Court Reverses Prudential Insurance Company of America’s Termination of Long-Term Disability Benefits

The Western District of Washington Court recently decided Cherry v. The Prudential Insurance Company of America, No. 21-27 MJP, 2022 WL 1302395 (W.D. Wash.  May 5, 2022). In this case, Andrew Cherry (Plaintiff) was a successful Software Design Engineer at Microsoft Corporation in Seattle, WA, where he had worked for a just over a decade, earning a base salary of $140,000.00. Mr. Cherry also enjoyed an “active life outside of work.” In 2008, Plaintiff required a microdiscectomy to repair a herniated disc at L5-S1, and in 2016, Mr. Cherry was diagnosed with lumbar radiculopathy—a condition in which the spinal nerve root is compressed, and/or there exist degenerative changes that cause significant pain. Despite this painful condition, Mr. Cherry continued to work part-time, beginning June 2016, shortly after he was diagnosed.

In December 2017, Mr. Cherry was no longer able to endure the pain, and his physician recommended that he cease working completely. Mr. Cherry returned to work in 2018, working a reduced schedule of 15 hours/week. Unfortunately, he was unable to keep up with those hours, because of his painful symptoms. Mr. Cherry filed a claim for short-term disability (STD) benefits under Microsoft’s employee-benefit plan that was insured and administered by Prudential Insurance Company of America (“the Plan”), an employee benefit plan governed by the Employee Retirement Income Security Act (ERISA). The Plan approved and paid STD benefits, beginning June 2016. In January 2017, after having reviewed Mr. Cherry’s medical records, the Plan approved Mr. Cherry’s claim for long-term disability (“LTD”) benefits.

In April 2018, Prudential required Mr. Cherry to undergo an independent medical examination. Following this exam, Prudential continued to pay LTD benefits to Mr. Cherry, through June 2018. In August 2018, Prudential then required Mr. Cherry to undergo psychiatric evaluation conducted by their consulting physician, Dr. James Bryan. Dr. Bryan formed an opinion that Mr. Cherry was merely suffering with somatic symptoms. The Plan then had Dr. Bryan’s report reviewed by another one of their physicians, a Dr. Hayes. Not surprisingly, Dr. Hayes agreed with Dr. Bryan’s conclusions. Regardless of the physician reports, however, the Plan approved Mr. Cherry’s LTD benefits through January 2019. There was a caveat to this approval, which we will explain later in this blog.

Firstly, though, Mr. Cherry’s LTD benefits were approved under the “any gainful occupation” (“any occ”) definition that was applicable to the Plan. In essence, this indicated that Mr. Cherry was unable to work in any occupation, and that there existed no alternative jobs that Mr. Cherry was both capable of doing and that satisfied the applicable provisions of his Plan. The caveat of its approval of Mr. Cherry’s LTD benefits beyond the “own occupation” definition of disabled, is that when Prudential informed Mr. Cherry was approved for “any occ” benefits, they also informed him that he had exhausted his LTD benefits allowed for mental illness. Mr. Cherry had never applied for benefits because of a disabling condition due to or caused by mental illness.

On April 1, 2019, the Plan terminated Mr. Cherry’s LTD benefits on the basis that he “should have been able to gradually increase to full-time employment by now.” “By now,” an arbitrary date picked by the Plan, and a date that disagreed with Mr. Cherry’s own treating providers, including his physiatrist, Dr. Kevin Berry. In October 2019, Mr. Cherry appealed Prudential’s denial. As part of the appeal-review process, in December 2019, Prudential required Mr. Cherry to attend another medical exam, this time with their consulting physician Dr. Sanders Chai. Dr. Chai, agreeing with Prudential’s Dr. Brzusek, proffered the opinion that Mr. Cherry could return to work. What makes no sense is that, although claiming that Mr. Cherry had “physically healed,” Dr. Chai was unable to cite to evidence to support his opinion. Further, Dr. Chai earlier noted that Mr. Cherry’s imaging (MRI and x-ray) confirmed his diagnoses. Neither Dr. Chai nor Dr. Brzusek cited to any evidence that supported their opinions that Mr. Cherry could return to full-time work. Regardless of the lack of evidence, Prudential denied Mr. Cherry’s appeal on the basis of Dr. Chai and Dr. Brzusek’s opinions. Following the denial of his appeal, Mr. Cherry filed a second appeal in or around August 2020. Responding to Mr. Cherry’s second-level appeal, Prudential again issued a denial, in December 2020. Mr. Cherry filed suit for his benefits under ERISA, on January 8. 2021.

In its May 2, 2022 decision, the Court found that Mr. Cherry’s claim arose under ERISA and that ERISA permits Mr. Cherry to sue “to recover benefits due to him under the terms of his plan, to enforce his rights under the term so the plan, or to clarify his rights to future benefits under the terms of the plan.” (see 29 U.S.C. § 1132(a)(1)(B).)

The Court also found that, under the terms of the plan and under Washington state law, the standard of review was de novo. In its review, the Court evaluated the Plan’s decision to deny Mr. Cherry’s LTD benefits because he purportedly exhausted the benefit-limitation, 24-months, for a mental illness. The record is clear, and the Court agreed, that Mr. Cherry was not disabled “due in whole or in part to mental illness.” The Court went on to opine that Mr. Cherry’s records confirmed that Mr. Cherry suffers with “significant pain and physical limitations” that render him unable to perform the duties of the work he had long enjoyed for over a decade. The Court further opined that the Plan’s doctor’s (Dr. Hayes) opinion held “no weight” because Dr. Hayes had never examined or observed Mr. Cherry. The Court found Dr. Hayes’ opinion to be merely speculative. Moreover, the Court found “[B]ased on the preponderance of the evidence, the Plaintiff’s disability was not caused in whole or in part by somatic symptom disorder.” The Court was clear that Mr. Cherry had not exhausted his LTD benefits because of a mental illness.

The Court then evaluated whether the Defendant had properly denied benefits for Mr. Cherry’s back condition. The Court found that Mr. Cherry’s limitations were well-documented throughout the administrative record (“AR”). The AR was over 6,000 pages and included a Functional Capacity Evaluation and a declaration by Mr. Cherry. The Court’s review of the AR concluded that Mr. Cherry was clearly unable to “sustain competitive work activity.” Further, the Court opined that it was “unrealistic” to expect Mr. Cherry find another occupation to work in part-time. Finally, the Court concluded, that Mr. Cherry is “unable to perform the duties of any gainful occupation for which [he] is reasonably fitted by education, training or experience” and is therefore entitled to benefits under the policy.” One other very interesting note about this case is what the Court permitted of Mr. Cherry, discovery on his breach of fiduciary duty claim. The court noted that, “courts have consistently permitted discovery on Section 1132(a)(3) claims.” The Court found that Mr. Cherry had made additional and different allegations from his Section 1132(a)(1)(B) claim. The court thus granted Mr. Cherry’s motion for limited discovery. Almost always, under ERISA, what you submit during the appeals process is the only evidence that the court will consider. Mr. Cherry’s case was an exception to this general rule.

It is also of note that the Court rejected Prudential’s request for remand. Prudential’s request for remand was an attempt to determine a third rationale for terminating Mr. Cherry’s benefits (that he did not continue working part-time after he departed from Microsoft). The Court noted, “The general rule … in this circuit and in others, is that a court will not allow an ERISA plan administrator to assert a reason for denial of benefits that it had not given during the administrative process.” Harlick v. Blue Shield of California, 686 F.3d 699, 719–20 (9th Cir. 2012) (rejecting insurer’s request to reopen its administrative process)…Remanding on this basis would give Defendant “a second bite at the apple when its first decision was simply contrary to the facts.” Grosz-Salomon v. Paul Revere Life Ins. Co., 237 F.3d 1154, 1163 (9th Cir. 2001).”

In sum, the Court’s Order was for Prudential to reinstate Mr. Cherry’s benefits, and pay him his benefits, plus interest, back to April 1, 2019, the date on which when Prudential terminated Mr. Cherry’s benefits. ERISA is a complicated law, as is the appeals process. If Prudential has denied your LTD claim, contact us for assistance.

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