                             In the
 United States Court of Appeals
               For the Seventh Circuit
                          ____________

No. 04-2342
HUGO DIAZ,
                                               Plaintiff-Appellant,
                                 v.

PRUDENTIAL INSURANCE COMPANY OF AMERICA,
                                              Defendant-Appellee.
                          ____________
            Appeal from the United States District Court
       for the Northern District of Illinois, Eastern Division.
          No. 03 C 2702—Charles R. Norgle, Sr., Judge.
                          ____________
  ARGUED JANUARY 3, 2005—DECIDED SEPTEMBER 20, 2005
                     ____________


  Before BAUER, EASTERBROOK, and WOOD, Circuit Judges.
  WOOD, Circuit Judge. This case involves Hugo Diaz’s
pursuit of long-term benefits under his company’s group
insurance disability plan. Prudential Insurance Company
of America, the plan’s underwriter, denied Diaz’s applica-
tion, both initially and through several rounds of appeal.
Diaz turned to the courts, but the district court concluded
that the plan gave the administrator discretionary author-
ity to determine participant eligibility. It therefore reviewed
Prudential’s decision under the deferential “arbitrary and
capricious” standard and concluded that Prudential was
entitled to summary judgment. We conclude
that deferential review was not appropriate given the
2                                               No. 04-2342

language of this plan and thus remand for further proceed-
ings.


                             I
  Diaz began working in 1998 as a computer programmer
analyst at Bank One in Chicago. As a Bank One employee,
he participated in a group disability insurance plan under-
written by Prudential. The plan included a long-term
disability component (LTD Plan) that provided benefits to a
participant who was unable to perform the essential
functions of his or her regular occupation as a result of an
injury or illness.
  In 2000, Diaz began experiencing persistent lower back
pain and was diagnosed with degenerative disc disease
and radiculopathy. For about two years, he underwent a
series of non-operative medical treatments that included
lumbar epidural steroid injections, physical therapy, and
pain medication. Because his condition was not improving
and he was in considerable pain, he stopped working on
January 31, 2002. On February 4, on the recommendation
of his physician, Diaz underwent a lumbar fusion procedure
with hardware implantation to correct an annular tear at
the lumbosacral joint, or L5-S1. Although post- operative
examinations showed that the hardware alignment was
satisfactory and there were no neurological deficits in his
lower extremities, Diaz continued to report varying levels
of pain in his back and legs. At times, Diaz reported that he
felt hardware movement in his back, but each time he had
this checked out, X-rays revealed that no movement had
occurred and that the fusion was consolidating satisfacto-
rily. After months of ineffective physical therapy and pain
medication, he decided that he could not return to work.
  Diaz submitted a claim for benefits under the LTD Plan
on July 22, 2002, alleging that the back pain had rendered
him disabled as of February 4, 2002. He supported his
No. 04-2342                                                3

application with several doctors’ notes expressing the
opinion that Diaz’s condition prevented him from sitting for
more than fifteen to twenty minutes. Prudential denied the
claim on August 27, for the stated reason that Diaz’s
reported inability to perform his job (which it considered a
sedentary one) was not consistent with the medical evi-
dence. Diaz sought reconsideration of the rejection on
October 22 and submitted additional medical evidence in
support of his claim, but Prudential upheld its negative
decision on January 22, 2003. Diaz then filed a second
appeal on February 4. This time, Prudential submitted
Diaz’s medical documentation to its medical consultant, Dr.
Gale Brown, for review. Although Dr. Brown did not
personally examine Diaz, he opined based on Diaz’s medical
records that the clinical and diagnostic evidence relating to
Diaz’s lumbar spine condition did not support Diaz’s reports
of persistent pain. He concluded that Diaz’s condition did
not prevent him from performing his job on a full-time
basis. Dr. Brown noted, however, that there were
non-physical factors that were having an adverse impact on
Diaz’s ability to engage in gainful employment, including
his anxiety over losing his job, depression, and opioid
dependency, but Diaz was not seeking benefits on any of
those bases. On April 16, 2003, Prudential again upheld its
decision denying Diaz benefits.
  Diaz filed this action in district court on April 22, 2003,
under § 502(a)(1)(B) of the Employee Retirement Income
Security Act of 1974 (ERISA), 29 U.S.C. § 1132(a)(1)(B),
seeking an award of benefits under the LTD Plan. On May
12, 2004, the district court granted summary judgment
in favor of Prudential, finding that Prudential’s denial of
benefits was not arbitrary or capricious. On appeal, Diaz
contends that the court should have reviewed Prudential’s
decision de novo. In the alternative, he asserts that Pruden-
tial’s decision is unsupportable even under the deferen-
tial standard of review and urges this court to award
benefits.
4                                                No. 04-2342

                              II
   The Supreme Court has 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 adminis-
trator or fiduciary discretionary authority to determine
eligibility for benefits or to construe the terms of the plan.”
Firestone Tire & Rubber v. Bruch, 489 U.S. 101, 115 (1989).
Under Bruch, plenary review is the default standard. We
have held that plenary review is required when the plan
documents contain no indication of the scope of judicial
review, because “it is a natural and modest extension of
Bruch, or perhaps merely a spelling out of an implication of
it, to construe uncertain language concerning the scope of
judicial review as favoring plenary review as well.”
Herzberger v. Standard Ins. Co., 205 F.3d 327, 330 (7th Cir.
2000). If a plan “is going to reserve a broad, unchanneled
discretion to deny claims, [plan participants] should be told
this, and told clearly.” Id. at 333. To decide whether a plan
confers discretion on the administrator, as Bruch and
Herzberger use the term, we review the language of the plan
de novo as we would review the language of any contract.
Ramsey v. Hercules Inc., 77 F.3d 199, 205 (7th Cir. 1996).
  Herzberger holds that the critical question is notice:
participants must be able to tell from the plan’s language
whether the plan is one that reserves discretion for the
administrator. We concluded that:
    [the] mere fact that a plan requires a determination of
    eligibility or entitlement by the administrator, or
    requires proof or satisfactory proof of the applicant’s
    claim, or requires both a determination and proof (or
    satisfactory proof), does not give the employee adequate
    notice that the plan administrator is to make
    a judgment largely insulated from judicial review by
    reason of being discretionary.
No. 04-2342                                                   5

Herzberger, 205 F.3d at 332. The reason for this rule is
a practical one. All plans require an administrator first to
determine whether a participant is entitled to benefits
before paying them; the alternative would be to hand money
out every time someone knocked on the door, which is
obviously out of the question. By itself, therefore, the fact
that an administrator is deciding on a case-by-case basis
who is entitled to benefits does not reveal whether a plan
does or does not reserve “discretion” to the administrator.
Similarly, a plan’s requirement that an applicant submit
“satisfactory proof of entitlement” does not necessarily
mean that a plan administrator has discretion, because
every plan requires submission of documentary proof, and
the administrator is entitled to insist on something like a
doctor’s note rather than one’s latest telephone bill. See id.;
see also Perugini-Christen v. Homestead Mortgage Co., 287
F.3d 624, 626-27 (7th Cir. 2002).
  Instead, plan documents must go further. If a plan wishes
to insulate its decision to deny benefits from plenary
review, the surest way to do so (at least in this Circuit) is by
including language that either mimics or is functionally
equivalent to the “safe harbor” language we have suggested:
“Benefits under this plan will be paid only if the plan
administrator decides in his discretion that the applicant is
entitled to them.” Herzberger, 205 F.3d at 331 (internal
quotation marks omitted). While we have strongly recom-
mended that plans adopt this language, its absence does not
compel the conclusion that the administrator does not have
discretion. Id. (“[T]here are no ‘magic words’ determining
the scope of judicial review of decisions to deny benefits,”
thus “we forbear to make our ‘safe harbor’ language manda-
tory.”).
  In the final analysis, a plan must indicate “with the
requisite if minimum clarity that a discretionary determi-
nation is envisaged.” Id. But what is that minimum point?
6                                                No. 04-2342

One could imagine an almost infinite set of verbal formula-
tions, and our prior cases have approached this question by
drawing very fine linguistic lines. Thus, for example, the
plan in Donato v. Metropolitan Life Insurance Co., 19 F.3d
375 (7th Cir. 1994), stated that disability benefits would be
paid “upon receipt of proof,” and that “all proof must be
satisfactory to us [the plan administrator].” 19 F.3d at 379
(internal quotation marks omitted). In addition, the plan
required that proof of claim “must describe the event, the
nature and the extent of the cause for which a claim is
made; it must be satisfactory to us.” Id. (internal quotation
marks omitted). Similarly, the plan in Bali v. Blue Cross &
Blue Shield Ass’n, 873 F.2d 1043 (7th Cir. 1989), spoke of
“such true and correct information as the Committee may
reasonably request,” and noted that disability was “deter-
mined on the basis of medical evidence satisfactory to the
Committee.” Id. at 1047 & n.6. We found in both Donato
and Bali that the use of the phrase “satisfactory to us” or its
equivalent was enough to show that the plan conferred the
degree of discretion on the administrator that justified
deferential review under Bruch.
  Prudential argues that its plan is functionally identical to
the ones in Donato and Bali. Agreeing with it, the district
court found that two sections of the LTD Plan, taken
together, support a finding of discretion. The first appears
in a section entitled “How does Prudential Define Disabil-
ity?”, which says “You are disabled when Prudential
determines that: you are unable to perform the material and
substantial duties of your regular occupation due to your
sickness or injury; and you have 20% or more loss in your
indexed monthly earnings due to that sickness or injury.”
(Emphasis added.) The second is in the section addressing
“Long Term Disability Coverage—Claim Information,”
which states “[w]e may request that you send proof of
continuing disability, satisfactory to Prudential, indicating
that you are under the regular care of a doctor.” (Emphasis
No. 04-2342                                                  7

added.) The district court thought, not unreasonably, that
the phrase “satisfactory to Prudential” was legally equiva-
lent to the “satisfactory to us” language in Bali and Donato,
and thus that the same outcome followed: review under
Bruch’s deferential standard.
   The problem with the district court’s analysis is not
something for which that court bears full responsibility. The
court correctly recognized that Donato and Bali point in the
direction it took. Indeed, it might have added that a number
of other circuits also appear to seize on the phrase “satisfac-
tory to us” as a way of making the cut that Bruch demands.
See, e.g., Brigham v. Sun Life of Canada, 317 F.3d 72, 81
(1st Cir. 2003) (“Circuits that have considered similar
language view the ‘to us’ after ‘satisfactory’ as an indicator
of subjective, discretionary authority on the part of the
administrator, distinguishing such phrasing from policies
that simply require ‘satisfactory proof’ of disability without
specifying who must be satisfied”); Ferrari v. Teachers Ins.
and Annuity Ass’n, 278 F.3d 801, 806 (8th Cir. 2002)
(finding a plan to confer sufficient discretion because it
“specifies that the employee must provide written proof of
continued total disability” and “that such proof must be
satisfactory to [the plan administrator]”); Nance v. Sun Life
Assur. Co., 294 F.3d 1263, 1267-68 (10th Cir. 2002) (“ ‘Satis-
factory to Sun Life’ . . . adequately conveys to the Plan
participants and beneficiaries that the evidence of disability
must be persuasive to Sun Life.”).
  Donato and Bali are not, however, the last word on the
subject from this court. As we have already noted,
Herzberger took a significantly different approach when it
held that a requirement that the administrator determine
eligibility, or that proof or satisfactory proof must be
tendered before benefits will be given, does not give the
employee adequate notice that “the plan administrator is to
make a judgment largely insulated from judicial review by
8                                               No. 04-2342

reason of being discretionary.” 205 F.3d at 332. Although
we did not circulate Herzberger to the full court under
Circuit Rule 40(e), subsequent developments, including this
case, persuade us that we should now clarify the test we are
using to decide whether de novo review or deferential
review is proper. Herzberger, we conclude, adopts the
preferable approach. There is a substantive difference
between plans without discretion, for which the standard of
review is de novo under Bruch, and those with discretion,
for which review is deferential. The former plans reflect the
fact that the applicant must meet the prescribed require-
ments of the plan, through appropriate evidence. (Juries or
judges deciding whether a contract has been breached have
the same task: they must evaluate the evidence to see if the
plaintiff should prevail, but they cannot rewrite the con-
tract.) The latter plans communicate the idea that the
administrator not only has broad-ranging authority to
assess compliance with pre-existing criteria, but also has
the power to interpret the rules, to implement the rules,
and even to change them entirely. One can draw a useful
analogy to the well-known Chevron standard used in review
of agency action, under which courts defer to agency
interpretations of gaps that Congress leaves in authorizing
statutes, on the theory that those gaps or ambiguities are
best seen as delegations of authority to fill in the blanks.
See Nat’l Cable & Telecomms. Ass’n v. Brand X Internet
Services, 125 S. Ct. 2688, 2699 (2005) (discussing Chevron
U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467
U.S. 837 (1984)). This implies as well that some aspects of
plan administration might be subject to de novo review,
while others might be entitled to deferential review.
  No single phrase such as “satisfactory to us” is likely to
convey enough information to permit the employee to
distinguish between plans that do and plans that do not
confer discretion on the administrator. And this is a matter
that may well be of interest to employees considering where
No. 04-2342                                                     9

to work: some may prefer the certainty of plans that do not
confer discretion on administrators, while others may think
that the lower costs that are likely to attend plans with
reserved discretion are worth it. We must therefore ask
what must be satisfactory to the plan’s administrator: did
the evidence comply with prescribed standards (i.e., no
discretion), or did the evidence comply with the plan admin-
istrator’s subjective notions of eligibility, disability, or other
terms in the plan (i.e., discretion). Prudential’s LTD Plan
requires “proof of continuing disability, satisfactory to
Prudential, indicating that [the claimant is] under the
regular care of a doctor.” This language does not alert the
plan participant to the possibility that Prudential has the
power to re-define the entire concept of disability, or
regularity of physician care, on a case-by-case basis. Fairly
read, it suggests only that the plan participant must submit
reliable proof of two things: continuing disability and
treatment by a doctor. In short, under Prudential’s Plan,
the only discretion reserved is the inevitable prerogative to
determine what forms of proof must be submitted with a
claim—something that an administrator in even the most
tightly restricted plan would have to do.
  In keeping with Herzberger, we conclude that the criti-
cal question is whether the plan gives the employee ade-
quate notice that the plan administrator is to make a
judgment within the confines of pre-set standards, or if it
has the latitude to shape the application, interpretation,
and content of the rules in each case. The Prudential Plan
here falls under the former category, and thus the dis-
trict court should have reviewed its application de novo.
To the extent that the test applied in Donato and Bali is
inconsistent with the approach we are now articulating, we
hereby disapprove the former two cases. Because we are
changing the way in which we ascertain the proper stan-
dard of review, we have circulated this opinion to all active
judges under Circuit Rule 40(e). No judge voted to hear the
10                                            No. 04-2342

case en banc.1


                            III
  The judgment of the district court is REVERSED and this
case is REMANDED for further proceedings consistent with
this opinion.

A true Copy:
      Teste:

                        ________________________________
                        Clerk of the United States Court of
                          Appeals for the Seventh Circuit




1
  Circuit Judge Rovner took no part in the consideration or
vote on the Rule 40(e) circulation.


                   USCA-02-C-0072—9-20-05
