* District Judge of the Eastern District of Louisiana,

sitting by designation.

REVISED, August 12, 1998

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

_____________________

No. 97-10491

_____________________

ANITA SCHADLER,

Plaintiff-Appellant,

v.

ANTHEM LIFE INSURANCE COMPANY; ANTHEM BENEFIT SERVICES INC;

ACORDIA BENEFITS OF THE SOUTH, INC; ALLIED SIGNAL, INC;

ALLIED SIGNAL TECHNICAL SERVICES CORPORATION; ALLIED SIGNAL

TEAM/WHITE SANDS,

Defendants-Appellees.

_________________________________________________________________

Appeal from the United States District Court

for the Northern District of Texas 

_________________________________________________________________

July 17, 1998

Before KING and BARKSDALE, Circuit Judges, and DUPLANTIER,*

District Judge.

KING, Circuit Judge:

In this case under the Employee Retirement Income Security

Act, plaintiff-appellant Anita Schadler appeals the district

court’s determination that she is ineligible to receive benefits

under her husband’s accidental death and dismemberment policy

based upon an exclusion asserted by defendants-appellees for the

first time on appeal to the district court. Because we conclude

that the plan administrator failed to make the initial benefits
2

determination as required by the plan, we vacate the judgment of

the district court and remand with instructions to remand to the

plan administrator to make the necessary benefits decision in the

first instance.

I. FACTUAL & PROCEDURAL BACKGROUND

Prior to May 1994, James T. Schadler (Mr. Schadler), the

late husband of plaintiff-appellant Anita Schadler (Mrs.

Schadler), worked as an engineer for Lockheed Corporation

(Lockheed) at the White Sands Test Facility in New Mexico. In

May 1994, defendant-appellee Allied Signal Team/White Sands

(Allied) replaced Lockheed as the contractor operating the White

Sands facility, and Mr. Schadler thereby became an employee of

Allied on May 3, 1994. 

As part of his employment, Allied offered Mr. Schadler a

package of employee benefits (the Plan). One option included in

the Plan was a voluntary accidental death and dismemberment

policy (the VAD&D Policy). Defendant-appellee Anthem Insurance

Company (Anthem) underwrote and administered the VAD&D Policy and

defendant-appellee Acordia Benefits of the South, Inc. (Acordia)

served as its third-party administrator. The VAD&D Policy

provided that Mr. Schadler could enroll upon submitting the

appropriate paperwork and agreeing to make certain premium

payments. 

On May 12, 1994, Mr. Schadler died as a result of a mixeddrug intoxication. His autopsy revealed a recent needle puncture

that was not associated with resuscitative efforts, and a
 

1 Anthem also stated in the letter that Mrs. Schadler was

not entitled to recover under an optional life insurance policy

(the OLI Policy) or under a separate accidental death and

dismemberment policy that was funded by Mr. Schadler’s employer

(the AD&D Policy). Anthem denied coverage on the OLI Policy

because “no Anthem Voluntary Life insurance product was offered”

to Mr. Schadler. It denied payment on the AD&D policy on the

basis of a provision excluding recovery for deaths resulting from

“the taking of drugs or poisons . . . when done on a voluntary

basis” unless those drugs “are taken on the advice of a

physician.”

 

2 In her complaint, Mrs. Schadler also challenged the

denial of benefits under the OLI Policy and under the AD&D

Policy. The parties settled the dispute over the AD&D Policy

3

toxicologic examination of his body fluids revealed “cocaine,

Desipramine, and markedly elevated levels of morphine.” Mr.

Schadler had a history of drug abuse.

Following Mr. Schadler’s death, Mrs. Schadler sought payment

under various policies included in the Plan, including the VAD&D

Policy. In a letter dated April 24, 1995, Anthem explained that

Mrs. Schadler was not entitled to recover under the VAD&D Policy

because it had never received an enrollment card from Mr.

Schadler and had not billed him for coverage under the VAD&D

Policy. Anthem therefore concluded that “no VAD&D policy was

ever issued to James L. Schadler.”1

Following Anthem’s determination that Mr. Schadler was not

covered by the VAD&D Policy, Mrs. Schadler timely filed this

action against defendants-appellees Anthem, Anthem Benefit

Services, Inc., Acordia, Allied, Allied Signal, Inc., and Allied

Signal Technical Services Corporation (collectively, Defendants)

pursuant to the Employee Retirement Income Security Act of 1974

(ERISA), 29 U.S.C. §§ 1001-1461.2 She contended in her complaint
before trial. In her brief on appeal, Mrs. Schadler does not

contest the denial of coverage under the OLI Policy, and we

therefore do not address that claim here. See Brinkmann v.

Dallas County Deputy Sheriff Abner, 813 F.2d 744, 748 (5th Cir.

1987). 

 

3 Defendants’ also contended that Mrs. Schadler was not

entitled to recover based on an exclusion for death or

dismemberment resulting from “committing or attempting to commit

an assault or felony.” However, they no longer assert this

exclusion as a basis for their denial of Mrs. Schadler’s claim

under the VAD&D Policy, and we therefore need not address it. 

See Brinkmann, 813 F.2d at 748.

4

that Mr. Schadler had completed and returned the VAD&D Policy’s

enrollment card, and she argued that Anthem’s failure to receive

the enrollment card was due to an “inadvertent error, omission or

failure” on the part of Allied, for which the Plan indicated that

an employee may not be deprived of coverage. 

On March 6, 1996, Defendants moved for summary judgment,

arguing that “no application or premium was ever received and no

coverage was ever in force for a VAD&D policy.” In the

alternative, Defendants argued for the first time that, even if

the VAD&D Policy had been in force, recovery was precluded by

several exclusions contained therein, which they described as

follows:3 

- Intentionally self-inflicted injuries, or any attempt

thereof, while sane or insane. 

- The taking of drugs or poisons or asphyxiation from

the inhaling of gas, when done on a voluntary basis. 

(This does not apply to drugs that are taken on the

advice of a physician).

For reasons that remain unclear, in Defendants’ Supplemental

Motion for Summary Judgment they began to abandon their original

lack of coverage defense, stating that, “[r]egardless of whether
5

James Schadler properly enrolled for the benefits in dispute, it

is undisputed that the summary and plan at issue included

language specifically excluding benefits for intentionally selfinflicted injury.” Moreover, Defendants’ Proposed Findings of

Fact and Conclusions of Law did not mention the lack of coverage

defense, stating only that Mr. Schadler’s death was excluded from

coverage based on the intentionally self-inflicted injury and

drug-use exclusions. In response, Mrs. Schadler argued that

Defendants could not rely on the drug-use exclusion because it

was not listed in the Summary Plan Description (SPD). She also

contended that Defendants should not be allowed to rely on the

intentionally self-inflicted injury exclusion because they did

not assert it until they moved for summary judgment in the

district court.

The district court denied Defendants’ motion for summary

judgment. Following a bench trial consisting of the admission of

depositions, affidavits, and other exhibits and of closing

arguments by counsel, the district court determined that circuit

precedent dictated that Defendants could not deny Mrs. Schadler

benefits based upon the drug-use exclusion because it was not

listed in the SPD. The court nevertheless found that she was

ineligible to receive benefits under the VAD&D Policy because Mr.

Schadler’s death was the result of illicit drug use, which the

court found constituted an intentionally self-inflicted injury

and was therefore excluded from coverage. Mrs. Schadler timely

appealed the judgment of the district court.
 

4 Alternatively, Defendants argue that the district court

incorrectly determined that they were foreclosed from relying on

the drug-use exclusion. In Hansen v. Continental Insurance Co.,

940 F.2d 971 (5th Cir. 1991), we held that where the SPD and the

terms of the plan conflict, the SPD controls. Id. at 982. 

However, we reserved for another day the issue of whether an

ERISA claimant must show reliance on the terms of the SPD in

order to benefit from the terms within it that conflict with the

plan. Id. at 983. Defendants now assert that this court should

follow the majority of other circuits and hold that in order for 

the SPD to control when in conflict with terms contained within

the plan, the plaintiff must prove that she relied on the SPD.

However, Defendants failed to include this issue in the parties’

Joint Pre-Trial Order, and they now raise it for the first time

on appeal. “‘Once the [pretrial] order is entered, it controls

6

 II. DISCUSSION

Mrs. Schadler argues that the district court erred in

finding that she was not entitled to benefits. She first

contends that ERISA and the regulations promulgated pursuant to

it dictate that Defendants should not have been allowed to assert

the intentionally self-inflicted injury exclusion for the first

time before the district court. Alternatively, Mrs. Schadler

asserts that even if Defendants are allowed to rely on the

intentionally self-inflicted injury exclusion, it does not

preclude her recovery because Mr. Schadler did not intend to

injure himself. 

Defendants respond that they have asserted the same factual

basis for denying the claim throughout the process and that Mrs.

Schadler therefore was not prejudiced by their reliance on the

intentionally self-inflicted injury exclusion for the first time

before the district court. In addition, they argue that the

district court’s decision that the intentionally self-inflicted

injury exclusion precluded recovery is correct.4 Following a
the scope and course of the trial. Fed. R. Civ. P. 16. If a

claim or issue is omitted from the order, it is waived.’” Valley

Ranch Dev. Co. v. FDIC, 960 F.2d 550, 554 (5th Cir. 1992)

(alteration in original) (quoting Flannery v. Carroll, 676 F.2d

126, 129 (5th Cir. 1982)). Moreover, the fact that the district

court mentioned reliance in a footnote is not sufficient to

permit Defendants to argue it before this court because the

record reveals that it was not litigated below. Accordingly, we

conclude that Defendants have failed to preserve any challenge to

the district court’s determination that they are precluded from

relying on the drug-use exclusion to deny benefits in this case.

7

brief discussion of the law surrounding suits challenging denials

of benefits under ERISA, we address each of these arguments in

turn.

A. 

As the Supreme Court has explained, “ERISA was enacted ‘to

promote the interests of employees and their beneficiaries in

employee benefit plans’ and ‘to protect contractually defined

benefits.’” Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101,

113 (1989) (citations omitted) (quoting Shaw v. Delta Airlines,

Inc., 463 U.S. 85, 90 (1983) and Massachusetts Mutual Life Ins.

Co. v. Russell, 473 U.S. 134, 148 (1985), respectively). 

Therefore, 

ERISA sets certain minimum requirements for procedures

and notification when a plan administrator denies a

claim for benefits. In a nutshell, 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, Inc., 962 F.2d 685, 688 (7th Cir. 1992).

These procedures are set forth in § 1133 of ERISA and in the

Department of Labor regulations promulgated pursuant to that

section. Section 1133 provides:
8

In accordance with regulations of the Secretary,

every employee benefit plan shall-- 

(1) provide adequate notice in writing to any

participant or beneficiary whose claim for

benefits under the plan has been denied, setting

forth the specific reasons for such denial,

written in a manner calculated to be understood by

the participant, and

(2) afford a reasonable opportunity to any

participant whose claim for benefits has been

denied for a full and fair review by the

appropriate named fiduciary of the decision

denying the claim.

29 U.S.C. § 1133. The Department of Labor Regulations further

elaborate on § 1133(1)’s notice requirement. Section 2560.503-

1(f) of Title 29 of the Code of Federal Regulations provides as

follows:

(f) Content of notice. A plan administrator or,

if paragraph (c) of this section is applicable, the

insurance company, insurance service, or other similar

organization, shall provide to every claimant who is

denied a claim for benefits written notice setting

forth in a manner calculated to be understood by the

claimant:

(1) The specific reason or reasons for the

denial;

(2) Specific reference to pertinent plan

provisions on which the denial is based;

(3) A description of any additional material or

information necessary for the claimant to perfect the

claim and an explanation of why such material or

information is necessary; and 

(4) Appropriate information as to the steps to be

taken if the participant or beneficiary wishes to

submit his or her claim for review.

29 C.F.R. § 2560.503-1(f). 

 Because ERISA and the regulations promulgated pursuant to

it “‘were intended to help claimants process their claims

efficiently and fairly,’” Short v. Central States, Southeast &

Southwest Areas Pension Fund, 729 F.2d 567, 575 (8th Cir. 1984)

(quoting Richardson v. Central States, Southeast & Southwest
9

Areas Pension Fund, 645 F.2d 660, 665 (8th Cir. 1981)), the

“requirement that the [administrator] disclose the basis for its

decision is necessary so that plan beneficiaries ‘can adequately

prepare . . . for any further administrative review, as well as

an appeal to the federal courts,’” Matuszak v. Torrington Co.,

927 F.2d 320, 323 (7th Cir. 1991) (alteration in original)

(quoting Richardson, 645 F.2d at 665). See also Halpin, 962 F.2d

at 689 (“[T]hese regulations are designed to afford the

beneficiary an explanation of the denial of benefits that is

adequate to ensure meaningful review of that denial.”). Courts

therefore have held that ERISA and its regulations require that,

when a plan administrator denies a claim, it must “‘issue a

written opinion that includes specific reasons for the decision. 

Baldfaced conclusions do not satisfy this requirement.’” Short,

729 F.2d at 575 (quoting Richardson, 645 F.2d at 665).

In determining whether to pay or deny benefits, a plan

administrator must make two general types of determinations: 

“First, he must determine the facts underlying the claim for

benefits. . . . Second, he must then determine whether those

facts constitute a claim to be honored under the terms of the

plan.” Pierre v. Connecticut Gen. Life Ins. Co./Life Ins. Co. of

N. Am., 932 F.2d 1552, 1557 (5th Cir. 1991). The requirement

that the administrator must give reasons for its benefits

decision applies to these two types of determinations.

When a plan has denied benefits to a claimant, § 1132 of

ERISA provides that the claimant may bring a suit in federal
 

5 Where the court must apply the abuse of discretion

standard to the administrator’s interpretation of the plan, we

have delineated a two-step inquiry for determining whether the

administrator’s decision will be affirmed. 

The court must initially determine whether the

administrator’s interpretation of the plan is the

legally correct interpretation. If the administrator’s

interpretation of the plan is legally correct, then the

inquiry ends because no abuse of discretion could have

occurred. However, if the court determines that the

administrator’s determination is not legally correct,

then it must further determine whether the

administrator’s decision was an abuse of discretion.

Spacek v. Maritime Ass’n, ILA Pension Plan, 134 F.3d 283, 292-93

(5th Cir. 1998) (citation omitted) (citing Wildbur, 974 F.2d at

10

district court “to recover benefits due to him under the terms of

his plan.” 29 U.S.C. § 1132(a)(1)(b). In Firestone Tire &

Rubber Co. v. Bruch, the Supreme Court delineated the appropriate

standards of review of the plan administrator’s second decision--

i.e., its interpretation of the provisions of the plan. 489 U.S.

101, 108 (1989). Relying on principles of trust law, the Court

held that “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.” Id. at 115; see also Sweatman v. Commercial Union

Ins. Co., 39 F.3d 594, 597-98 (5th Cir. 1994); Wildbur v. ARCO

Chem. Co., 974 F.2d 631, 636 (5th Cir.), modified on other

grounds, 979 F.2d 1013 (5th Cir. 1992). Where a plan does vest

the administrator with such discretionary authority, courts

review the decision under the more deferential abuse of

discretion standard.5 Barhan v. Ry-Ron, Inc., 121 F.3d 198, 201
637).

 

6 Other evidence that may be relevant to this

determination includes, for example, evidence indicating whether

the administrator’s interpretations of plan provisions have been

consistent. See Wildbur, 974 F.2d at 639 n.15.

11

(5th Cir. 1997); Wildbur, 974 F.2d at 636. Finally, even when

the district court’s review of the administrator’s interpretation

of the provisions of the plan is limited by the use of a

deferential standard, we have held that the district court “is

not confined to the administrative record in determining whether,

under our analytical framework, [the] plan administrator abused

his discretion in making a benefit determination.”6 Wildbur, 974

F.2d at 639. 

Bruch addressed only the second determination made by the

administrator, leaving open the question of what standard of

review should be applied to an administrator’s factual

determinations. See Bruch, 489 U.S. at 108 (noting that its

discussion was “limited to the appropriate standard of review in

§ 1132(a)(1)(B) actions challenging denials of benefits based on

plan interpretations” (emphasis added)); Pierre, 932 F.2d at 1557

(“Bruch addressed the proper standard of review that is to be

given to the plan administrator’s second determination. Bruch

did not speak to the first.”). As to the first determination--

the findings of fact--we have held that the administrator’s

decision should always be reviewed for an abuse of discretion. 

Pierre, 932 F.2d at 1562; see also Southern Farm Bureau Life Ins.

Co. v. Moore, 993 F.2d 98, 101 (5th Cir. 1993). Moreover, the
12

reviewing court “should evaluate the administrator’s fact

findings regarding the eligibility of a claimant based on the

evidence before the administrator, assuming that both parties

were given an opportunity to present facts to the administrator.” 

Wildbur, 974 F.2d at 639; see also Southern Farm Bureau, 993 F.2d

at 102. 

In sum, ERISA and its regulations contemplate a system in

which the administrator makes a decision as to whether to grant

or deny benefits based on the factual scenario and based on its

interpretation of the relevant plan provisions. The

administrator then provides the claimant with notice of the

decision, including, among other things, the “specific reason or

reasons for the denial” and “[s]pecific reference to pertinent

plan provisions on which the denial is based.” 29 C.F.R.

§ 2560.503-1(f). If the administrator denies benefits, the

claimant may bring suit under § 1132. The district court will

then engage in a deferential review of the administrator’s

factual determinations, based on the record before the

administrator. Next, depending on whether the plan expressly

grants the administrator discretion in interpreting its terms,

the reviewing court will review the administrator’s

interpretation of the plan provisions either under a de novo or

an abuse of discretion standard. Thus, the end product of a

claims review process wherein § 1133 and its regulations have

been followed faithfully is a benefits decision that is

thoroughly informed by the relevant facts and the terms of the
 

7 The Plan states: “Anthem Life Insurance Company

reserves the right to determine eligibility and construe the

terms of the Plan.” Although it does not include the term

“discretion,” this statement is adequate to vest the

administrator with the discretion to interpret the terms of the

Plan. See Wildbur, 974 F.2d at 637 (noting that the focus in

determining whether administrators have been granted discretion

to interpret the terms of the plan should be on “the breadth of

the administrators’ power--their ‘authority to determine

eligibility for benefits or to construe the terms of the plan’”

and not on an “incantation of the word ‘discretion’ or any other

‘magic word’” (quoting Block v. Pitney Bowes, Inc., 952 F.2d

1450, 1453 (D.C. Cir. 1992))).

13

plan and, if benefits are denied, includes an explanation of the

denial that is adequate to insure meaningful review of that

denial. Having laid out the proper procedures to be followed, we

now turn to an examination of how this process functioned in the

instant case.

B.

The Plan at issue in this case vests the administrator with

the discretion to interpret its terms.7 The administrator

determined that Mrs. Schadler was not entitled to recover because

the VAD&D Policy had never gone into effect and therefore had

never provided coverage for Mr. Schadler. Mrs. Schadler then

filed suit pursuant to § 1132, contending that the terms of the

Plan indicated that a beneficiary would not be penalized for his

employer’s failure to submit his enrollment documents properly. 

Defendants moved for summary judgment, and they asserted for the

first time that even if the VAD&D Policy had been in effect as to

Mr. Schadler, coverage was precluded based on several exclusions
 

8 The Plan’s intentionally self-inflicted injury

exclusion states: “No benefits will be paid for losses caused or

contributed to by: . . . (5) suicide, attempted suicide, or

intentionally self-inflicted injury, while sane or insane.”

14

contained in the VAD&D Policy, including one relating to

intentionally self-inflicted injury.8

Mrs. Schadler now argues that Defendants should be barred

from raising the intentionally self-inflicted injury exclusion

for the first time in the district court. Defendants respond

that the judgment of the district court should be affirmed

because they have relied on the same “factual basis” for their

denial of benefits throughout the process. For the reasons that

follow, we conclude that the case must be remanded to the

administrator so that it may exercise its discretion and

determine whether, under the circumstances of this case, the

intentionally self-inflicted injury exclusion prevents Mrs.

Schadler from recovering under the VAD&D Policy.

Mrs. Schadler argues that Defendants should not have been

allowed to assert the intentionally self-inflicted injury

exclusion for the first time before the district court because

ERISA and the regulations promulgated pursuant to it mandate that

when an employee benefit plan provides a claimant with notice

that her claim has been denied, it must specifically reference

the plan provision upon which the administrator relied in making

the decision to deny benefits. Mrs. Schadler contends that

because Defendants failed to specifically reference the

intentionally self-inflicted injury exclusion in their denial
 

9 Relying on Hansen v. Western Greyhound Retirement Plan,

859 F.2d 779 (9th Cir. 1988), Defendants respond, and the

district court held, that no principle of estoppel precludes them

from changing the basis for their denial of benefits. Id. at 781

n.1. In Hansen, the Ninth Circuit held that “an employee benefit

fund may not be required by estoppel to make payments not

authorized by a written plan.” Id. at 781. In a footnote, the

court also noted that “[e]ven if Trust officials offered varying

explanations [for their denial of the plaintiff’s claim], their

confusion could not estop enforcement of the written plan

provisions.” Id. at 781 n.1. Hansen is inapposite to the case

at bar. 

Hansen involved a claim for retirement benefits by a

plaintiff who, according to the written terms of the plan, was

ineligible to receive the benefits he sought. Id. at 781. The

Hansen claimant based his claim for equitable estoppel on his

reliance on a misrepresentation made to him by a plan official

regarding his eligibility. Id. In contrast, no one now disputes

that Mr. Schadler was eligible to receive benefits under the

terms of the Plan. Moreover, Mrs. Schadler advances no claim

that the Plan misled her husband as to his coverage, and, as she

points out, she is not asking the court to estop Defendants from

asserting the exclusion for equitable reasons. Rather, she

contends that because the Plan failed to assert the intentionally

self-inflicted injury exclusion in the first instance as a reason

for its denial of her claim, it has now waived that exclusion.

15

letter, they have waived that exclusion and should have been

barred from raising it on appeal to the district court.9

We agree with Mrs. Schadler that, once the interpretation of

plan provisions becomes an issue, both the administrator and the

claimant should (1) adduce, at the earliest possible point in the

process, all possible reasons bearing on the granting or denial

of benefits under the plan and (2) develop the necessary factual

record so that those issues may be addressed and decided. Doing

so will ultimately further ERISA’s purpose of streamlining and

shortening the timeframe for disposing of claims. However,

whatever may be the case in other circumstances, we do not think

that a finding that Defendants have waived the intentionally
16

self-inflicted injury exclusion is warranted in the instant case. 

This is not a situation in which the administrator asserted one

plan exclusion at the administrative level and trial counsel then

bolstered the administrator’s position before the district court

with other exclusions. Indeed, in denying the claim in the first

instance, the administrator advanced a non-frivolous argument

that the VAD&D Policy had never been in effect as to Mr.

Schadler. The administrator therefore was not called upon to

make any further benefits determinations or even to interpret the

terms of the Plan at all in concluding that Mr. Schadler was not

covered. See Vizcaino v. Microsoft Corp., 120 F.3d 1006, 1013

(9th Cir. 1997) (en banc) (remanding the case to the plan

administrator which had not interpreted the provision at issue in

the first instance because it had found for the defendants on

alternative grounds), cert. denied, 118 S. Ct. 899 (1998); id. at

1022 n.4 (O’Scannlain, J., concurring in part and dissenting in

part) (“[T]he Plan Administrator had no need to reach the

question of the meaning of [the plan provision at issue on

appeal] since it had already determined that the [plaintiffs]

were not entitled to benefits on several other grounds. I am not

persuaded that by failing to interpret expressly a provision in

the Plan the Administrator rendered the provision a nullity.”). 

As a result, we are unwilling to conclude that the administrator

has, by determining that Mr. Schadler was not covered by the

VAD&D Policy, waived the right to interpret any particular
17

provisions of the VAD&D Policy once it has been shown that Mr.

Schadler was in fact covered.

Defendants respond to Mrs. Schadler’s waiver argument by

contending that she has suffered no prejudice as a result of

their assertion of the intentionally self-inflicted injury

exclusion for the first time before the district court because

they have at all times claimed that the basis for their denial of

coverage is the fact that Mr. Schadler died as a result of a

voluntary, self-administered drug overdose. They therefore argue

that the district court’s judgment should be affirmed. We

disagree.

First, although from the beginning Defendants claimed that

Mr. Schadler was not entitled to coverage under the AD&D Policy

(as distinguished from the VAD&D Policy at issue here) based on

the fact that he died as a result of a voluntary drug overdose,

they did not assert this with respect to the VAD&D Policy until

their motion for summary judgment. Prior to that point in the

claims process and the ensuing litigation, Defendants’ defense to

Mrs. Schadler’s claim under the VAD&D Policy was based entirely

on their argument that Mr. Schadler never effectively enrolled in

the VAD&D Policy and therefore was not entitled to coverage. 

Therefore, Defendants’ claim that they have always asserted the

same “factual basis” in denying this claim is simply not true. 

Second, even if Defendants had stated from the beginning that

their denial of coverage was based on the fact that Mr. Schadler

died from a voluntary drug overdose, that would not have
 

10 We note also that in many cases the factual development

that takes place at the administrative level will differ

depending on the plan provisions upon which the administrator

relies to deny benefits. In the case at bar, for example, the

no-coverage defense, the drug-use exclusion, and the

intentionally self-inflicted injury exclusion each requires the

development of different factual issues. 

In order to address the application of the intentionally

self-inflicted injury exclusion to Mrs. Schadler’s claim, the

administrator must consider facts bearing upon (1) Mr. Schadler’s

state of mind and intent and (2) his subjective expectations in

taking the particular drugs at issue here. In addition, the

administrator must “ask whether a reasonable person, with

background and characteristics similar to the insured, would have

viewed the injury as highly likely to occur as a result of the

insured’s intentional conduct.” Wickman v. Northwestern Nat’l

Ins. Co., 908 F.2d 1077, 1088 (1st Cir. 1990); see also,

Santaella v. Metropolitan Life Ins. Co., 123 F.3d 456, 464-65

(7th Cir. 1997) (adopting the Wickman test); Todd v. AIG Life

Ins. Co., 47 F.3d 1448, 1456 (5th Cir. 1995) (same). As is

evident from this discussion, due to the specificity of the

factual inquiry demanded by each plan provision, it is imperative

that a claimant know at the administrative level which plan

provisions have been relied upon in denying the claim and be

given a full opportunity at that level to adduce all relevant

evidence.

18

satisfied § 2560.503-1(f) which mandates that, in addition to

providing the factual reasons for the denial, the notice to the

claimant must also contain “[s]pecific reference to pertinent

plan provisions on which the denial is based.” 29 C.F.R.

§ 2560.503-1(f)(2).10 

As we find that neither Mrs. Schadler’s nor Defendants’

arguments are compelling in the instant situation, we turn to our

own analysis of what the law requires in this case. ERISA and

Bruch indicate that the job of the district court is to review

the administrator’s fact-finding and its interpretation of an

employee benefit plan’s provisions. See Bruch, 489 U.S. at 111. 

Indeed, the Supreme Court has instructed us that, when an
19

employee benefit plan vests discretion in the administrator,

principles of trust law require that we leave the plan

administrator’s interpretation undisturbed if reasonable. See

id. In this case, however, the administrator never had occasion

to interpret the intentionally self-inflicted injury exclusion

upon which Defendants now rely to deny coverage because it

concluded at the outset that the VAD&D Policy never covered Mr.

Schadler. 

Although we have not previously addressed an ERISA case

presenting a similar situation, several other courts have done so

and have unanimously concluded that a post hoc rationalization

for a decision to deny benefits is not equivalent to an

administrator’s exercise of its discretion. See, e.g., Vizcaino,

120 F.3d at 1013-15 (remanding a case for a decision by the

administrator where, for the first time at trial, the defendants

asserted an interpretation of a plan provision that had not been

considered in the administrator’s decision to deny benefits);

Gallo v. Amoco Corp., 102 F.3d 918, 923 (7th Cir. 1996) (“If the

justification that the plan administrator offers in court is

inconsistent with the reason that he gave the applicant, the

justification will be undermined.”), cert. denied, 117 S. Ct.

2532 (1997); Matuszak v. Torrington Co., 927 F.2d 320, 323 (7th

Cir. 1990) (“This Court would emasculate ERISA’s disclosure

requirement if it were to defer to reasons that the Board first

identified on appeal in the District Court, years after the

decision at issue. No plan can authorize such a result . . .
20

.”); Adelson v. GTE Corp., 790 F. Supp. 1265, 1273 (D. Md. 1992)

(refusing to apply a deferential standard of review to a

rationale for denying benefits that was not advanced by the

administrator and was only brought forth later by attorneys for

the plan on review by the district court). These courts reason

that “no plan can provide discretion to deny benefits for reasons

identified only years after the fact.” Matuszak, 927 F.2d at

322. 

The district court, recognizing that the administrator did

not rely on the intentionally self-inflicted injury exclusion in

deciding to deny benefits, determined that it should therefore

apply a de novo standard of review and, in effect, made the

benefits decision itself. “Whether the district court employed

the correct standard of review to an administrator’s eligibility

determination/plan interpretation is a question of law.” Chevron

Chem. Co. v. Oil, Chem. & Atomic Workers Local Union, 47 F.3d

139, 142 (5th Cir. 1995). We do not think that the application

of de novo review is appropriate under the circumstances of this

case. 

Because Defendants denied that coverage ever existed until

the matter was before the district court, the administrator never

had occasion to exercise any discretion to interpret the terms of

the Plan. For reasons that are unclear, Defendants now agree

that the VAD&D Policy was in effect as to Mr. Schadler, and they

now ask us to affirm the district court’s denial of coverage on

the basis of the intentionally self-inflicted injury exclusion. 
 

11 In so holding, we do not intend to create a steadfast

rule that de novo review is never appropriate where a defendant

puts forth a reason for denying benefits for the first time at

trial. There may indeed be cases in which such review is

appropriate, but this is not one of them. For example, it may be

appropriate for a district court to undertake a de novo review of

the denial where the administrator, despite repeated

21

However, “we should not allow ourselves to be seduced into making

a decision which belongs to the plan administrator in the first

instance.” Vizcaino, 120 F.3d at 1013. As the Ninth Circuit has

explained, “‘It is not the court’s function ab initio to apply

the correct standard to [the participant’s] claim. That

function, under the Plan, is reserved to the Plan

administrator.’” Saffle v. Sierra Pac. Power Co. Bargaining Unit

Long Term Disability Income Plan, 85 F.3d 455, 461 (9th Cir.

1996) (alteration in original) (quoting Henry v. The Home Ins.

Co., 907 F. Supp. 1392, 1398-99 (C.D. Cal. 1995)). We would

stand ERISA on its head if we countenanced bypassing the

procedures provided by the statute for making benefits decisions

in favor of making the initial benefits decision ourselves. We

therefore conclude that the district court erred in engaging in a

de novo review and making the factual and legal inquiry in the

first instance. Rather, when it became clear that Defendants

were no longer asserting that Mr. Schadler had not effectively

enrolled in the VAD&D Policy, the case should have been remanded

to the administrator for the development of a full factual record

and for the making of the decision on whether to grant or deny

benefits on the basis of the intentionally self-inflicted injury

exclusion in the first instance.11
opportunities to do so, refuses to make a ruling on an issue or

where the administrator so delays making a decision that such

delay amounts to a failure to decide the issue. See, e.g.,

Nelson v. EG&G Energy Measurements Group, Inc., 37 F.3d 1384,

1388-89 (9th Cir. 1994) (reviewing a denial of benefits de novo

where the entity vested with the discretion to interpret the

terms of the plan did not do so, despite repeated requests from

the plaintiffs). In this case, however, we face neither of those

situations, and we therefore need not decide when, if ever, de

novo review would be appropriate despite a plan’s grant of

discretion to its administrator.

22

III. CONCLUSION

For the foregoing reasons, we VACATE the judgment of the

district court and REMAND the case to the district court with

instructions to REMAND to the Plan administrator for further

proceedings consistent with this opinion. Costs shall be borne

by Defendants.