                                             Filed:    August 8, 1997


                  UNITED STATES COURT OF APPEALS

                      FOR THE FOURTH CIRCUIT



                            No. 96-1534
                           (CA-94-81-C)



Nancy Martin,

                                               Plaintiff - Appellee,

         versus

Blue Cross & Blue Shield of Virginia, Inc.,

                                             Defendant - Appellant.




                            O R D E R


    The Court amends its opinion filed June 23, 1997, as follows:

    On page 17, line 28 -- the subsequent history for Boggs v.
Boggs should read "cert. granted, 117 S. Ct. 379 (1996).

                                     For the Court - By Direction



                                          /s/ Patricia S. Connor

                                                      Clerk
PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

NANCY MARTIN,
Plaintiff-Appellee,

v.
                                                              No. 96-1534
BLUE CROSS & BLUE SHIELD OF
VIRGINIA, INCORPORATED,
Defendant-Appellant.

Appeal from the United States District Court
for the Western District of Virginia, at Charlottesville.
B. Waugh Crigler, Magistrate Judge.
(CA-94-81-C)

Argued: April 7, 1997

Decided: June 23, 1997

Before LUTTIG and WILLIAMS, Circuit Judges, and
DUFFY, United States District Court Judge for the
District of South Carolina sitting by designation.

_________________________________________________________________

Reversed by published opinion. Judge Williams wrote the opinion, in
which Judge Luttig and Judge Duffy joined.

_________________________________________________________________

COUNSEL

ARGUED: Thomas E. Spahn, MCGUIRE, WOODS, BATTLE &
BOOTHE, L.L.P., Richmond, Virginia, for Appellant. Richard Den-
nis Carter, HUDGINS, CARTER & COLEMAN, Alexandria, Vir-
ginia, for Appellee. ON BRIEF: Joel H. Trotter, MCGUIRE,
WOODS, BATTLE & BOOTHE, L.L.P., Richmond, Virginia; Jea-
nette D. Rogers, Litigation Department, BLUE CROSS & BLUE
SHIELD OF VIRGINIA, Richmond, Virginia, for Appellant. Jacque-
line E. Bennett, Mercedes J. Madole, HUDGINS, CARTER &
COLEMAN, Alexandria, Virginia, for Appellee.

_________________________________________________________________

OPINION

WILLIAMS, Circuit Judge:

In this case, we consider Nancy Cornelius Martin's claim under the
Employee Retirement Income Security Act (ERISA), 29 U.S.C.A.
§ 1001-1461 (West 1985 & Supp. 1997), to obtain insurance benefits
for the autologous bone marrow transplant procedure she underwent
as treatment for her epithelial ovarian cancer. The magistrate judge1
concluded that the summary plan description (SPD) issued by Blue
Cross & Blue Shield of Virginia (Blue Cross) did not exclude the
high-dose chemotherapy and peripheral stem cell rescue elements of
Mrs. Martin's procedure and issued a declaratory judgment that Blue
Cross must therefore cover those elements of the procedure. Because
we conclude that the magistrate judge erred in finding that the proce-
dure was not experimental or investigative, we reverse. We also hold
that ERISA permits recovery of attorneys' fees only by prevailing
parties, and thus reverse the award of attorneys' fees in favor of Mrs.
Martin.

I.

Ronald W. Martin, Mrs. Martin's husband, was one of the owners
of a business known as Ray Fisher and Ron Martin, Incorporated (the
Company). During its twenty-eight years of operations, the Company
maintained a welfare benefit plan for its employees. Mrs. Martin, as
Mr. Martin's wife, was a beneficiary of the health insurance coverage
established and maintained by the Company. On behalf of the Com-
_________________________________________________________________

1 The parties consented to submission of the case to a magistrate
judge's dispositive jurisdiction under 28 U.S.C.A. § 636(c) (West 1993
& Supp. 1997).

                    2
pany, Mr. Martin often changed health insurance policies to minimize
costs, although in recent years he changed policies less often. In Octo-
ber 1993, Mr. Martin contracted with Blue Cross to provide the Com-
pany's health insurance and to administer the plan. Mrs. Martin
claims that although the Company received copies of the SPD, Blue
Cross never provided the Company with a copy of the insurance con-
tract itself (the Plan).

Around this same time, Mrs. Martin was diagnosed with epithelial
ovarian cancer. In 1994, Mrs. Martin was referred to Dr. Steven
Wolff, an oncologist at Vanderbilt University Medical Center (Van-
derbilt). Dr. Wolff recommended that, to treat her ovarian cancer,
Mrs. Martin undergo a regimen of high-dose chemotherapy coupled
with stem cell rescue and autologous bone marrow transplant. The
parties do not dispute that the procedure at issue consists of three
phases. The first of these, stem cell rescue, involves the harvesting of
the patient's bone marrow cells.2 Then, while the harvested cells are
frozen and stored, the second stage -- high-dose chemotherapy -- is
conducted. The dosage is so strong that the patient's remaining bone
marrow cells are destroyed or damaged so severely that they grow
back slowly. The third stage involves the reinfusion of the harvested
cells into the patient. This reinfusion is necessary to save the patient's
immune system, which would otherwise be crippled by the damage
_________________________________________________________________

2 There are at least two methods of stem cell rescue. The stem cells
may be extracted from the bone marrow itself in a procedure called
autologous bone marrow harvest. In such a procedure, "the rear hip
bones, are aspirated of their marrow by long needles done percutane-
ously through the skin." (J.A. at 597.) The stem cells may also be
extracted from the blood itself in a procedure called peripheral stem cell
rescue. In such a procedure, the stem cells are mobilized from their nor-
mal residence and collected by a process called leukapheresis. The dif-
ference is of no consequence to the resolution of this case. As explained
by Dr. Wolff, Mrs. Martin's treating physician and expert witness, "It's
not probably crucial where those cells come from. Those cells should be
viewed not therapeutically, but should be viewed as supportive care for
the patient undergoing that type of therapy." (J.A. at 595.) Moreover, the
difference in terminology is sometimes ignored."They are different pro-
cedures but the casual term, [autologous bone marrow transplant], can
sometimes denote either one of those sources of bone marrow -- of bone
marrow stem cells." (J.A. at 599.)

                    3
to the bone marrow cells during the high-dose chemotherapy stage.
Dr. Wolff, Mrs. Martin's treating physician and expert witness,
described the entire procedure as "the administration of cytotoxic
therapy of such magnitude that the bone marrow, the organ of the
body that makes all the blood cells, is substantially injured necessitat-
ing the administration or transfusion of additional bone marrow cells
to aid in the recovery of bone marrow function induced by the dam-
age of the chemotherapy or radiation therapy." (J.A. at 595.) There is
evidence in the record that the term "autologous bone marrow trans-
plant" is often used to describe not only the third stage of the process,
but also the entire procedure, including stem cell rescue and high-
dose chemotherapy.

Dr. Wolff testified that, at the time of Mrs. Martin's treatment,
fewer than five women had ever undergone the same procedure for
epithelial ovarian cancer. In fact, the procedure was classified as a
Phase II clinical trial. Such clinical trials are regulated by the Food
and Drug Administration and the Department of Health and Human
Services and require a protocol document to standardize the proce-
dure. As explained by Dr. Wolff, a protocol explains "what you're
doing, why you're doing [it], the rationale, who is eligible for this
type of therapy, what the therapy is, how to administer the therapy,
how to care for the patients, what the complications of expected
nature are and how you could analyze the information that you get."
(J.A. at 605.) Such clinical trials also require that each participating
patient be advised of the nature of the treatment and its attendant
risks.

On April 27, 1994, Dr. Wolff requested pre-authorization from
Blue Cross, specifically indicating that he was "requesting authoriza-
tion for the treatment of this patient with high-dose chemotherapy
with autologous stem cell and marrow rescue." (J.A. at 17.) Soon
thereafter, on April 29, 1994, Blue Cross denied pre-authorization.
The offered reason for the denial was that "[h]igh-dose chemo(ra-
dio)therapy is considered investigational in the treatment of epithelial
ovarian cancer." (J.A. at 18.) On June 6, 1994, Dr. Wolff again wrote
to Blue Cross, appealing its initial coverage decision. On June 9,
1994, Blue Cross reaffirmed its denial of coverage, stating that it
"must deny proposed high-dose chemotherapy for diagnosis epithelial
ovarian carcinoma from two viewpoints: a) policy denial -- consid-

                     4
ered investigational in diagnosis of epithelial ovarian cancer [and] b)
contractually excluded per amendment to group policy-- not covered
for ovarian cancer other than germ cell tumors." (J.A. at 20.) Mrs.
Martin's final appeal to Blue Cross was by a letter from her lawyer
on July 6, 1994, which included several medical articles on the effec-
tiveness of the recommended treatment for ovarian cancer. Blue Cross
responded on August 2, 1994, explaining that

        [t]he Technology Evaluation and Coverage (TEC) program
        of the Medical Advisory panel of the Blue Cross and Blue
        Shield Association reviewed all of the scientific published
        peer reviewed literature on [autologous bone marrow trans-
        plant] for treating epithelial ovarian cancer. The treatment
        modality does not meet our coverage eligibility guidelines.
        I have enclosed a copy of these guidelines for you.

(J.A. at 1014.) Blue Cross appended to this letter its five-factor analy-
sis for determining if a procedure was experimental or investigative.

In July of 1994, before receiving the final letter from Blue Cross
but after receiving both denials of pre-authorization, Mrs. Martin
decided to undergo the procedure. Mrs. Martin conceded that she "ac-
tually underwent the procedure . . . with knowledge that Blue Cross
was taking the position it wasn't covered." (J.A. at 297.) The proce-
dure was successful, and she was discharged from the hospital in
August of 1994.

On November 28, 1994, Mrs. Martin filed this action against Blue
Cross in the United States District Court for the Western District of
Virginia. She brought the suit under 29 U.S.C.A. § 1132(a)(1)(B)
(West 1985), as a beneficiary of an employee welfare benefit plan.
From the beginning of the lawsuit, Mrs. Martin maintained that the
Company never received a copy of the Plan and therefore that the
SPD controlled. The magistrate judge bifurcated the trial to deter-
mine, first, which document -- the Plan or the SPD-- controlled the
analysis and, second, whether under the controlling document, Mrs.
Martin's treatment was excluded.

On July 5, 1995, the magistrate judge held a hearing on the first
issue and ruled from the bench that the Company never received a

                    5
copy of the Plan. He therefore concluded that the SPD controlled.
Later, on December 13, 1995, the magistrate judge held a second evi-
dentiary hearing to determine if Mrs. Martin's treatment was covered.
In a memorandum opinion issued on January 22, 1996, the magistrate
judge reaffirmed his earlier ruling from the bench that the procedure
was not experimental or investigative within the meaning of the
SPD's exclusion. He further concluded that an exclusion for "autolo-
gous bone marrow transplants" in the SPD did not exclude the related
services of high-dose chemotherapy and stem cell rescue. Therefore,
the magistrate judge entered a declaratory judgment of coverage for
those two phases of the procedure.

Thereafter, Mrs. Martin petitioned the court for attorneys' fees. The
magistrate judge granted the motion and, in an order of final judgment
entered on March 13, 1996, awarded attorneys' fees. Blue Cross
appeals, claiming that the entire procedure was excluded under the
Plan's and the SPD's exclusion for experimental or investigative pro-
cedures, as well as under the exclusions in the Plan and the SPD for
autologous bone marrow transplants. Blue Cross also challenges the
award of attorneys' fees in favor of Mrs. Martin. We conclude that
under the terms of the Plan and the SPD, the procedure was experi-
mental or investigative and that Mrs. Martin is not entitled to insur-
ance coverage for any phase of the procedure or to attorneys' fees.
Accordingly, we reverse.

II.

Blue Cross claims that the magistrate judge erred in concluding
that the procedure at issue was not experimental or investigative
within the meaning of the Plan's and the SPD's exclusions. The mag-
istrate judge assumed that, because "the SPD controls this case" (J.A.
at 748), review of Blue Cross's denial of benefits was de novo. We
disagree with the magistrate judge's assumption that the SPD controls
the case and with the magistrate judge's application of a de novo stan-
dard of review. We will assume without deciding that the Plan itself
was never received by the Company -- a point the parties argue at
considerable length -- because, in our view, the receipt or nonreceipt
of the Plan is irrelevant. In the Fourth Circuit, "if there [is] a conflict
between the complexities of the plan's language and the simple lan-
guage of the [SPD], the latter [will] control if the participant relied on

                     6
the SPD or was prejudiced by it." Hendricks v. Central Reserve Life
Ins. Co., 39 F.3d 507, 511 (4th Cir. 1994) (quotation omitted). In
other words, even if the Plan never arrived, it will nonetheless control
unless Mrs. Martin can prove both conflict between the Plan and the
SPD and that she relied on or was prejudiced by the SPD.

Mrs. Martin fails at the first step. The SPD provided "a brief list
of exclusions that apply to [the] program." (J.A. at 837-38.) This
"brief list" specifically stated that "Comprehensive Major Medical
benefits will not be provided for the following: . .. Experimental or
investigative procedures . . . ." (J.A. at 837-38.) The Plan itself
excludes "[a]ny service determined to be Experimental/Investigative
by the Company, in its sole discretion." (J.A. at 900.) The Plan further
explains that the phrase

        Experimental/Investigative . . . describes any service or sup-
        ply which is judged to be experimental or investigative by
        the Company in its sole discretion. The Company will use
        the following criteria to decide this:

        1. any supply or drug used must have received final
        approval to market by the U.S. Food and Drug Administra-
        tion;

        2. there must be enough information in the peer reviewed
        medical and scientific literature to let the Company judge
        the safety and efficacy;

        3. the available scientific evidence must show a good
        effect on health outcomes outside a research setting; and

        4. the service or supply must be as safe and effective out-
        side a research setting as current diagnostic or therapeutic
        options.

        A service or supply will be experimental or investigative if
        the Company decides that any one of the four criteria is not
        met.

                    7
(J.A. at 885.)3 Therefore, because the Plan gives more detail than the
SPD but does not contradict its terms, there is no conflict between the
Plan and the SPD.

Circuit precedent supports this conclusion. In Hendricks, we con-
sidered an argument that "the district court, in ruling on coverage for
his treatment, improperly relied upon definitions of the terms `experi-
mental' and `investigative' in the official plan document maintained
in Central Reserve's files and did not rest its decision on the terms of
the summary plan description circulated to employees." 39 F.3d at
511. There, as here, the summary plan description used only the
words "experimental or investigative," while the plan defined the
exclusion in greater detail. After carefully reviewing the common
understanding of the terms "experimental or investigative," we upheld
the view of "the district court that the definitions of `experimental'
and `investigative' given in the official plan document are not so dif-
ferent from common understandings of the terms that they can be
thought to conflict with those understandings." Id. at 512. We think
that the reasoning of Hendricks is equally applicable here. Because
the additional considerations outlined in the Plan "are not so different
from common understandings of the terms," no conflict exists
between the SPD and the Plan. As noted in Hendricks, when "the
summary plan description and the plan itself do not conflict, our cases
provide no prohibition against review of the official plan itself for a
fuller understanding of the plan's terms. Indeed, in those circum-
stances the plan is the controlling document for determining the scope
of benefits provided." Id.

We also find that no conflict arises from the Plan's grant of discre-
tion to Blue Cross to determine whether a procedure is experimental
or investigative. Although the SPD contains no such language, we
find no conflict between the absence of discretionary language in the
SPD and its presence in the Plan. Vesting the plan administrator with
discretion in making coverage decisions simply does not conflict with
the SPD's silence on the matter.4 See Atwood v. Newmont Gold Co.,
_________________________________________________________________

3 These four factors are very similar to the five factors appended to
Blue Cross's letter of August 2, 1994, denying coverage.

4 Moreover, even were we to conclude that the Plan's grant of discre-
tionary authority conflicted with the SPD's silence, Mrs. Martin could

                    8
45 F.3d 1317, 1321 (9th Cir. 1995) (holding that even though the
summary plan description did not include discretionary language, the
grant of discretionary authority in the plan controlled); see also
Jensen v. SIPCO, Inc., 38 F.3d 945, 952 (8th Cir. 1994) (explaining
that the plan will control "when the plan document is specific and the
SPD is silent on a particular matter"). Therefore, the Plan controls,
and it vests the administrator of the plan with discretion in making
coverage decisions.

Because the magistrate judge erred in finding a conflict between
the SPD and the Plan and in concluding that the SPD controlled, he
also erred in choosing the standard under which to review Blue
Cross's denial of benefits. In actions under ERISA challenging the
denial of benefits, we apply the standard of review described in
Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989). Under
this standard, we must show deference to the denial of benefits by an
administrator with discretionary powers to determine eligibility for
benefits, and we will reverse the administrator's denial of benefits
only upon a showing of abuse of discretion. See id. at 115; Doe v.
Group Hosp. & Med. Servs., 3 F.3d 80, 85 (4th Cir. 1993). This stan-
dard is slightly modified, however, when the administrator labors
under a conflict of interest. In our Circuit,

       when a fiduciary exercises discretion in interpreting a dis-
       puted term of the contract where one interpretation will fur-
       ther the financial interests of the fiduciary, we will not act
       as deferentially as would otherwise be appropriate. Rather,
_________________________________________________________________

hardly argue that she relied on or was prejudiced by the SPD's failure to
describe the appropriate standard for coverage decisions. As explained
by the Ninth Circuit, "The language of the SPD in this case amply
informed [the beneficiary] that there was a danger that he would be ineli-
gible for severance benefits if he resigned. The omission of plan lan-
guage placing the determination in the discretion of[the employer] does
not undermine this conclusion." Atwood v. Newmont Gold Co., 45 F.3d
1317, 1321 (9th Cir. 1995). Here, Mrs. Martin knew that the Blue Cross
policy did not cover experimental or investigative procedures, and she
cannot claim to have been prejudiced by the fact that she did not know
how Blue Cross would determine whether, applied to her illness, the pro-
cedure was experimental or investigative.

                    9
        we will review the merits of the interpretation to determine
        whether it is consistent with an exercise of discretion by a
        fiduciary acting free of the interests that conflict with those
        of the beneficiaries. In short, the fiduciary decision will be
        entitled to some deference, but this deference will be less-
        ened to the degree necessary to neutralize any untoward
        influence resulting from the conflict.

Doe, 3 F.3d at 87; see also Bedrick v. Travelers Ins. Co., 93 F.3d 149,
152 (4th Cir. 1996) ("Inasmuch as the law is highly suspect of `fidu-
ciaries' having a personal interest in the subject of their trust, the
`abuse of discretion' standard is not applied in as deferential a manner
to" plans where "the insurer processes and pays claims and acts as
plan administrator."). Therefore, the appropriate standard under which
to review Blue Cross's denial of benefits to Mrs. Martin is not de
novo, as used by the magistrate judge, but rather a modified abuse of
discretion standard.

In light of the magistrate judge's application of the wrong standard
in reviewing Blue Cross's denial of benefits, remand would ordinarily
be appropriate. In our view, however, remand is unnecessary because
we conclude, as a matter of law, that the procedure at issue was
experimental or investigative within the meaning of the Plan.

We first note that we have twice considered the issue, in different
contexts. In Hendricks, 39 F.3d at 509, we considered the identical
procedure as administered to a patient with small cell lung cancer.
The procedure at issue in Hendricks was a clinical trial, regulated by
the Food and Drug Administration and the Department of Health and
Human Services. Furthermore, Hendricks signed an informed consent
form and was subject to a protocol. Finally, Hendricks was one of the
first patients to undergo high-dose chemotherapy with stem cell res-
cue for his particular type of cancer. We concluded that although

        the components of the treatment proposed are fairly well
        known and data demonstrate that high-dose chemotherapy
        generally has a tendency to improve a patient's response to
        cancer, the data failed to demonstrate that small cell lung
        cancer would be more effectively treated with high-dose
        chemotherapy than with standard chemotherapy.

                    10
Id. at 514. Later, however, in Wilson v. CHAMPUS, 65 F.3d 361 (4th
Cir. 1995), a case that did not cite Hendricks , we held that autologous
bone marrow transplant with high-dose chemotherapy was not experi-
mental or investigative when administered for breast cancer. We
rejected the argument that "published, Phase III clinical trial results
are required before a benefit can be provided." Id. at 365. Instead, we
reasoned that "there is considerable evidence that Phase III clinical
trials are not the critical aspect in determining whether a therapy has
become `generally accepted' within the medical community." Id. This
reasoning, coupled with our review of the medical literature, led us
to conclude that high-dose chemotherapy with stem cell rescue was
not experimental or investigative when used to treat breast cancer.

Hendricks and Wilson make clear that an insurance policy may
limit coverage depending on the type of cancer involved. Although
both cases involved the same procedure, we reached different results
for small cell lung cancer and for breast cancer. Here, we conclude
that, at the time Mrs. Martin underwent the procedure, Blue Cross did
not abuse its discretion in determining that autologous bone marrow
transplant with high-dose chemotherapy for epithelial ovarian cancer
was experimental or investigative.

Blue Cross extensively reviewed the medical literature before
denying Mrs. Martin's application for coverage. In April of 1994, the
National Institutes of Health (NIH) produced a consensus statement
on "Ovarian Cancer: Screening, Treatment, and Followup." (J.A. at
1035.) The statement specifically noted that "high-dose chemotherapy
with hematopoietic growth factors or bone marrow transplantation is
experimental, and its use should be limited to research settings." (J.A.
at 1046.) Dr. John L. Colley, Blue Cross's expert witness, testified
that when the coverage decision for Mrs. Martin was made, Blue
Cross "had seen the NIH statement." (J.A. at 568.) Further, as
explained by Dr. Colley, "[t]he independent, seventy (70) or so Blue
[Cross/Blue Shield] plans across the country[formed an] association
[that] has a technology assessment program[the Technology Evalua-
tion Center] that looks at emerging technologies and . . . they have
a . . . very elaborate evaluation process for literature review and atten-
dance at scientific meetings . . . ." (J.A. at 560.) In 1994, the Technol-
ogy Evaluation Center produced an eighteen-page assessment that
"review[ed] the available evidence to determine whether high-dose

                     11
chemotherapy with autologous stem cell support (HDC/AuSCS)
improves survival for patients with epithelial ovarian cell cancer."
(J.A. at 1056.) The assessment "focuse[d] on evidence published
since 1990, briefly review[ed] the earlier evidence, and synthesiz[ed]
the prior conclusions with the new evidence." (J.A. at 1056.) After an
extensive review of the available literature in the eighteen-page
report, the Technology Evaluation Center concluded that "high-dose
chemotherapy with autologous stem cell support for the treatment of
epithelial ovarian cancer does not meet the Blue Cross and Blue
Shield Association Technology Evaluation Center (TEC) criteria."
(J.A. at 1074.) Dr. Colley testified that Blue Cross relied on this
assessment in denying coverage for Mrs. Martin's procedure, and
Blue Cross specifically mentioned the assessment in its final denial
of coverage to Mrs. Martin. Dr. Colley also testified that, when Mrs.
Martin's application for coverage was denied, nothing had "come to
Blue Cross'[s] attention to cast doubt on the original understanding
that [high-dose chemotherapy with autologous bone marrow trans-
plant] was experimental [or] investigative for ovarian cancer." (J.A.
at 568.) In fact, there is no testimony in the record that this treatment
has yet become generally accepted or standard practice for treatment
of epithelial ovarian cancer.

Our conclusion that Blue Cross conducted an adequate review of
the medical evidence and did not abuse its discretion in denying bene-
fits is sufficient to dispose of Mrs. Martin's claim. But because the
magistrate judge considered evidence beyond that which was before
the administrator,5 and because neither party objected to the consider-
_________________________________________________________________

5 In Sheppard & Enoch Pratt Hosp. v. Travelers Ins. Co., 32 F.3d 120,
125 (4th Cir 1994), we reaffirmed our view that, when the administrator
is vested with discretion in making coverage decisions, "an assessment
of the reasonableness of the administrator's decision must be based on
the facts known to it at the time." See also Berry v. Ciba-Geigy, 761 F.2d
1003 (4th Cir. 1985) (same, pre-Firestone). On the other hand, we have
held that in conducting de novo review of an administrator's coverage
decision, the reviewing court may consider evidence that was not before
the administrator "only when circumstances clearly establish that addi-
tional evidence is necessary to conduct an adequate de novo review of
the benefit decision." Quesinberry v. Life Ins. Co. of N. Am., 987 F.2d
1017, 1025 (4th Cir. 1993) (en banc). Here, the magistrate judge incor-
rectly assumed that review of Blue Cross's coverage denial was de novo
and therefore considered evidence that was not before the administrator.

                    12
ation of such evidence, we note that the extrinsic evidence presented
at the hearing does not undermine Blue Cross's denial of coverage.

The Plan requires that, to avoid exclusion as experimental or inves-
tigative, the procedure meet four criteria, one of which is that it "be
as safe and effective outside a research setting as current diagnostic
or therapeutic options." See supra p.11. Likewise, one of the five fac-
tors included in Blue Cross's final denial of coverage was that "[t]he
available scientific evidence must demonstrate a net beneficial effect
on health outcomes." (J.A. at 25.) Dr. Wolff, Mrs. Martin's own
expert witness, agreed with the statement that "what's experimental
is whether the therapy is better than standard alternatives for ovarian
cancer." (J.A. at 489.) Therefore, although Dr. Wolff testified that
application of Blue Cross's coverage factors otherwise indicated that
the procedure was not experimental or investigative, and although his
testimony was credited by the magistrate judge, he conceded that at
least one of the factors precluded coverage because there was a lack
of evidence to prove that this procedure was "as safe . . . as current
diagnostic or therapeutic options." The Plan makes clear that cover-
age will be denied if "any one of the four criteria" indicates that the
procedure is experimental or investigative, and Dr. Wolff's conces-
sion cannot support Mrs. Martin's claim for benefits.

Moreover, Dr. Wolff answered affirmatively when asked whether
"high-dose chemotherapy with autologous bone marrow transplant for
ovarian cancer patients is experimental as you define the term experi-
mental." (J.A. at 687.) Therefore, Dr. Wolff himself testified that, in
the general sense of the term, Mrs. Martin's procedure was experi-
mental or investigative. In other words, not only did Mrs. Martin's
expert testify that at least one coverage factor indicated that the proce-
dure was experimental or investigative, he also testified that he him-
self considered the procedure experimental or investigative.

Finally, Mrs. Martin's procedure, like that in Hendricks, was part
of a clinical trial, more specifically a Phase II clinical trial.6 In this
_________________________________________________________________

6 As we have previously explained,"Phase III is the final stage of med-
ical clinical trials. In Phase I, a new therapy is given to human beings for
the first time . . . . In Phase II, the treatment is given to a larger group
to determine whether the procedure is effective in treating a disease."
Wilson v. CHAMPUS, 65 F.3d 361, 365 n.5 (4th Cir. 1995).

                    13
regard, the magistrate judge clearly erred in concluding that "what
was considered a clinical trial in November 1993 on the evidence
before the district judge in Hendricks, was not a clinical trial accord-
ing to the preponderance of the evidence in this case." (J.A. at 771.)
In fact, it is uncontradicted in the record that Mrs. Martin's procedure
was part of a Phase II clinical trial. In his deposition, Dr. Wolff
explained that "a Phase [II] study really tries to answer the question,
in a specific disease situation how effective is the therapy intervention
that you're trying. You have to also note that to go in Phase [II]
studies means you're not taking standard therapy . . . ." (J.A. at 496.)
Although Wilson specifically rejected the argument that lack of a
Phase III clinical trial renders a procedure experimental or investiga-
tive, Mrs. Martin's participation in a Phase II clinical trial strongly
supports Blue Cross's conclusion that the procedure, when adminis-
tered to Mrs. Martin, was experimental or investigative. Moreover,
the required protocol for Mrs. Martin's procedure stated, "THIS
STUDY IS ENTIRELY RESEARCH," and, "THIS STUDY IS AN
INVESTIGATIONAL TREATMENT PROGRAM." (J.A. at 939.)
Finally, Mrs. Martin signed an informed consent form before under-
going the procedure. In this consent form, it was noted that:

        Both of these drugs are used in standard therapy for various
        tumors either separately or in combination. Recently, there
        is some evidence that each of these agents may be more
        effective if given at doses much greater than normal. The
        use of the higher doses and the combination of these drugs
        at the higher doses is the investigational (research) part of
        this study. The combination of these drugs in high-doses
        have been used in only a few patients. Preliminary observa-
        tions suggest that this therapy may be effective.

        It is the purpose of this study to determine the effectiveness
        and safety (side effects) of this high-dose therapy. It must be
        understood that compared to standard therapy the use of the
        therapy in this study will produce more serious side-effects
        and should be considered substantially more risky.

(J.A. at 951 (emphasis added).) Therefore, Mrs. Martin knew before
undergoing the procedure that it was considered experimental or
investigative.

                    14
In short, Blue Cross did not abuse its discretion in denying benefits
to Mrs. Martin because its decision was based on an extensive review
of the available literature. Moreover, the extrinsic evidence consid-
ered by the magistrate judge supports Blue Cross's denial of cover-
age. Dr. Wolff testified that at least one of Blue Cross's coverage
factors indicated that the procedure was experimental or investigative
and that he himself considered the procedure experimental or investi-
gative. In addition, Mrs. Martin herself knew that the procedure was
experimental or investigative because it was part of a Phase II clinical
trial, was subject to a protocol, and required Mrs. Martin's informed
consent. In light of this evidence, we cannot say that Blue Cross
abused its discretion, even the more limited discretion afforded to a
fiduciary acting under a possible conflict of interest, in concluding
that the procedure here was experimental or investigative when used
to treat epithelial ovarian cancer.

Finally, we note that we are not at liberty to "fragment" the proce-
dure into its component parts under the exclusion for experimental or
investigative procedures. In Hendricks, we concluded that "[t]o frag-
ment the phases of treatment and consider each in light of the policy
language produces an unrealistic and distorted analysis." 39 F.3d at
514. In doing so, we distinguished Doe v. Group Hosp. & Med.
Servs., 3 F.3d 80 (4th Cir. 1993), which held that fragmentation of the
treatment was permissible under an exclusion for autologous bone
marrow transplants. In Hendricks, we reasoned that because "the
treatment which is experimental or investigative includes the high-
dose chemotherapy as well as the preparational and recovery phases
of the treatment, the scope of the exclusion here is broader" than the
scope of the autologous bone marrow transplant exclusion considered
in Doe. 39 F.3d at 515. Applying Hendricks, we hold that Mrs. Martin
cannot recover the cost of any part of the procedure.7
_________________________________________________________________

7 In light of our disposition of this issue, we need not decide whether
reimbursement for the procedure was also prevented by the exclusion of
autologous bone marrow transplants contained in both the Plan and the
SPD.

                    15
III.

The magistrate judge also awarded attorneys' fees to Mrs. Martin.
We review the award of attorneys' fees under ERISA for abuse of dis-
cretion. See Denzler v. Questech, Inc,, 80 F.3d 97, 103 (4th Cir.
1996). Here, the magistrate judge abused his discretion by basing the
award of attorneys' fees on a faulty legal standard. The magistrate
judge stated that attorneys' fees "under ERISA[ ] should be recovered
by the prevailing party absent special circumstances rendering the
award unjust." (J.A. at 795.) We have specifically rejected such a
standard, holding that "there [is] no presumption in favor of awarding
attorney's fees to a prevailing insured or beneficiary." Denzler, 80
F.3d at 104. Therefore, the magistrate judge erred in applying a pre-
sumption that attorneys' fees should be recovered by a prevailing
ERISA claimant.

Although we would ordinarily remand for an application of the cor-
rect legal principles, remand here is unnecessary because Mrs. Martin
is not entitled to attorneys' fees as a matter of law. We have held that,
in awarding attorneys' fees, we consider five factors:

        (1) degree of opposing parties' culpability or bad faith;

        (2) ability of opposing parties to satisfy an award of attor-
        ney's fees;

        (3) whether an award of attorney's fees against the oppos-
        ing parties would deter other persons acting under similar
        circumstances;

        (4) whether the parties requesting attorney's fees sought to
        benefit all participants and beneficiaries of an ERISA plan
        or to resolve a significant legal question regarding ERISA
        itself; and

        (5) the relative merits of the parties' positions.

Id. at 104. Although we have never specifically held that only prevail-
ing parties are entitled to attorneys' fees under ERISA, we have often

                    16
indicated that reversal of a judgment under ERISA also requires
reversal of any attendant award of attorneys' fees. See, e.g., Freeman
v. Central States, Southeast & Southwest Areas Pension Fund, 32
F.3d 90, 94 (4th Cir. 1994) (explaining that, because the district court
clearly erred in its ruling, "[t]he judgment, as well as the derivative
award of attorney's fees and costs, must therefore be reversed");
Elmore v. Cone Mills Corp., 23 F.3d 855, 863 (4th Cir. 1994) (en
banc) (explaining, in an action under ERISA, that"[o]ur reversal of
the prior judgment also requires that we vacate the award of attor-
neys' fees to Plaintiffs"); Fuller v. FMC Corp., 4 F.3d 255, 264 (4th
Cir. 1993) (reversing a judgment under ERISA and holding that
"[b]ecause of our rulings in favor of [the employer], we must also
reverse the award in favor of [plaintiffs] for attorney's fees"). We
have also suggested, without explicitly holding, that only prevailing
parties are entitled to be considered for an award of attorneys' fees
under ERISA. See Custer v. Pan American Life Ins. Co., 12 F.3d 410,
423 (4th Cir. 1993) (stating that a plaintiff under ERISA "must dem-
onstrate more than merely being the prevailing party on a single issue
to demand entitlement to attorney's fees"). Moreover, many of our
sister circuits have imposed a "prevailing party" limitation on the
availability of attorneys' fees under ERISA. See Cottrill v. Sparrow,
Johnson & Ursillo, Inc., 100 F.3d 220, 225 (1st Cir. 1996) (consider-
ing "the degree of culpability or bad faith attributable to the losing
party" and "the depth of the losing party's pocket" (emphasis added));
Boggs v. Boggs, 82 F.3d 90, 94 n.1 (5th Cir.) (explaining that ERISA
"allows the court to award ERISA beneficiaries, participants, and
fiduciaries reasonable attorney's fees and costs when they are the pre-
vailing party"), cert. granted, 117 S. Ct. 379 (1996); Little v. Cox's
Supermarkets, 71 F.3d 637, 644 (7th Cir. 1995) (asking the "`bottom-
line question'" of whether "the losing party's position [was] substan-
tially justified and taken in good faith" (emphasis added)); Eddy V.
Colonial Life Ins. Co., 59 F.3d 201, 206 (D.C. Cir. 1995) (considering
the "losing party's culpability or bad faith" and "the losing party's
ability to satisfy a fee award" (emphasis added)); McPherson v.
Employees' Pension Plan, 33 F.3d 253, 254 (3d Cir. 1994) (noting
that "[a]ttorneys' fees may be awarded to prevailing parties in actions
brought under" ERISA); see also Flanagan v. Island Empire Elec.
Workers Pension Plan & Trust, 3 F.3d 1246, 1253 (9th Cir. 1993)
(admitting that it had "said in dictum that [the ERISA fee provision]

                    17
permits an award of fees to a non-prevailing party," but holding that
"plaintiffs cannot recover fees under section 1132(g)(1) until they
succeed on any significant issue in litigation which achieves some of
the benefit [they] sought in bringing suit" (quotations omitted and
alterations in original)). But cf. Miller v. United Welfare Fund, 72
F.3d 1066, 1074 (2d Cir. 1995) (stating that ERISA"contains no
requirement that the party awarded attorneys' fees be the prevailing
party"). Because of the strong suggestions in our own precedent, sup-
ported by the weight of authority from other circuits, we now make
clear that in the Fourth Circuit, only a prevailing party is entitled to
consideration for attorneys' fees in an ERISA action. We have denied
Mrs. Martin's claim in full, and therefore she is not entitled to attor-
neys' fees. Accordingly, we reverse the magistrate judge's award of
attorneys' fees.

IV.

We hold that the magistrate judge erred in concluding that Mrs.
Martin's procedure was not experimental or investigative. Because
circuit precedent precludes fragmentation of the autologous bone mar-
row transplant procedure for purposes of the experimental or investi-
gative exclusion, we deny Mrs. Martin's claim in full, including her
claim for attorneys' fees.

REVERSED

                    18
