John Johnston v. Prudential Insurance Company of America

John Johnston appeals a district court1 order finding that Prudential Insurance

Company of America (“Prudential”) did not abuse its discretion when it terminated

his long term disability benefits. We affirm the district court’s order.

1The Honorable David Gregory Kays, then Chief United States District Judge

for the Western District of Missouri, now United States District Judge for the Western

District of Missouri.

I. Background

Johnston was an Enterprise Storage Engineer in the computer department at

Commerce Bancshares, Inc. (“Commerce”). As part of an employee welfare benefit

plan (the “Plan”), Commerce provided its employees long-term disability (“LTD”)

insurance from Prudential.

In July 2013, Johnston became unable to continue working due to complications

from hydrocephalus, which ultimately led to surgery to remove a colloid cyst from his

brain. Johnston filed a claim for LTD benefits with Prudential. Dr. Kala Danushkodi,

Johnston’s treating physician, submitted a statement that Johnston had “cognitive

impairment / moderate to severe” and was unable to return to work due to the

impairment.

Prudential sent Johnston a letter approving his claim for LTD benefits in

November 2013. Prudential also requested the results of two neuropsychological

examinations “for the ongoing review of your claim and benefits beyond December

31, 2013.” It further advised that it would “periodically review your claim, and

request or obtain information, to ensure that you meet all eligibility requirements.”

After receiving and reviewing the results of Johnston’s examinations, Prudential

staff noted that one of the tests was not valid due to Johnston’s inconsistent

performance. After Johnston underwent an additional surgery in March 2014 to place

a shunt in his head, Prudential decided that another neuropsychological evaluation was

needed to determine whether he continued to be disabled.

Neuropsychologist Dr. Robert Denney examined Johnston in June 2014. Dr.

Denney used multiple tests for the validity of Johnston’s responses, both “embedded”

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and “free-standing.”2 He was unable to determine whether Johnston was cognitively

impaired because Johnston failed almost all of the validity tests. Dr. Denney opined

that two of the free-standing validity tests indicated that Johnston “was actively

attempting to perform poorly.” In a supplemental addendum to his report, Dr. Denney

reviewed the data from two of Johnston’s previous examinations. He did not change

his conclusions about Johnston because one examination had failed validity indicators,

while the other examination had inconsistent results that suggested invalidity.

Based on Dr. Denney’s report and addendum, Prudential terminated Johnston’s

LTD benefits as of September 1, 2014. It determined that Johnston had failed to

support his claim that he was still unable to work due to cognitive impairment.

Johnston appealed the termination of his LTD benefits. In support of his

appeal, he submitted a statement from his therapist, Dr. Marcia Meyer, explaining that

he was exhausted by Dr. Denney’s tests and that he was unable to maintain the focus

and concentration needed for his job.

After reviewing Johnston’s appeal, Prudential sought a second

neuropsychological examination. Dr. Michelle Zeller examined Johnston in June

2015, and she reported that he failed all nine validity measures on the tests she

administered. She concluded that he was attempting to appear more impaired than he

actually is, and she stated that she was unable to determine his level of impairment.

Dr. Zeller explained: “Failure on any one of these measures would raise the possibility

of negative response bias, suboptimal effort and/or symptom exaggeration. Failure

on all nine, however, is compelling evidence of suboptimal effort.”

2As Dr. Denney explained, “[f]reestanding tests usually appear to measure a

domain such as memory, whereas, in reality, the test would only show impairment for

those individuals with extremely severe memory impairment,” while “[e]mbedded

indices, on the other hand, are inside traditional, neuropsychological testing.”

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Prudential upheld its denial of LTD benefits, and Johnston sued Prudential

under 29 U.S.C. § 1132(a)(1)(B), a part of the Employee Retirement Income Security

Act of 1974 (“ERISA”). On cross-motions for summary judgment, the district court

granted summary judgment to Prudential and denied Johnston’s motion. Johnston

filed a motion to reconsider, which the court denied on the basis that it did not contain

any new evidence or arguments not previously available. Johnston timely appealed.

II. Standard of Review

“We review the district court’s adjudication of [an ERISA] claim de novo,

applying the same standard of review to the plan administrator’s decision as the

district court.” McClelland v. Life Ins. Co. of N. Am., 679 F.3d 755, 759 (8th Cir.

2012). “When an ERISA-qualified employee benefit plan grants the plan

administrator the discretion to determine whether a claimant is eligible for benefits,

review of the administrator’s decision is for an abuse of discretion.” Id. “The

administrator’s decision should be affirmed if it is reasonable, meaning it is supported

by substantial evidence.” Green v. Union Sec. Ins. Co., 646 F.3d 1042, 1050 (8th Cir.

2011). “Substantial evidence is more than a scintilla but less than a preponderance.”

Id. “[W]hen a conflict of interest exists because the plan administrator is both the

decision-maker and the insurer, ‘we take that conflict into account and give it some

weight in the abuse-of-discretion calculation.’” Nichols v. Unicare Life & Health Ins.

Co., 739 F.3d 1176, 1181 (8th Cir. 2014) (quoting Carrow v. Standard Ins. Co., 664

F.3d 1254, 1259 (8th Cir. 2012)).

III. Analysis

Johnston acknowledges that the Plan gives Prudential discretion to determine

eligibility for benefits and that, as a result, an abuse of discretion standard applies.

Thus, the question on review is whether Prudential abused that discretion.

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The Plan placed the burden on the beneficiary to provide proof of disability,

including continuing disability. The Plan states, “We will stop sending you payments

and your claim will end on the earliest of the following:” including, among other

things, “[t]he date you fail to submit proof of continuing disability satisfactory to

Prudential.” Because ERISA allows a beneficiary to sue “to recover benefits due to

him under the terms of his plan,” a plan may place the burden of proving eligibility

on the beneficiary. See Farley v. Benefit Tr. Life Ins. Co., 979 F.2d 653, 658 (8th Cir.

1992) (emphasis added) (quoting 29 U.S.C. § 1132(a)(1)(B)).

We agree with the district court that the standard of review is dispositive in this

case. Johnston presented some evidence from his medical providers that he was

disabled. He genuinely had a colloid cyst in his brain, and the Social Security

Administration’s (“SSA’s”) reviewers found that he was “disabled” under the SSA’s

definition of disability. But Prudential also had evidence that Johnston was

deliberately exaggerating his symptoms, making it impossible to determine whether

he had cognitive deficiencies that rendered him disabled. Prudential’s examinations

also occurred after the SSA’s review of Johnston’s condition, meaning that the SSA

did not know about Johnston’s potential malingering. Thus, as the district court

stated, although a court “might have reached a different conclusion” under de novo

review, a court could find no abuse of discretion here because “Prudential’s decision

is still supported by substantial evidence.”

Johnston argues that because his evidence indicates he was disabled and

Prudential’s examining doctors could not determine whether this was true, Prudential

needed to introduce new evidence to show that he was not disabled. He cites no

authority for the proposition that the burden of proof shifts after an initial

determination of disability. Johnston cites Gunderson v. W.R. Grace & Co. Long

Term Disability Income Plan, 874 F.2d 496 (8th Cir. 1989) to argue that Prudential

should have obtained a vocational rehabilitation opinion. In Gunderson, we stated

that even if the beneficiary bears the burden of proof, a plan administrator cannot

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change its understanding of the same opinions from the same doctors without

substantial evidence supporting the new understanding. See id. at 499–500 & n.4. It

was undisputed in Gunderson that the beneficiary was disabled for over two years.

Id. at 498. The plan administrator received reports on Gunderson’s condition from his

treating physician after one year, after two years, and after four years. See id. at 499.

We acknowledged the plan administrator may have had discretion to terminate

benefits under the second report. Id. at 500. Because Gunderson’s condition was the

same in the third report as in the second report, though, we found no substantial

evidence supporting the plan administrator’s decision to terminate benefits when it

received the third report after continuing them under the second report. Id. We

suggested, based on those facts, that the plan administrator should have obtained a

vocational expert’s opinion before making a different decision on evidence that was

otherwise the same. Id. at 499.

Here, Dr. Denney’s report and Dr. Zeller’s report support a new understanding

of Johnston’s prior medical evidence: that he was malingering. This case is different

from Gunderson because Prudential had evidence allowing it to reassess the prior

evidence the beneficiary submitted. Thus, because Prudential’s changed decision was

supported by new evidence, as required in Gunderson, and because no authority

requires shifting the burden of proof to Prudential, we decline to adopt Johnston’s

burden-shifting approach.

Johnston also argues that if this termination is upheld, insurers will have an

incentive to claim beneficiaries are malingering in order to terminate benefits and save

money. This could be a persuasive argument if the determination of malingering were

a purely subjective or opinion-based determination, but there are multiple established

ways to test validity of a neuropsychological examination. Dr. Denney extensively

discussed which tests he administered and how these tests objectively measure

validity. On review of the validity tests administered to Johnston, we see no basis to

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conclude that Prudential’s evidence of malingering was subjective or otherwise

manipulable by bias.

In sum, under our de novo review, we agree with the district court that

Prudential did not abuse its discretion in terminating Johnston’s benefits. There was

substantial evidence to support Prudential’s conclusion that Johnston may have been

malingering in the tests he used as evidence to prove disability. As a result, Johnston

failed to provide sufficient evidence of continuing disability.

We affirm the district court’s order because Prudential’s decision was not an

abuse of discretion.