                                                                     F I L E D
                                                             United States Court of Appeals
                                                                     Tenth Circuit
                                   PUBLISH
                                                                     June 21, 2006
                     UNITED STATES CO URT O F APPEALS            Elisabeth A. Shumaker
                                                                     Clerk of Court
                                TENTH CIRCUIT



 D EN ISE R EK STA D ,

        Plaintiff - Appellee,
                                                       No. 05-1146
 vs.

 U.S. BANCORP, formerly doing
 business as First Bank System, Inc., a
 D elaw are corporation, and U .S. BANK
 LO N G TER M D ISA BILITY PLAN,
 form erly know n as FIR ST B ANK
 SYSTEM LON G TERM DISABILITY
 PLAN (Plan #509),

        Defendants - Appellants,

        and

 FBS M ORTGAGE CORPORATIO N, a
 Nevada corporation doing business as
 Colorado National M ortgage
 C orporation; K N U TSO N
 M ORTGAGE CORPORATIO N, a
 Delaware Corporation,

       Defendants.



         A PPE AL FR OM T HE UNITED STATES DISTRICT COURT
                   FOR T HE DISTRICT OF COLORADO
                           (D.C. No. 97-N-1315)


Carmen S. Danielson (and Peter C. Dietze, on the brief), Dietze and Davis, P.C,
Boulder, Colorado, for Plaintiff - Appellee.
Steven J. M erker, (Van Aaron Hughes and Jason L. Johnson, with him on the
briefs), D orsey & W hitney, L.L.P., Denver, Colorado, for Defendants - A ppellants
U.S. Bancorp and U.S. Bank Long Term Disability Plan.


Before KELLY, SE YM OU R, and HA RTZ, Circuit Judges.


KELLY, Circuit Judge.




      Defendant-Appellants U .S. Bancorp and U.S. Bank Long Term Disability

Plan, (the “Plan”), successors in interest to First Bank Systems, Inc. and First

Bank Systems Long-Term Disability Plan, respectively, appeal from the district

court’s grant of summary judgment in favor of Plaintiff-Appellee Denise Rekstad

on her claim for disability benefits under the Employee Retirement Income

Security Act of 1974 (“ERISA ”), 29 U.S.C. §§ 1001-1461. Our jurisdiction arises

under 28 U.S.C. § 1291, and we reverse and remand.



                                   Background

      M s. Rekstad worked for U.S. Bancorp 1 as a loan originator and took part in

the Plan, which it administered and insured. After an ankle injury in November

1993, she could not work for a period of time and therefore received short-term




      1
         At many times in this case’s factual chronology, First Bank was the
actual entity involved. But for ease of understanding, this opinion refers only to
U.S. Bancorp, unless otherwise noted.

                                        -2-
and eventually long-term disability benefits pursuant to the Plan. In April 1995,

M s. Rekstad’s physician, Dale K aiser, M .D., determined that M s. Rekstad’s ankle

had healed sufficiently so that she could return to work. He in turn informed ITT

Hartford (“ITT”)— U.S. Bancorp’s agent with respect to the administration,

management and payment of the benefits described in the Plan— that she was

medically cleared.

      In June 1995, U.S. Bancorp offered M s. Rekstad her previous position of

employment. In response, she informed U.S. Bancorp that, on June 9, 1995, she

was involved in an automobile accident. She explained that injuries she suffered

therefrom rendered her totally disabled and that she needed to continue her long-

term disability benefits under the Plan. M s. Rekstad continued to receive long-

term disability benefits until February 1996 when ITT sent her a letter explaining

that she no longer met the Plan’s definition of “total disability.” Aplt. App. at

1331. M s. Rekstad administratively appealed that decision and was again denied

further benefits.

      In April 1996, U.S. Bancorp sold its Colorado mortgage offices to Knutson

M ortgage (“Knutson”). In M ay 1996, after M s. Rekstad exhausted her

administrative appeals, U.S. Bancorp terminated her employment because she did

not return to work. U.S. Bancorp did advise her, however, that Knutson had

agreed to offer continued employment to all U.S. Bancorp loan originators and

that she should therefore immediately contact Knutson. M s. Rekstad contacted

                                         -3-
Knutson and represented that she desired to commence her employment as soon as

possible as a loan originator, presenting herself as ready and willing to work.

Knutson refused to hire her in any capacity.

      M s. Rekstad’s post-accident medical condition has been extensively

evaluated and treated. She has undergone several neuropsychological evaluations,

and she continues to see a physician regarding her physical condition— namely in

regards to chronic pain she allegedly continues to suffer as a result of the

accident.

      In June 1996, Dr. Thomas Bennett, Ph.D., a psychologist under w hose care

M s. Rekstad was receiving neuropsychological treatment, released M s. Rekstad

for part-time work. This was the first time she had ever been released to do any

type of work since her automobile accident. In a report documenting the release,

Dr. Bennett explained that M s. Rekstad would have residual deficits with fatigue,

problems with memory and attention/concentration, and confusion with financial

aspects.

      M s. Rekstad subsequently sought and obtained employment three different

times. Beginning in August 1996, she worked as a full-time straight-

commissioned loan originator with the Norwest Corporation (“Norwest”). M s.

Rekstad was terminated by Norwest in February 1997, but soon thereafter, she

began working for Cherry Creek M ortgage (“Cherry Creek”). She was terminated

from that position in M ay 1997 but was again quickly employed by Chase

                                        -4-
M anhattan M ortgage (“Chase”). W hile w orking at Chase from M ay 1997 to July

1998, M s. Rekstad earned $58,395.79. During this period, she also enrolled in

Regis University’s masters of non-profit management program.

      In July 1998, M s. Rekstad took a leave of absence from Chase. Her

supervisor at Chase informed her that her performance was unsatisfactory but that

Chase proposed placing her on disability instead of terminating her. M s. Rekstad

was approved for and received short-term and then long-term disability benefits

through Chase’s long-term disability carrier, Liberty M utual. Liberty M utual has

been issuing disability benefits to M s. Rekstad since January 12, 1999, based on a

disability date of July 16, 1998.

      On January 20, 2000, M s. Rekstad filed a claim for social security benefits,

alleging that she became disabled on July 20, 1998. Though she claimed she

became disabled as of that date, she explained that her disability was the result of

her June 9, 1995 automobile accident. On June 29, 2001, the Social Security

Administration (“SSA ”) found her disabled. The Administrative Law Judge

(“ALJ”) determined that she is unable to perform any work on a sustained basis,

including sedentary unskilled w ork. See Aplt. App. at 1758. The A LJ also

concluded that M s. Rekstad has not engaged in substantial gainful activity since

July 10, 1998, and that she has been under a disability since July 10, 1998. 2 See

      2
        There is no indication in the record as to the basis for the discrepancy
between M s. Rekstad’s claimed disability date of July 20, 1998 and the ALJ
determination that she w as disabled as of July 10, 1998. This difference is,

                                         -5-
id.

      M s. Rekstad filed the current civil action on June 24, 1997, seeking, inter

alia, a judicial review of U.S. Bancorp’s denial of disability benefits under

ERISA. On M arch 10, 1999, the district court concluded that U.S. Bancorp’s

denial of M s. Rekstad’s benefits was arbitrary and capricious. 3 The district court

then remanded to U.S. Bancorp the issue of M s. Rekstad’s eligibility for disability

benefits after January 31, 1996. U.S. Bancorp appealed from the remand order,

but this court found that it was not an appealable final decision. See Rekstad v.

U.S. Bancorp Sys., Inc., 238 F.3d 1259, 1261-62 (10th Cir. 2001). As such,

pursuant to the remand order, U.S. Bancorp was required to ascertain M s.

Rekstad’s eligibility for long-term disability benefits after January 31, 1996.

          In accordance with the remand order, M s. Rekstad served her claim for

long-term disability benefits on U.S. Bancorp. In it, she made available her post-

accident employment information and all of her medical records— including those

of her treating physicians whom concluded M s. Rekstad was totally disabled due

to her physical and cognitive impairments. Upon receipt, U.S. Bancorp charged a



however, immaterial to our discussion.
      3
        The district court originally granted summary judgment in favor of M s.
Rekstad on July 30, 1998. In so doing, it applied a de novo standard of review to
U.S. Bancorp’s decision to deny benefits, a standard of review this court found to
be improper in Charter Canyon Treatment Ctr. v. Pool Co., 153 F.3d 1132 (10th
Cir. 1998). As such, the district court granted a motion for reconsideration and
reviewed the denial of benefits under an “arbitrary and capricious” standard.

                                          -6-
benefit claim subcommittee (the “Committee”) with the responsibility of dealing

with M s. Rekstad’s claim. In turn, the Committee asked ITT to analyze whether

M s. Rekstad ceased to be disabled at any time on or after January 31, 1996 for

“any occupation.”

      ITT utilized the M edical Advisory Group (“M AG”) 4 to review and analyze

the medical findings associated with M s. Rekstad’s claims.   ITT asked Todd

Lyon, M .D., a practicing physician and member of M AG, to determine whether

M s. Rekstad had the capacity to work after January 31, 1996. M artin Zelman,

M .D., a psychiatrist and another member of M AG, was asked by ITT to review

M s. Rekstad’s medical file regarding her neuropsychological condition to

determine if she was capable of working. Neither physician treated or examined

M s. Rekstad, but based on their review of her medical records determined, in

essence, that the medical evidence submitted by M s. Rekstad in support of her

disability was mostly subjective and inconsistent with the objective medical

findings and that such objective medical findings do not support limitations that

would preclude her from performing her job or any job due to a physical or

cognitive impairment.

      In July 2001, ITT submitted a report to the Committee concluding that M s.

Rekstad was not disabled beyond January 31, 1996. ITT stated that this

conclusion was based upon (1) M s. Rekstad’s employment history with Norwest,

      4
          M AG is a vendor of ITT.

                                        -7-
Cherry Creek, and Chase; (2) her representations that she was not disabled; (3)

her attendance at educational courses w hile w orking at Chase; (4) the SSA’s

decision that M s. Rekstad was disabled as of July 20, 1998; and (5) the

conclusions of Drs. Lyon and Zelman. See Aplt. App. at 1425.

      On August 2, 2001, the Committee met to review ITT’s determination that

M s. Rekstad’s claim should be denied. Based on this review, the Committee

asked ITT to clarify a couple issues, which it did to the Committee’s satisfaction.

On August 15, 2001, U.S. Bancorp denied M s. Rekstad’s long-term disability

benefits claim.

      On October 15, 2001, M s. Rekstad administratively appealed U.S.

Bancorp’s decision. In so doing, she supplied further documentation to U.S.

Bancorp, including additional medical records from her treating physicians and

affidavits from herself, her husband, and her sister regarding her post-accident

employment. The Committee sent the additional information submitted by M s.

Rekstad to ITT for its review . ITT in turn requested that Dr. Lyon review this

information as well. Dr. Lyon submitted four addenda to his initial report after

reviewing the additional information provided by M s. Rekstad. In each, he

concluded by explaining that despite the new information, he found that his

previously rendered opinion was unchanged. However, neither Dr. Lyon nor ITT

considered the affidavits submitted by M s. Rekstad and her relatives because the

information was not provided by medical professionals.

                                        -8-
      On January 20, 2002, ITT upheld its initial determination that M s. Rekstad

was not entitled to long-term disability benefits under the Plan. The Committee

review ed ITT’s determination and Dr. Lyon’s supplemental comments. On

February 12, 2002, U.S. Bancorp agreed with ITT, upholding its earlier decision.

      Following U.S. Bancorp’s denial of M s. Rekstad’s claim for disability

benefits, she filed a motion to reopen the case, which the district court granted.

Thereafter, M s. Rekstad filed a motion for summary judgment claiming that U.S.

Bancorp’s decision to deny her long-term disability benefits after January 31,

1996 was arbitrary and capricious. U.S. Bancorp filed a combined response and

motion for summary judgment. On April 21, 2004, the district court agreed with

M s. Rekstad, granting her motion and denying U.S. Bancorp’s. On December 10,

2004, the district court ruled on the calculation of damages, finding that the

benefits owed M s. Rekstad under the Plan should not be reduced by the disability

benefits she received from Liberty M utual. This appeal followed.



                                     Discussion

      Appellants forward three arguments on appeal. They contend that the

district court erred in (1) finding that U.S. Bancorp, as administrator of the Plan,

operated under a conflict of interest; (2) failing to properly apply the arbitrary and

capricious standard of review; and (3) deciding not to reduce M s. Rekstad’s

award of benefits by the amount of disability payments she received from Liberty

                                         -9-
M utual.

         W e review a grant of summary judgment de novo, applying the same legal

standard used by the district court. Charter Canyon, 153 F.3d at 1135. Summary

judgment is appropriate “if the pleadings, depositions, answ ers to interrogatories,

and admissions on file, together with the affidavits, if any, show that there is no

genuine issue of material fact and that the moving party is entitled to a judgment

as a matter of law.” Fed. R. Civ. P. 56(c); Kimber v. Thiokol Corp., 196 F.3d

1092, 1097 (10th Cir. 1999).

         A court reviewing a challenge to a denial of employee benefits under 29

U.S.C. § 1132(a)(1)(B) applies an “arbitrary and capricious” standard to a plan

administrator’s actions where, as here, the plan grants the administrator

discretionary authority to determine eligibility for benefits or to construe the

plan’s terms. See Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115

(1989). The district court’s determination of w hether a plan administrator’s

decision is arbitrary and capricious is a legal conclusion subject to de novo

review. Caldw ell v. Life Ins. Co. of N . Am., 287 F.3d 1276, 1282 (10th Cir.

2002).

         Indicia of an arbitrary and capricious decision include, inter alia, lack of

substantial evidence. Id. Substantial evidence is such evidence that a reasonable

mind might accept as adequate to support the conclusion reached by the decision

maker. Id. It requires “more than a scintilla but less than a preponderance.”

                                           - 10 -
Sandoval v. Aetna Life & Cas. Ins. Co., 967 F.2d 377, 382 (10th Cir. 1992)

(internal quotations omitted). “In determining whether the evidence in support of

the administrator’s decision is substantial, we must take into account whatever in

the record fairly detracts from its weight.” Caldwell, 287 F.3d at 1282 (internal

quotations and alterations omitted). M oreover, “substantiality of the evidence is

based upon the record as a whole.” Id.

      Though our standard of review always remains arbitrary and capricious,

Fought v. UNUM Life Ins. Co. of Am., 379 F.3d 997, 1004 (10th Cir. 2004) (per

curium), the amount of deference given to a plan administrator’s decision

decreases in certain circumstances. It is lessened in varying degrees if there

exists a conflict of interest between the administrator’s duty to act in the interest

of the plan participant and the administrator’s self interest or loyalty to his

employer. See Firestone, 489 U.S. at 115; Fought, 379 F.3d at 1004-05. W hen

there exists such a conflict of interest, we undertake a “sliding scale” analysis,

“decreas[ing] the level of deference given to the conflicted administrator’s

decision in proportion to the seriousness of the conflict.” Fought, 379 F.3d at

1004 (quoting Chambers v. Family Health Plan Corp., 100 F.3d 818, 825 (10th

Cir. 1996)).

      The district court held that U.S. Bancorp’s decision was entitled to some

deference, but that deference would be lessened to the degree necessary to

neutralize any untoward influence resulting from the conflict it found. Relying on

                                         - 11 -
Kimber, Appellants contend that this holding w as in error. W e need not address

this issue because after review ing U.S. Bancorp’s determination under the fully

deferential arbitrary and capricious standard, we find that its decision to deny

benefits was arbitrary and capricious. W e emphasize, however, that we neither

determine w hether M s. Rekstad is totally disabled, nor whether U.S. Bancorp’s

decision was incorrect, rather we conclude only that it denied M s. Rekstad’s

benefits in an arbitrary and capricious manner. Central to that holding is our

determination that U.S. Bancorp failed to examine a material portion of the

relevant evidence.

      In deciding whether M s. Rekstad was totally disabled under the terms of

the Plan, ITT considered evidence of her post-accident employment and

education. Playing a significant role, ITT’s consideration of this evidence

touched on several of the stated bases for its July 2001 determination that she was

not so disabled: her post-accident employment history, her representations that

she was w illing and able to work, her attendance at educational courses w hile

working at Chase, and Dr. Zelman’s report which indicates that his conclusion

was based, in part, on M s. Rekstad’s success in her post-accident employment.

Relying on ITT’s recommendation, U.S. Bancorp decided to deny benefits.

      In her administrative appeal, M s. Rekstad and two of her relatives

submitted affidavits to U.S. Bancorp explaining that though she was employed

three times subsequent to her accident and did enroll in some post-graduate

                                        - 12 -
courses, she was unable to maintain her job with each employer or complete her

course work because of manifest difficulties associated with her physical and

cognitive impairments. U.S. Bancorp forwarded those affidavits to ITT for its

consideration. In ITT’s January 2002 re-determination of whether M s. Rekstad

was disabled under the Plan, it stated that the affidavits “were not considered in

making our determination.” A plt. App. at 1411. U.S. Bancorp requested ITT to

clarify that statement. ITT explained that the “personal affidavits were reviewed

but not deemed pertinent to the disability determination, as these individuals are

no [sic] medical professionals.” Id. at 1613. U.S. Bancorp took no further action

on the issue.

      It was arbitrary for U.S. Bancorp to make its decision to deny disability

benefits without it giving full and fair consideration to the affidavits submitted by

M s. Rekstad and her relatives. As noted, evidence of M s. Rekstad’s post-accident

employment and education played a significant role in ITT’s determination that

M s. Rekstad is not totally disabled. But its consideration of this evidence was

impermissibly one-sided. W hile M s. Rekstad’s ability to pursue and attain

employment and attend post-graduate level courses may support a determination

that she is not totally disabled, her inability to hold that employment or finish her

course work because of problems associated with her physical and cognitive

impairments may support a contrary conclusion. See W ilcott v. M atlack, Inc., 64

F.3d 1458, 1460-61 (10th Cir. 1995). Evidence regarding the latter need not have

                                         - 13 -
been furnished by a medical professional to w arrant its consideration. Because

U.S. Bancorp relied upon ITT’s determination, wherein ITT did not consider this

evidence, its decision was arbitrary. Cf. Sandoval, 967 F.3d at 380 (an

administrator’s decision is not arbitrary and capricious for a failure to consider

evidence not before it).

      W e have previously confronted a scenario where a plan administrator failed

to gather and examine relevant evidence. In Caldwell, we accorded less deference

to the plan administrator’s decision, but we went on to analyze whether it was

nevertheless supported by substantial evidence, concluding that it was not. See

Caldwell, 287 F.3d at 1285-86 (court’s de novo review of the record supported

conclusion that claimant was disabled and the plan administrator’s failure to

gather and examine relevant evidence buttressed the court’s determination that the

plan administrator had acted arbitrarily and capriciously).

      Under the facts of this case, however, we believe that a remand to U.S.

Bancorp is the more appropriate course of action. This is not a case where it is so

clear-cut that it w as unreasonable for U .S. Bancorp to deny M s. Rekstad benefits.

But because ITT’s one-sided consideration of M s. Rekstad’s post-accident

employment and education permeated U.S. Bancorp’s decision, we are unable to

determine the substantiality of the evidence supporting it. See Gaither v. Aetna

Life Ins. Co., 388 F.3d 759, 773 n.5 (10th Cir. 2004) (concluding that merely

review ing a plan administrator’s decision under reduced deference per Caldwell is

                                        - 14 -
inappropriate w here the failure to investigate left inadequate grounds for the court

to determine whether it could still be within the bounds of reason); see also Quinn

v. Blue Cross & Blue Shield Ass’n., 161 F.3d 472, 477 (7th Cir. 1998) (“[T]he

proper remedy in an ERISA case, as well as a conventional case, is to remand for

further findings or explanations, unless it is ‘so clear cut that it would be

unreasonable for the plan administrator to deny the application for benefits on any

ground.’”) (quoting Gallo v. Amoco Corp., 102 F.3d 918, 923 (7th Cir. 1996).

M oreover, we are not convinced that U.S. Bancorp would arrive at its previous

conclusion once full and thorough consideration is given to all relevant evidence.

And we will not substitute our judgment for that of U.S. Bancorp. See Quinn,

161 F.3d at 478; M iller v. United W elfare Fund, 72 F.3d 1066, 1073-74 (2d Cir.

1995). W e therefore remand to the district court with instructions that the case be

returned to U.S. Bancorp for reconsideration.

      Determining that remand is proper, we need not reach the last issue

presented: whether the district court erred in deciding not to reduce M s. Rekstad’s

award of benefits by the amount of disability payments she received from Liberty

M utual.

      REVERSED and REM ANDED.




                                         - 15 -
