Prudential’s failure to provide documents weighs in long term disability claimant’s favor

In a ruling filed on November 17, 2009, the United States Court of Appeals for the Eighth Circuit found that Prudential Insurance Company of America (Prudential) had failed to provide Barbara Brown adequate information with which to appeal their decision to deny her long term disability (LTD) benefits. As a result, the court did not apply a common court-approved practice which demands that all administrative options must be exhausted before filing suit.

Brown’s story began in August of 2005, when she stopped working for J.B. Hunt Transport Services, Inc. (Hunt)  because the pain she was experiencing in her neck, back, and left knee made it too difficult to drive a truck anymore. Prudential awarded Brown disability benefits in September based on her left knee condition which was deemed to be disabling and rendered Brown “unable to perform the material and substantial cuties of [her] regular occupation due to [her] injury.”

Brown had been a lifelong trucker until her knee pain made it impossible for her to manage the clutch. It was all she knew how to do. But in June of 2006, she received a letter informing her that Prudential had “obtain(ed) and review(ed) information” about her “medical condition”, “daily activities,” and “education, experience, and other occupations [she} would be qualified to perform.” Based on this information, Prudential was terminating her long term disability benefits, because she was now able to perform “the duties of any gainful occupation for which” she was “reasonably fitted by education, training or experience.” Prudential went on to list occupations that one of its vocational rehabilitation specialists had recommended for Brown – a semiconductor bonder, a surveillance system monitor, a food checker, or an assembler.

Prudential notified Brown that she had the right to appeal the decision within 180 days. The letter required the appeal to state the reasons Brown disagreed with their decision and to supply supporting evidence such as therapy treatment notes, physician’s records, test results and any other information that related to her claim.

Brown responded to the letter, by calling Prudential. In her conversation with a Prudential representative, she made it clear that she wanted to appeal. The representative told Brown that she needed to put her reasons for disagreeing with the decision in writing. Prudential claims that Brown never did so. Instead, she requested, through her attorney, a copy of the long term disability plan. In subsequent letters, her attorney requested a variety of documents, but most notably a complete copy of the Administrative Record on Brown.

Other than requesting that Hunt send Brown a copy of the Plan’s summary plan description and “Wrap” document which described the various benefits available to Hunt employees, Prudential ignored the rest of Brown’s requests. In December 2007, Brown filed a one-count complaint against Hunt in state court. Hunt removed the complaint to federal district court, which determined that as the claims administrator, Prudential was the party liable if Brown was found to be disabled.

In January of 2008, Brown’s attorney contacted Prudential to find out if Brown had filed an administrative appeal. Prudential said, no, and that the deadline for filing that appeal had already expired in November, 2007.

In February, Brown’s attorney contacted Hunt as sponsor of Brown’s LTD Plan, reminding the company that he had requested certain documents but had not received the information. Finally, on March 21, 2008, Hunt mailed the Administrative Record to Brown, but still did not send the claims manuals that had been requested.

In April, Brown filed a two count amendment to the original complaint against both Hunt and Prudential in district court. Count I sought to reinstate Brown’s long term disability benefits, including back benefits. Count II sought statutory penalties for Hunt and Prudential’s failure to respond to her requests for information. The district court dismissed both Counts after Hunt and Prudential filed their motions for summary judgment. Count I was dismissed because Brown had not filed a written administrative appeal to Prudential’s discontinuation of her LTD benefits. The court ruled that she had not exhausted her administrative remedies. Count II was dismissed because Hunt could not be held liable for failing to provide claims manuals.

Brown appealed the district court’s granting Hunt and Prudential summary judgment, claiming that there were genuine issues and that such a judgment was not appropriate. At issue was whether Brown was required to exhaust her administrative remedies. She claimed that she was unable to exhaust those remedies because Prudential failed to provide her with the Administrative Record and the other documents she requested. To have appealed the cancellation of her benefits without this information would have been comparable to appealing “in the blind.”

After reviewing the facts, the Court came to the same conclusion. They determined that Prudential had failed under ERISA provision § 1133(2) to provide Brown with “a reasonable opportunity . . . for a full and fair review” of Prudential’s decision to discontinue her LTD benefits, thus the court’s general requirement that all administrative solutions be used first before filing suit did not apply in her case.

The Court noted that Prudential’s failures to respond to Brown’s requests for sufficient information upon which to formulate an appeal prevented her from making that appeal. Brown had no idea who had determined that she was now able to work in the alternative jobs listed in her notice of benefits termination. She didn’t have access to the methodologies that were applied to her case. She was given detailed instructions as to what her appeal should refute but given no information to refute in that appeal. She had been asked to deliver a detailed challenge to their decision, while being deprived of the information that would allow her to do so.

The Court determined that the appropriate remedy for Count I against Prudential was to reverse the district court’s ruling and instruct the district court to require Prudential to take corrective action by reopening the administrative record. The Court refused to review the merits of Browns claim for long term disability benefits. As for Count I against Hunt and Count II against both Hunt and Prudential, the Court affirmed the district court’s decision.

If the disability claim is governed by ERISA, a disability claimant is required to exhaust all mandatory administrative remedies prior to filing a lawsuit.  But in this case, Prudential failed to provide a copy of the administrative record, therefore, the claimant had no option but to file a lawsuit.

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