PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

CALLIE D. GUTHRIE, 

Plaintiff-Appellant,

v.

NATIONAL RURAL ELECTRIC  No. 06-1410 COOPERATIVE ASSOCIATION LONGTERM DISABILITY PLAN; COOPERATIVE

BENEFIT ADMINISTRATORS,

INCORPORATED,

Defendants-Appellees. 

Appeal from the United States District Court

for the Eastern District of North Carolina, at Greenville.

Malcolm J. Howard, Senior District Judge.

(4:04-cv-00182-H)

Argued: September 25, 2007

Decided: December 11, 2007

Before KING and GREGORY, Circuit Judges, and

Samuel G. WILSON, United States District Judge for the

Western District of Virginia, sitting by designation.

Reversed and remanded with instructions by published opinion. Judge

Gregory wrote the opinion, in which Judge King and Judge Wilson

joined. 

COUNSEL

ARGUED: Andrew O. Whiteman, HARTZELL & WHITEMAN,

L.L.P., Raleigh, North Carolina, for Appellant. John Jay Range,
HUNTON & WILLIAMS, Washington, D.C., for Appellees. ON

BRIEF: Elena E. Ellison, HUNTON & WILLIAMS, Richmond, Virginia, for Appellees.

OPINION

GREGORY, Circuit Judge: 

Callie D. Guthrie ("Guthrie") was denied long-term disability benefits ("LTD benefits") by her employee benefit plan. She brought suit

against Cooperative Benefit Administrators, Inc. ("CBA") under the

Employee Retirement Income Security Act ("ERISA"), 29 U.S.C.

§ 1132(a)(1)(B). CBA moved for summary judgment. The District

Court granted CBA’s motion for summary judgment and denied

Guthrie’s motion for summary judgment, holding that no genuine

issue of fact supported Guthrie’s disability claim. Because we find

that CBA failed to consider all of Guthrie’s medical ailments in denying her claim for disability benefits, we reverse and remand. 

I.

Guthrie is a 57 year old former employee of Harkers Island Electric

Membership Corporation ("HIEMC") where she worked as a custodian for 13 years. HIEMC is a member of the National Rural Electric

Cooperative Association ("NRECA"). NRECA, a non-profit corporation, is a national trade association for rural electric cooperatives.

NRECA sponsors a Group Benefits Program which provides disability, life, accident, medical and other welfare benefits plans.1

 HIEMC

along with more than 1,000 other rural electric cooperatives participates in the Group Benefits Program. The Group Benefits Program is

administered by NRECA’s wholly-owned subsidiary, CBA. 

On March 23, 2002, Guthrie took disability leave from HIEMC.

Shortly thereafter on May 6, 2002, she filed a claim for LTD benefits.

Guthrie claimed to have breathing problems which prevented her

1The Group Benefits Program is a single plan of welfare benefits as

defined in section 3(1), 29 U.S.C. § 1002(1) of ERISA. 

2 GUTHRIE v. NATIONAL RURAL ELECTRIC
from working in an environment using cleaning products. She also

claimed to suffer from carpal tunnel syndrome, arthritis in her knees,

asthma, sores on her skin, depression and anxiety, unsteady gait, poor

vision, obesity, high blood pressure, and high cholesterol. Guthrie’s

primary care physician, Dr. T.L. Goodman ("Dr. Goodman"), confirmed her ailments. Dr. Goodman concluded that Guthrie was totally

disabled because her breathing prevented her from working around

dust, cleaners, and humidity. He noted, however, that Guthrie was not

totally disabled from other employment. 

HIEMC’s Groups benefits program includes a long-term disability

plan ("LTD Plan") that provides benefits to employees. HIEMC contributes to a trust fund held by NRECA for the payment of administrative expenses, insurance company premiums, and benefits. Under the

terms of the LTD Plan a participant is considered "totally disabled"

if due to sickness or accidental bodily injury he or she is: (1) completely unable to perform any and every duty pertaining to his own

occupation, and (2) after two years, completely unable to engage in

any and every gainful occupation for which he is reasonably fitted by

education, training, or experience. On June 13, 2002, CBA approved

Guthrie’s claim for benefits under the LTD Plan’s "own occupation"

standard. 

After receipt of benefits, Guthrie says her health continued to deteriorate. Although she underwent surgery for carpal tunnel, the surgery

did not completely relieve her pain. She continued to experience

problems with her knees, left wrist, hand, and cholesterol. 

In support of her disability claim, Guthrie submitted medical

records from her treating physicians to CBA. Dr. Goodman, Dr. C.

Hugh Everhart, a pulmonologist, and Dr. Matthew L. Zettle, an orthopedist, all agreed that Guthrie could not work as a custodian due to

exposure to fumes, solvents and dust. But none concluded that she

lacked the capacity to perform other work. 

Based on these medical reports, CBA referred Guthrie to Intracorp,

an employability assessment company. After interviewing Guthrie

and reviewing her medical files, Intracorp concluded that Guthrie

faced several barriers to future employment including, the lack of a

high school diploma and limited transferable skills. Intracorp noted

GUTHRIE v. NATIONAL RURAL ELECTRIC 3
that Guthrie would need to learn how to develop a resume and interview; but could perform sedentary or light duty jobs.2

Intracorp provided a job list, with descriptions, to Guthrie’s physicians and requested that they "indicate which positions would be

physically and mentally appropriate." Dr. Zettle approved the list. Dr.

Everhart confirmed that all the jobs were appropriate so long as Guthrie was not exposed to excessive dust or fumes. Dr. Goodman claimed

that none of the jobs were appropriate. Because Dr. Goodman previously agreed that Guthrie could perform other work, Intracorp asked

Dr. Goodman to explain his new diagnosis. In response, he stated that

he previously failed to consider Guthrie’s other medical conditions:

asthma, chronic nasal congestion, gastroesophageal reflux syndrome,

obesity, hypertension, osteoarthritis, carpal tunnel syndrome, and IQ.

Taking all this into account, Dr. Goodman opined that while Guthrie

could physically perform some of the positions, she could not "function" in any of the jobs. 

In January 2003, Intracorp reevaluated Guthrie and determined that

despite having below average math, reading, and language skills she

could perform unskilled sedentary jobs such as ticket taker, cashier,

hostess, textile tagger, and photo finishing lab worker. Intracorp provided Guthrie’s assessment to Dr. Goodman. He agreed that Guthrie

could physically perform a few of the jobs. 

From February 2003 to June 2003, Intracorp says it provided Guthrie with numerous job leads and assured her that "if a job was offered,

Dr. Goodman would be contacted to ensure she was physically able

to perform the job duties." (J.A. 224.) However, according to Intracorp, Guthrie often unnecessarily and negatively explained her medical conditions to potential employers. 

During this same time, Guthrie says her health deteriorated even

further. Dr. Goodman noted that Guthrie continued to have very sig2

Intracorp identified the following jobs: document preparer, microfilming, reviewer, addresser, taxicab coordinator, telephone solicitor, call-out

operator, order clerk for food and beverage, charge account clerk, dispatcher of motor vehicles, ticket taker, file clerk, and library assistant.

(J.A. 235-38.) 

4 GUTHRIE v. NATIONAL RURAL ELECTRIC
nificant medical problems. He reported that she had rather significant

musculoskeletal symptoms, very prominent anxiety, depression, "is

frequently tearful," and severe dermatological lesions that in some

ways were making her unemployable. James E. Lauve ("Lauve"), a

board-certified clinical social worker, also evaluated Guthrie. Lauve

diagnosed Guthrie as suffering from major depression and anxiety

and concluded that her physical and mental state precluded work

areas commensurate with her experience, education and physical

capabilities. 

On January 22, 2004, CBA informed Guthrie that her benefits

under the "own occupation" standard would expire on June 22, 2004,

and that it was reviewing her disability status. Dr. Goodman submitted another evaluation along with current medical records. He reiterated that Guthrie could not perform any job due to her mental and

physical constraints. 

Virginia Parks ("Parks"), a CBA nurse analyst, reviewed Dr. Goodman’s report and the medical records and determined that Guthrie’s

medical problems remained relatively unchanged. 

On May 24, 2004, CBA informed Guthrie that it would not renew

her LTD benefits because her medical evidence demonstrated that she

could obtain other gainful employment and, therefore, was not disabled under the "any occupation" standard. Guthrie appealed and

requested that CBA consider her award of social security benefits. 

On July 30, 2004, Guthrie petitioned CBA’s Appeals Committee.

In support, she provided letters from Dr. Goodman and Dr. James M.

Zechman ("Zechman"). Dr. Goodman stated he continued to follow

Guthrie’s osteoarthritis, severe dermatitis, asthma with an occupational component, esophageal disease, hyperlipidemia, and hypertension and that these conditions rendered her disabled from any

occupation. Dr. Zechman, board-certified in allergy and immunology,

also concluded that Guthrie has occupational asthma, which he considered a permanent disability. 

CBA submitted Dr. Zechman’s report to ProPeer for a second independent review. Dr. Leonard Sonne ("Sonne"), a board-certified pulmonologist, reviewed the report along with Guthrie’s medical files.

GUTHRIE v. NATIONAL RURAL ELECTRIC 5
Sonne agreed that Guthrie had mild asthma, depression, and arthritis

but that there was "no documentation to substantiate any disability

from sedentary work, light work, or medium work." (J.A. 47-48). 

On September 30, 2004, the Appeal Committee denied Guthrie’s

claim for LTD benefits. Guthrie then filed suit in the United States

District Court for the Eastern District of North Carolina. Guthrie

sought, inter alia, reinstatement of benefits under 29 U.S.C.

§ 1132(g). On cross-motions for summary judgment, the District

Court found that CBA did not abuse its discretion in denying Guthrie

LTD benefits under the "any occupation" standard because there was

substantial evidence in the record demonstrating that Guthrie could

perform sedentary jobs. 

Guthrie challenges the district court’s finding on two grounds: (1)

the district court failed to apply a modified abuse of discretion standard of review in determining whether the denial of her benefits was

supported by substantial evidence; and (2) the district court erred in

holding that Guthrie’s claim received a full and fair review pursuant

to 29 U.S.C. § 1332(a) of ERISA.

II.

When an ERISA claimant appeals a grant of summary judgment,

the Court conducts a de novo review, applying the same standards that

the district court employed. Ellis v. Metro. Life Ins. Co., 126 F.3d

228, 232 (4th Cir. 1997). A district court’s determination of the

proper standard for reviewing an ERISA plan administrator’s decision

is also reviewed de novo. Colucci v. Agfa Corp. Severance Pay Plan,

431 F.3d 170, 176 (4th Cir. 2005).

III.

In the instant case, the first issue to resolve is the proper standard

of review. It is well-settled that courts review the denial of benefits

under an ERISA policy for "abuse of discretion" if the policy grants

the administrator or fiduciary final and conclusive discretionary

authority. Carolina Care Plan Inc. v. McKenzie, 467 F.3d 383, 386

(4th Cir. 2006). This standard is only modified when a beneficiary

6 GUTHRIE v. NATIONAL RURAL ELECTRIC
demonstrates that the plan administrator has a conflict of interest. Id.

The LTD Plan at issue grants the administrator full authority.3 But

Guthrie maintains that a conflict of interest exists because CBA is a

subsidiary of NRECA. The district court disagreed and refused to

apply the "sliding scale abuse of discretion standard." 

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

Supreme Court set forth the standard of review in ERISA cases. The

Court instructed lower courts to apply an abuse of discretion standard

unless the administrator or fiduciary is operating under a conflict of

interest. Then, "the conflict must be weighed as a ‘facto[r] in determining whether there is an abuse of discretion.’" Id. at 115 (quoting

Restatement (Second) of Trust § 187, cmt. d (1959)). 

"Since Firestone, courts have struggled to give effect to [its] delphic statement, and to determine both what constitutes a conflict of

interest and how a conflict should affect the scrutiny of an administrator’s decision to deny benefits." Pinto v. Reliance Standard Life Ins.

Co., 214 F.3d 377, 383 (3d Cir. 2000). Under the sliding-scale

approach, the greater the administrator’s conflict of interest, the less

deference the reviewing court will give to the administrator’s decision. Carolina Care Plan Inc., 467 F.3d at 386 ("‘[t]he more incentive

for the administrator . . . to benefit itself,’ the less a court defers."

(quoting Ellis, 126 F.3d at 233)). However, a conflict of interest must

exist. 

HIEMC pays into a trust fund held by NRECA, a non-profit, who

contracts with CBA, an independent third-party to administer the

claims. (J.A. 460.) NRECA established a trust funded by thousands

of participating employers solely to pre-fund the benefit claims of

their employees and to spread the financial risk of paying a benefit

claim. Neither NRECA or any of the employers have a reversionary

interest in the funds. Benefit claims are paid from the trust — not

CBA’s, NRECA’s, or any participating employer’s own assets.

Because CBA and NRECA maintain a parent-subsidiary relationship,

Guthrie argues that a less deferential standard of review should apply.

3Section 9.07 of the LTD Benefit Plan grants "the Plan Administrator

and CBA . . . the discretion and final authority to interpret and construe

the terms of the Plan . . . ." (J.A. 329.) 

GUTHRIE v. NATIONAL RURAL ELECTRIC 7
In support, she cites two cases: Vega v. National Life Insurance Services, Inc., 188 F.3d 287 (5th Cir. 1999) (en banc) and Railey v.

Cooperative Benefit Administrators, Inc., 2006 WL 1548968, *5-6

(W.D.Ky. June 5, 2006). We find both cases unpersuasive. 

Vega involved an insurance company that utilized its whollyowned subsidiary as a plan administrator. Although the record did not

contain much information about the relationship between the companies, the Fifth Circuit reasoned that traditionally parent and subsidiary

companies are more like single entities and, therefore, the subsidiary’s decision to deny benefits "was, to some degree, self-interested."

Vega, 188 F.3d at 301. The Court held that because the plaintiffs only

demonstrated a minimal basis for a conflict and presented no evidence

of the degree of the conflict, the appropriate review under the sliding

scale approach would be to apply only a "modicum" less deference

than they otherwise would. Id.

Similarly in Railey, where NRECA and CBA were defendants, the

Court, relying on Vega, held that it was "not willing to ignore the possibility that CBA may have some incentive to decide in favor of its

parent company, NRECA." Railey, 2006 WL 1548968 at *5-6

(emphasis added).4 Despite not being able to identify any incentives

CBA would have to deny claims, the Court termed NRECA’s parentsubsidiary relationship an "inherent conflict." Id.

Courts have generally not considered the employer trust fund structure an "inherent conflict." Post v. Hartford Ins. Co., 501 F.3d 154,

164 n.6 (3d Cir. 2007) (noting that when employee benefits are paid

out a fully funded and segregated ERISA trust fund rather than an

employers operating budget, no structural conflict of interest is created). Unlike an insurance company that insures and administers a

plan, NRECA’s trust fund structure removes the inherent incentive to

4Guthrie also cites an additional case where NRECA and CBA were

defendants. Martin v. Nat’l Rural Elec. Coop. Assoc. Group Benefit Program, No. 8:03-cv-0640-t-26, (M.D. Fla. November 13, 2003). In Martin, the court stated that it previously ruled that the Plan documents, as

well as the Declaration of Robert E. Alvin, showed no evidence of conflict of interest, or more specifically, financial stake in the outcome of

Plaintiff’s claim, on the part of CBA. Id. at 8. 

8 GUTHRIE v. NATIONAL RURAL ELECTRIC
deny claims because the funds do not come from NRECA or CBA’s

assets. See Bedrick v. Travelers Ins. Co., 93 F.3d 149, 151 (4th Cir.

1996) (explaining the nature of the conflict as: "For a fixed premium

from the employer, [the insurance company] both funds and administers the plan, so it bears the financial consequences - and reaps the

financial rewards - of its own coverage decisions"). To the extent that

CBA has discretion to avoid paying claims, there is no evidence that

it thereby promotes the potential for its own or NRECA’s profit. 

We have recognized that "[t]here is a material difference [ ]

between a corporation whose business profits primarily derive from

managing ERISA plans and a corporation that collaterally manages a

plan through which it chooses to provide its employees benefits."

Colucci, 431 F.3d at 179. In Colucci, we held that "the simple and

commonplace fact that a plan’s administrator is also its funder is not

enough to support a finding of a conflict of interest that would cause

an adjustment to our deference." Id.

CBA and NRECA are independent third-parties that receive no

financial or evaluative incentives for denying claims. By employing

an independent third-party administrator and paying benefits from a

trust fund, CBA avoids potential conflicts of interest. And, any "potential conflict" which Guthrie alludes to but fails to identify, does not

establish a legally cognizable conflict of interest. Thus, we find that

the district court properly applied the abuse of discretion standard of

review.

IV.

Under the abuse of discretion standard, an administrator’s decision

will be upheld if it is reasonable. Bernstein v. CapitalCare, Inc., 70

F.3d 783, 787 (4th Cir. 1995). 

Put simply, CBA denied Guthrie’s claim because she was physically and mentally capable of working a sedentary job. The crux of

Guthrie’s appeal is that CBA denied her a "full and fair review" by

ignoring compelling evidence that she was limited by a number of

physical and mental ailments in addition to occupational asthma.

GUTHRIE v. NATIONAL RURAL ELECTRIC 9
She claims that CBA improperly relied on pulmonologists who did

not adequately address her other health conditions, in violation of

ERISA provisions, which require an administrator to "consult with a

health care professional who has appropriate training and experience

in the field of medicine involved in the medical judgment." 29 C.F.R.

§ 2560.503-1(h)(3)(iii). Guthrie also argues there is ample evidence

supporting her disability claim based on other conditions that CBA

never considered. CBA contends that Guthrie’s primary complaint

was occupational asthma, and therefore it was not inappropriate to

refer her claims to pulmonary specialists. More significantly, CBA

asserts that Guthrie’s other ailments were not the basis for her claim

for LTD benefits. The district court found that all of Guthrie’s arguments lacked merit and held that there was substantial evidence to

deny her disability claim. 

ERISA requires that plan administrators give plan participant

appeals a "full and fair review" so that an administrator’s decision is

"the result of a deliberate, principled reasoning process" and "supported by substantial evidence." 29 U.S.C. § 1332(a); Weaver v.

Phoenix Home Life Mut. Ins. Co., 99 F.2d 154, 157 (4th Cir. 1993);

Stup v. Unum Life Ins. Co., 390 F.3d 301, 307 (4th Cir. 2004). 

In assessing the reasonableness of an administrator’s decision, we

look to several non-exclusive factors. Booth v. Wal-mart Stores, Inc.

Assocs. Health and Welfare Plan, 201 F.3d 335, 342-43 (4th Cir.

2000) (listing the factors to include: the language of the plan, whether

the decision making process was reasoned and principled, and the

adequacy of the materials considered to make the decision and the

degree to which they support it). The dispositive factors, here, are

whether CBA’s decision was the result of a deliberate, principled reasoning process and supported by substantial evidence. See Sheppard

& Enoch Pratt Hosp., Inc. v. Travelers Ins. Co., 32 F.3d 120, 126 (4th

Cir. 1994) (stating that where the plan administrator offers a reasonable interpretation, courts may not disturb its findings). 

Employing this standard, we find CBA’s denial of benefits was

unreasonable. Although initially CBA had substantial evidence that

Guthrie could perform sedentary work, by 2003 CBA was on notice

that Guthrie’s other ailments were causing her health to deteriorate.

On May 12, 2003, Dr. Goodman noted that Guthrie’s medical prob10 GUTHRIE v. NATIONAL RURAL ELECTRIC
lems were very significant and that she was suffering from "very

prominent anxiety," depression, "is frequently tearful," and that "in

some ways [Guthrie’s] dermatological lesions were making her unemployable." (J.A. 77.) By the time CBA commenced its investigation

on January 22, 2004, into whether Guthrie’s LTD benefits would continue, she was already diagnosed by a clinical social worker, albeit

not a psychologist, as suffering from major depression and anxiety.

In response to the investigation, Dr. Goodman completed an attending

physician statement on January 28, 2004. In the statement, he indicated that Guthrie’s asthma, nerves, skin lesions, and arthritis all

placed her in a Class 5 physical impairment category; that is, Guthrie’s functional capacity was severely limited and she was incapable

of minimal sedentary activity. Dr. Goodman also noted that she had

developed very prominent anxiety symptoms. On February 27, 2004,

Dr. Goodman reported that Guthrie’s skin rash was so terrible that she

had small infected boils in some areas. Despite these reports, CBA

denied Guthrie LTD benefits on May 24, 2004. 

And even after Dr. Goodman, in support of Guthrie’s appeal, stated

that her osteoarthritis, severe dermatitis, asthma with an occupational

component, esophageal disease, hyperlipidemia, and hypertension

rendered her disabled from any occupation, CBA claimed that her

medical condition did not prevent her from returning to other gainful

employment. In so deciding, CBA relied on Drs. Sonne’s and Pearl’s

reports. Both pulmonologists found that Guthrie was not disabled

based on her occupational asthma. Although Dr. Pearl noted that

Guthrie had "multiple other problems," neither doctor addressed her

other ailments. 

Given that CBA was aware of the extent to which Guthrie’s other

ailments were disabling, we cannot conclude that CBA’s reliance on

the opinions of pulmonologists was reasonable. Under the circumstances, CBA should have referred Guthrie’s appeal to an internist or

primary care physician to assess her other ailments. Without question,

CBA honed in on Guthrie’s pulmonary issues, which effectively

resulted in denying her claim based on occupational asthma alone.

The record makes clear that on appeal the basis for Guthrie’s claim

for LTD benefits included far more than her occupational asthma.

Moreover, the record is bereft of any evidence demonstrating that

Guthrie’s other ailments were not disabling. Thus, CBA’s failure to

GUTHRIE v. NATIONAL RURAL ELECTRIC 11
consider Guthrie’s constellation of medical issues denied her a full

and fair review and, consequently, its decision to deny benefits was

not based on substantial evidence.

V.

For the foregoing reasons, we reverse the judgment of the district

court granting summary judgment in CBA’s favor and remand for

entry of judgment in Guthrie’s favor.

REVERSED AND REMANDED WITH INSTRUCTIONS

12 GUTHRIE v. NATIONAL RURAL ELECTRIC