discretionary authority with respect to claims for

benefits. Therefore, its decision to deny benefits should be

reviewed under the arbitrary and capricious standard. Ruiz

instead argues that Continental is not a fiduciary and, therefore, we should review Continental’s decision to deny Ruiz

benefits de novo.
No. 03-3911 7

1. Is Continental a Fiduciary?

Section 3(21)(A) of ERISA defines a fiduciary as any

person who:

exercises any discretionary authority or discretionary

control respecting management of such plan or exercises

any authority or control respecting management or

disposition of its assets, (ii) . . . renders investment

advice for a fee or other compensation, direct or indirect, with respect to any moneys or other property of

such plan, or has any authority or responsibility to do

so, or (iii) . . . has any discretionary authority or discretionary responsibility in the administration of such plan.

29 U.S.C. § 1002(21)(A). The measure of whether a person is

a fiduciary is not whether that person is formally designated

as such. Instead, a fiduciary should be viewed “in functional

terms of control and authority over the plan.” Mertens v.

Hewitt Assocs., 508 U.S. 248, 262 (1993); see also ABA Section

of Labor and Employment Law, Employment Benefits Law

626 (2d ed. 2000) (“A fiduciary with respect to a plan is any

person that in fact performs any of the functions described

in the statutory definition, regardless of the formal relationship, if any, that person has with the plan.”). A court should

thus look to whether a proposed fiduciary exercises control

or authority over a particular benefit in an ERISA plan.

In this case we are concerned with whether Continental

fits the third criterion. That is, whether it “has any discretionary authority or discretionary responsibility in the administration of [the] plan.” 29 U.S.C. § 1002(21)(A)(iii).

In Aetna Health Inc. v. Davila, 124 S. Ct. 2488 (2004), the

Supreme Court held that “[w]hen administering employee

benefit plans, HMOs must make discretionary decisions

regarding eligibility for plan benefits, and, in this regard,

must be treated as plan fiduciaries.” Id. at 2502. The Court
8 No. 03-3911

concluded that “[c]lassifying any entity with discretionary

authority over benefits determinations as anything but a

plan fiduciary would . . . conflict with ERISA’s statutory and

regulatory scheme.” Id.

In light of Davila, we conclude that Continental was acting

as a fiduciary when it determined that Ruiz was not eligible

for disability benefits. As the Supreme Court noted, “[a]

benefit determination under ERISA . . . is generally a

fiduciary act.” Id. at 2501.

2. Does the Plan grant Continental the authority to construe

its terms or determine eligibility for benefits?

Having determined that Continental is indeed a fiduciary,

we must determine whether the Plan grants it the authority

to construe the terms of the Plan or determine eligibility for

benefits. Donato v. Metro. Life Ins. Co., 19 F.3d 375, 379 (7th

Cir. 1994).

Continental argues that the Plan does, pointing to the

Certificate issued to Ruiz that states that “[w]hen making a

benefit determination under the policy, [Continental has]

the discretionary authority to determine Your eligibility for

benefits and to interpret the terms and provisions of the

policy.” (Emphasis in the original.) While this court has held

that no “magic words” are necessary for a grant of discretionary authority, id. (quoting Sisters of the Third Order of St.

Francis v. SwedishAmerican Group Health Benefit Trust, 901 F.2d

1369, 1379 (7th Cir. 1990)), the language in the Certificate is

surely sufficient.

Ruiz, however, argues that the Certificate and the insurance policy issued by Continental are not plan documents

and, therefore, there is no language in a plan document that

vested Continental with the authority to construe the terms
No. 03-3911 9

of the Plan or determine eligibility for benefits. In support

of his argument, Ruiz quotes from this court’s decision in

Wallace v. Reliance Standard Life Ins., 318 F.3d 723 (7th Cir.

2003). In Wallace, this court noted that “Pegram [v. Hedrich,

530 U.S. U.S. 211 (2000)] concluded that a contract of

insurance sold to a plan is not itself ‘the plan’ . . . .” Wallace,

318 F.3d at 724. Ruiz takes this to mean that an insurance

policy issued pursuant to a contract for insurance does not

constitute a plan document.

Pegram, however, does not hold that an insurance policy

is not a plan document. Pegram holds only that “the provisions of documents that set up [an] HMO are not as such,

a plan.” Pegram, 530 U.S. at 223. In fact, the Court went on

to suggest that provisions of a contract between an HMO

(and, by extension, an insurer such as Continental) and an

employer can be part of a plan. Id. (“[T]he agreement between an HMO and an employer who pays the premiums

may provide . . . elements of a plan by setting out rules under

which beneficiaries will be entitled to care.”) (emphasis

added).

Moreover, we have considered an insurance policy a plan

document before. In Postma v. Paul Revere Life Insurance Co.,

223 F.3d 533, 537-40 (7th Cir. 2000), this court considered

whether an insurance policy issued by Paul Revere gave the

company the necessary discretion to entitle it to the arbitrary and capricious standard of review of its decision to

deny a plaintiff disability benefits. See also Houston v.

Provident Life and Accident Ins. Co., 390 F.3d 990, 994 (7th Cir.

2004) (in concluding that a defendant was entitled to the

arbitrary and capricious standard noted that “the policy

grants Provident ‘full, exclusive, and discretionary authority

to control, manage, and administer claims.’ ”) (emphasis

added). Other circuits have also held that insurance policies

are plan documents. Ross v. Rail Car Am. Group Disability
10 No. 03-3911

1 Ruiz has not presented specific evidence that Continental

suffered from a conflict of interest that would require this court

to apply the sliding scale of deference described in Manny v. Cent.

States, S.E. & S.W. Areas Pension & Health & Welfare Funds, 388

F.3d 241, 242-43 (7th Cir. 2004). See Mers v. Marriott Int’l Group

Accidental Death & Dismemberment Plan, 144 F.3d 1014, 1020 (7th

Cir. 1998) (requiring “specific evidence of actual bias that there is

a significant conflict”). We apply, therefore, a “simple” arbitrary

and capricious standard of review. Manny, 388 F.3d at 243.

Income Plan, 285 F.3d 735, 739 n.5 (8th Cir. 2002); Cinelli v.

Sec. Pac. Corp., 61 F.3d 1437, 1441 (9th Cir. 1995); Gable v.

Sweetheart Cup Co., 35 F.3d 851, 856 (4th Cir. 1994); Musto v.

Am. Gen. Corp., 861 F.2d 897, 900-01 (6th Cir. 1988); see also

Shaw v. Conn. Gen. Life Ins. Co., 353 F.3d 1276, 1282-83 (11th

Cir. 2003) (treating an insurance policy as plan document).

In this case, the insurance policy and the Certificate are

plan documents. The plan documents granted Continental

the requisite discretionary authority. Continental is entitled,

therefore, to have its decision to deny Ruiz benefits reviewed under an arbitrary and capricious standard.

B. Continental’s Decision

A fiduciary’s decision to deny a claim for benefits is entitled to “great deference” under the arbitrary and capricious

standard of review. Blickenstaff v. R.R. Donnelley & Sons Co.

Short Term Disability Plan, 378 F.3d 669, 677 (7th Cir. 2004).

It is not enough that we might disagree with a fiduciary’s

decision concerning benefits; we cannot overturn a decision

to deny benefits unless the decision was “downright

unreasonable.” Id.1

Continental’s decision was not “downright unreasonable.”

The Plan required Ruiz to submit objective medical findings
No. 03-3911 11

to support his claim for disability. The reports of the doctors

who opined that Ruiz could not perform even sedentary

work (the level of exertion a vocational consultant employed by Continental concluded Ruiz could perform) are

not supported by objective evidence. Instead, the primary

evidence supporting Ruiz’s claim that he cannot perform

any work for which he is trained was his own subjective

complaints of pain.

Further, the physicians’ opinions about Ruiz’s ability

to work are somewhat inconsistent. At roughly the same

time (the fall of 1999), Drs. Pavelka and Levin offered contradictory assessments of Ruiz’s capacities. As noted above,

Dr. Pavelka suggested Ruiz could perform no work while

Dr. Levin suggested that Ruiz could perform jobs that allowed Ruiz to sit, stand, or walk such that he was standing

for no more than two hours at one time, sitting for no more

than three hours at one time, and walking for no more than

three hours at a time. In conflict with both these earlier determinations is Dr. Hanlon’s conclusion, a year later, that,

although Ruiz was disabled at the time of the report, he would

able to return to work duties only a short time thereafter.

Finally, Dr. Kanuru’s opinion, the most recent of the four,

was not supported by objective medical evidence and, instead, relied solely on Ruiz’s complaints regarding his pain;

evidence, as noted above, that was not sufficient under the

Plan to support a claim for disability benefits.

In light of the lack of objective medical evidence supporting Ruiz’s claim that he can perform no work he is trained

to do, and the inconsistent conclusions of physicians reviewing Ruiz’s medical records, it was not “downright unreasonable” for Continental to conclude that Ruiz was not

entitled to long-term disability benefits. Blickenstaff , 378

F.3d at 677.
12 No. 03-3911

III.

The district court properly granted summary judgment in

favor of Continental. Continental served as a fiduciary to the

Plan and its decision to deny Ruiz long-term disability

benefits was neither arbitrary nor capricious. The decision

of the district court is

AFFIRMED.

A true Copy:

Teste:

 _____________________________

Clerk of the United States Court of 

Appeals for the Seventh Circuit 

USCA-02-C-0072—3-11-05