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

No. 03-2776
EVELYN L. HOUSTON,
                                                     Plaintiff-Appellee,
                                   v.


PROVIDENT LIFE AND ACCIDENT
INSURANCE COMPANY,
                                                 Defendant-Appellant.
                           ____________
            Appeal from the United States District Court for
           the Northern District of Illinois, Eastern Division.
               No. 95 C 2389—Joan B. Gottschall, Judge.
                           ____________
      ARGUED SEPTEMBER 21, 2004—DECIDED DECEMBER 2, 2004
                           ____________



    Before EASTERBROOK, RIPPLE and WILLIAMS, Circuit Judges.
  RIPPLE, Circuit Judge. Evelyn Houston filed this action
against Provident Life and Accident Insurance Company
(“Provident”) to challenge the termination of her long term
                                                            1
disability benefits under ERISA, 29 U.S.C. § 1132(a)(1)(B).


1
  Ms. Houston’s amended complaint alleged violations of 29 U.S.C.
§§ 1133, 1140, 1141 and 1144; however, the district court deemed
“the complaint as constructively amended by the parties to add a
                                                    (continued...)
2                                                      No. 03-2776

The district court denied Provident’s motion for summary
judgment. After a trial upon the administrative record, the
court decided that Provident’s decision to terminate Ms.
Houston’s benefits was “arbitrary and capricious” and re-
manded the case to Provident with instructions. The court
also denied Provident’s subsequent Rule 59(e) motion to
alter or amend the judgment. For the reasons set forth in the
following opinion, we reverse the judgment of the district
court.


                                  I
                        BACKGROUND
A. Facts
  Ms. Houston worked as a legal secretary for the law firm
of Sidley & Austin. She injured her back at work on June 14,
1993, when she lost her balance while lifting boxes of files.
Ms. Houston participated in an employee welfare benefit
plan that Sidley & Austin established and maintained under
ERISA, 29 U.S.C. § 1001 et seq.; Provident provided the
plan’s long term disability insurance coverage. Ms. Houston
sought treatment for her injury, which included, among
other things, weekly visits to her family practice physician,
Dr. Mahendra Patel, and a visit to a neurosurgeon, Dr. Alan
Kaufman. She also underwent a physical evaluation by Dr.


1
  (...continued)
claim under § 1132,” Houston v. Provident Life & Accident Ins.
Co., No. 95 C 2389, 

, at *4 (N.D. Ill. Dec. 21,
2000), which allows an ERISA plan participant or beneficiary to
bring a civil action to recover benefits due, to enforce rights, or to
clarify rights to future benefits under the terms of the plan. The
court, in response to the parties’ briefs, addressed only the § 1132
claim. This decision is not contested on appeal.
No. 03-2776                                                      3

James W. Ryan, a consultant in orthopedic surgery, on July
          2
20, 1993. Dr. Ryan concluded that Ms. Houston had
sufficient functional capacity to perform secretarial tasks:
    The patient has a grip test which showed some marginal
    differences between the right and the left, being a slight
    bit of weakness in the right. The examination was
    accomplished with many complaints of pain, basically
    she is neurologically intact. I found no spasm. She has
    no weakness. There is no asymmetry of the upper
    extremities. I do not believe she has cervical radiculop-
    athy. She has in fact, had a cervical strain which I feel
    has resolved. There are no objective findings. There is a
    functional overlay. She can return to the work she was
    doing without limitation.
R.115 at 66. On August 2, 1993, after Dr. Ryan’s examina-
tion, Ms. Houston had an MRI scan taken of her cervical
spine.
  On December 28, 1993, Ms. Houston submitted an initial
claim for long term disability benefits under the policy. The
policy provides that an employee is “disabled” from her
own occupation if she is unable to earn at least eighty per-
cent of her indexed earnings, or is unable to perform each of
the material duties of the occupation that she regularly
performed for her employer. R.115 at 227. In addition to her
claimant’s statement, Ms. Houston signed an authorization
permitting the release of her medical information to Provi-
dent. She also submitted an Attending Physician’s State-


2
  Dr. Ryan was consulted by Chubb Group of Insurance Companies
(“Chubb”), Sidley & Austin’s workers’ compensation carrier, to
evaluate Ms. Houston. Chubb denied Ms. Houston’s workers’
compensation claim; its letter of denial stated “[a]ccording to Dr.
Ryan, you should be able to return to your regular job.” R.115 at
69.
4                                                  No. 03-2776

ment of Disability completed by Dr. Patel, which stated that
she was disabled from her regular occupation due to a
cervical disc injury. Dr. Patel later submitted additional
medical records, including a clinical summary of Ms.
Houston’s medical condition in light of the results of her
MRI, which stated, in part:
    The patient was given cervical traction, ultrasound
    therapy and the patient apparently had no relief. The
    patient was admitted during the month of the rest of
    1993, at St. Margaret Hospital under my care and at this
    time the patient was seen by Dr. Kaufman. The patient
    was center and right of the central disc herniation of the
    sixth cervical disc with secondary compromise of the
    anterolateral subarachnoid space. The patient also had
    central bulging annulus of the fifth cervical disc. . . . Her
    symptoms were definitely due to the cervical disc
    syndrome. Dr. Kaufman had advised the patient sur-
    gery but her Workman’s Compensation Insurance was
    not approving the further treatment and surgical
    intervention. . . .
       The patient’s work injury has definitely caused the
    cervical symptoms radiating to both upper extremities
    and, in my opinion, this patient needs further work up,
    like a myelogram and if the myelogram is consistent
    with the MRI of the cervical spine, then the patient will
    definitely need removal of the cervical disc . . . .
R.115 at 75-76. Provident approved Ms. Houston’s long term
disability benefits claim on March 30, 1994.
  About two and a half months later, however, Provident
learned from Sidley & Austin that Chubb had denied Ms.
Houston’s related workers’ compensation claim based upon
Dr. Ryan’s conclusion that she could return to work.
Therefore, Provident exercised its discretion under the
No. 03-2776                                              5

policy to have Ms. Houston undergo another independent
medical examination. Dr. Churl-Soo Suk, also an orthopedic
specialist, examined Ms. Houston and concluded:
   I believe the patient has been having problems of the
   neck condition for some time which was diagnosed as
   herniated nucleus pulposus between C5 and C6 by MRI
   examination and the patient is under the care of a
   neurosurgeon at this time. I think further evaluation by
   the neurosurgeon for the cervical spine is needed.
R.115 at 99. Provident asked Dr. Suk to clarify his conclu-
sions by answering four questions; he responded as follows:
   1.   Define this claimant’s current diagnosis, recom-
        mend treatment program and prognosis.
   A. Diagnosis: Suspected herniated nucleus pulposus
      between C5 & 6 and mild degenerative changes
      between C5 & 6.
   2.   In your opinion, may this person return to his/her
        regular occupation at this time? If currently dis-
        abled from his/her occupation, please indicate
        when he/she might be able to return to that type of
        work.
   A. No. The patient should be further evaluated by a
      neurosurgeon.
   3. May this person return to some other type of work
      at this time? If currently unable to return to any
      type of work, please indicate when he/she might be
      able to do so and describe findings that support
      total disability.
   A. No.
   4. Complete the attached physical capacities form.
R.115 at 96-97. On the physical capacities form, Dr. Suk
indicated that Ms. Houston had a great deal of work ca-
6                                                 No. 03-2776

pacity; she could: (1) stand, walk, sit and drive without re-
striction over a full workday; (2) occasionally lift a maxi-
mum of ten pounds; (3) use her hands for grasping, fine
manipulation and repetitive motion, but not for pushing or
pulling; and (4) occasionally bend, squat, kneel and balance
and could frequently use a foot control. The form also
indicated that she could return to “light duty” work
“pending neurological evaluation.” R.115 at 91.
  In June 1994, Provident’s in-house medical advisor con-
cluded that Ms. Houston was not totally disabled, but he
recommended that Provident obtain the neurological report
referenced in Dr. Suk’s report. Provident wrote to Dr.
Kaufman and requested Ms. Houston’s medical records, but
he did not respond. On December 28, 1994, Provident’s
rehabilitation specialist recommended that:
    [F]urther review of the file indicates that [Ms. Houston]
    has very little objective info to substantiate disability. A
    neurosurgeon named Kaufman is alleged to advise
    surgery, but Dr. Kaufman has not answered your letter
    of 10-20-94. We have nothing from him. The IME by Dr.
    Suk indicates [Ms. Houston] has plenty of work capac-
    ity for her occ[upation] and fails to defend his conclu-
    sion that she should not do any work. What we do have
    is a clear statement of 7-20-93 by James W. Ryan, MD,
    Orthopedist, saying there were no objective findings. He
    diagnosed cervical strain “which has resolved.” He felt
    she had functional overlay and could return to her own
    job w/o limitations. A report of 6-15-93 by a Dr.
    Mahendra A. Patel simply relates patient complaints
    and suggests need for “further work up, like a
    myelogram . . . .”
      I feel we should now act on the physical capacity find-
    ings of Dr. Suk and on those of other doctors (Ryan) and
    terminate LTD.
No. 03-2776                                                7

R.115 at 25. On January 6, 1995, Provident notified Ms.
Houston that it had terminated her long term disability
benefits as of December 31, 1994, because “the physical
capacity findings indicate that you have the ability to
perform not only your own occupation as legal secretary but
also many sedentary jobs.” R.115 at 164.
  On January 27, 1995, Ms. Houston updated her proof of
disability with a second statement of disability prepared by
Dr. Patel, which indicated that she remained disabled from
her own or any other occupation and that her work capacity
was “as before.” R.115 at 79-83. Provident’s ERISA appeals
committee reviewed the supplemented file and upheld the
termination of benefits due to “insufficient information on
which to continue disability due to [her] purported cervical
problems.” R.115 at 167. On March 9, 1995, Ms. Houston
again supplemented her file with medical documents from
Dr. Patel, and, for the first time, she submitted statements
from doctors regarding a vision problem and depression.
Provident’s ERISA appeals committee again upheld the ter-
mination of benefits; in its view, neither her vision problem
nor her depression limited her ability to work in her
occupation.


B. District Court Proceedings
  Ms. Houston filed this action under ERISA to challenge
Provident’s termination decision. Provident filed a motion
for summary judgment, which the district court denied. The
court later granted Provident’s motion to limit the trial
evidence to the administrative record. An open question
remained as to whether the administrative record included
the August 1993 MRI scan of Ms. Houston’s spine; after
reviewing the parties’ briefs on the issue, the court con-
cluded that the record included the MRI’s results (as op-
posed to the MRI image itself).
8                                                No. 03-2776

  Because the parties agreed that the policy grants Provident
the discretion to determine participants’ eligibility for ben-
efits, the district court employed an arbitrary and capricious
standard of review. Provident admitted, and the administra-
tive record showed, that the decision to terminate Ms.
Houston’s benefits was based upon Dr. Ryan’s report and
the physical capacities form prepared by Dr. Suk. The court
determined that it was not reasonable for Provident to rely
on Dr. Ryan’s report when he had not considered the
medical test results of the MRI, and each doctor who had
taken into account the MRI (Drs. Patel and Suk) had found
Ms. Houston unable to return to work. The court similarly
found that it was not reasonable for Provident to rely upon
the physical capacities form prepared by Dr. Suk. The court
believed that Dr. Suk’s opinion, viewed in its entirety, was
that Ms. Houston was disabled, required further neurologi-
cal evaluation and could not return to her job or any other
job. Moreover, the physical capacities form itself limited Ms.
Houston to light duty work pending neurological eval-
uation. Thus, the court concluded that Provident’s decision
to terminate Ms. Houston’s benefits was arbitrary and
capricious.
  The court held that Provident must acknowledge that Ms.
Houston was disabled as of December 31, 1994 (the date her
benefits terminated) and that Provident was liable to Ms.
Houston for benefits for any time thereafter that she was
disabled. If Provident sought to establish that her disability
ended sometime after December 31, 1994, it could augment
the record with additional evidence.
  The court later denied Provident’s Rule 59(e) motion to
alter or amend the judgment.
No. 03-2776                                                   9

                              II
                       DISCUSSION
  We review the district court’s legal determinations de
novo and its factual findings for clear error. Blickenstaff v.
R.R. Donnelley & Sons Co. Short Term Disability Plan, 

, 677 (7th Cir. 2004).


A. Provident’s Decision to Terminate Benefits
  1. ERISA Standard of Review
   When a participant of an ERISA employee benefits plan
challenges the denial of benefits, we must review that denial
“under a de novo standard unless the benefit plan gives the
administrator or fiduciary discretionary authority to
determine eligibility for benefits or to construe the terms of
the plan.” Firestone Tire & Rubber Co. v. Bruch, 

,
115 (1989); see Hightshue v. AIG Life Ins. Co., 

,
1147 (7th Cir. 1998). When a plan confers such discretion
upon the plan administrator or fiduciary, we shall not
disturb a decision concerning eligibility for benefits unless
it is arbitrary and capricious. See Firestone 

. In this case, the policy grants Provident “full,
exclusive, and discretionary authority to control, manage,
and administer claims.” R.95, Ex.D at 25. Thus, we shall
apply the arbitrary and capricious standard and shall not
overturn Provident’s decision to terminate Ms. Houston’s
long term disability benefits “as long as (1) ‘it is possible to
offer a reasoned explanation, based on the evidence, for a
particular outcome,’ (2) the decision ‘is based on a reason-
able explanation of relevant plan documents,’ or (3) the
administrator ‘has based its decision on a consideration of
the relevant factors that encompass the important aspects of
the problem.’ ” Hess v. Hartford Life & Accident Ins. Co., 274
10                                              No. 03-2776

F.3d 456, 461 (7th Cir. 2001) (quoting Exbom v. Cent. States,
Southeast & Southwest Areas Health & Welfare Fund, 

, 1142-43 (7th Cir. 1990)).


    2. Benefits Termination Decision
  As noted earlier, the plain language of the policy provides
that a person is “disabled” from her own occupation if she
is unable to perform each of the material duties of the
occupation that she regularly performed for her employer.
R.115 at 227. Notably, Provident informed Ms. Houston that
she was ineligible for disability benefits under the policy
because “[t]he physical capacity findings indicate you have
the ability to perform not only your own occupation as a
legal secretary but also many other sedentary jobs.” R.115 at
        3
163-64.
  Provident maintains, and we agree, that its determination
had a reasonable basis when Dr. Ryan and Dr. Suk, both
orthopedic specialists, had documented that Ms. Houston’s
back injury did not functionally limit her ability to perform
the material duties of her occupation. Ms. Houston and the
district court consider Dr. Ryan’s opinion the least reliable
because he did not account for the results of the MRI exam
(his evaluation preceded the MRI). However, as Provident
submits, the MRI merely aided the diagnosis of a herniated
disc, and the record offers insufficient objective documenta-
tion that this medical condition rendered Ms. Houston
unable to perform sedentary work. Thus, the absence of the
MRI is not fatal to Dr. Ryan’s functional capacity test. Sim-


3
  Provident’s ERISA appeals committee denied Ms. Houston’s
claim as supplemented on the same grounds—neither her vision
problem nor depression rendered her unable to perform her own
occupation. R.115 at 102-17; 168-69.
No. 03-2776                                                       11

ilarly, although Dr. Suk suspected Ms. Houston of having
herniated discs and suggested further neurological evalua-
tion, he more importantly found her capable of a wide range
of work activity. Dr. Suk’s physical capacities form indi-
cated that, over a full workday, Ms. Houston could stand,
walk, sit and drive without restriction; occasionally lift up
to ten pounds; use her hands for grasping, fine manipula-
tion and repetitive motion (but not for pushing or pulling);
occasionally bend, squat, kneel and balance; and frequently
                   4
use a foot control. Further, the form cleared her for light
duty work pending neurological evaluation.
  In sum, we believe that the record here leads firmly to the
conclusion that Provident reasonably concluded that Ms.
Houston was not “disabled” as defined in the policy based
upon Dr. Ryan’s and Dr. Suk’s evaluation that she had the
functional capacity to perform the material duties of her
occupation. See 

(holding that
plan administrator reasonably terminated benefits based
upon functional capacity evaluation); Sisto v. Ameritech


4
   Sidley & Austin’s job description for legal secretaries, a part of
the administrative record, is worth noting; it lists the “essential
duties” as: (1) using word processing; (2) organizing court filings,
clerical functions and work flow; (3) inputing attorney daily time;
(4) coordinating attorney travel arrangements and maintaining
travel expenses; (5) proofreading documents; (6) receiving and
transmitting telephone calls, conference calls and messages; (7)
processing mail; (8) coordinating meetings and appointments for
attorneys and clients; (9) maintaining attorney calendars; (10)
coordinating prompt production and delivery of legal work; (11)
obtaining cases from the library; (12) maintaining client and other
files; (13) performing secretarial functions, such as processing new
client/matter reports and expense reports. In addition, the job
description states that Sidley & Austin would make “[r]easonable
accommodations” to enable employees to perform those essential
duties. R.115 at 29.
12                                                No. 03-2776

Sickness & Accident Disability Benefit Plan, No. 01 C 8262,

, at *5-7, 9 (N.D. Ill. Oct. 31, 2003) (finding
reasonable basis for denial of disability benefits even though
MRI found two herniated cervical discs, because medical
consultants concluded that the medical records did not
establish that claimant was unable to perform any work);
Rivera v. Bd. of Trustees, No. 02 Civ. 7844, 

,
at *5, 9 (S.D.N.Y. July 23, 2003) (finding that denial of
disability benefits was reasonable even though claimant’s
physician diagnosed him with a herniated disc and con-
cluded that he was totally disabled, because independent
medical examiner concluded that condition was not so
severe as to limit all work-related activity), aff’d, 

, at *2 (2d Cir. Feb. 12, 2004) (holding that substantial
evidence supported the denial of benefits, including exam-
ining physician’s conclusion that claimant could return to
work).


                         Conclusion
  Accordingly, we reverse the judgment of the district court.
Provident may recover its costs in this court.
                                                    REVERSED
No. 03-2776                                            13

A true Copy:
       Teste:

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




                USCA-02-C-0072—12-2-04