Court Upholds LTD Insurer's Claim Denial Based on Failed Validity Tests

The Eighth Circuit Court of Appeals, in Johnston v. Prudential Ins. Co., has affirmed a lower court's ruling that the defendant insurer acted appropriately in terminating the plaintiff's long term-disability ("LTD") insurance benefits based on evidence that the plaintiff was "deliberately exaggerating" his symptoms.

Background. The plaintiff, who was covered by his employer's LTD plan, had to undergo brain surgery due to complications from hydrocephalus. Following the brain surgery, the plaintiff's treating physician determined that he was unable to return to work due to moderate to severe cognitive impairment. The plaintiff then filed a claim for LTD benefits, and the insurer approved the plaintiff's claim.

As part of its ongoing review of the plaintiff's claim, the defendant requested that the plaintiff undergo two rounds of neuropsychological testing, which the plaintiff did. In reviewing the results of such testing, the defendant's medical examiner determined that the tests were not valid due to inconsistent performance. In particular, the defendant's examiner determined that the plaintiff was likely exaggerating the level of his disability by "actively attempting to perform poorly."
In light of the examiner's opinion, the defendant terminated the plaintiff's LTD benefits, and he appealed. The defendant brought in another examiner who came to the same conclusion as the first, i.e., that the plaintiff had failed the validity measures incorporated into the neuropsychological testing. As a result, the defendant upheld its decision and denied the plaintiff's appeal, and the plaintiff responded by suing the defendant in federal district court.

District Court. The district court proceeded to dismiss the plaintiff's claim after it reviewed the record and concluded that there was no abuse of discretion by the insurer because its reason for the benefit denial was based on evidence. Moreover, the court noted that the plaintiff had not provided any additional evidence beyond what was presented during the appeal process. In turn, the plaintiff appealed the district court's decision to the Eighth Circuit.

Eighth Circuit. On appeal, the plaintiff asserted that because the defendant had originally decided to approve his claim for LTD benefits, it was required to produce new evidence demonstrating that he wasn't disabled. However, the Eighth Circuit disagreed, finding that there was no legal precedent to support the plaintiff's position. In addition, the Eighth Circuit noted that the defendant had obtained evidence that allowed it to reassess its prior determination regarding the plaintiff's claim. The Eighth Circuit ultimately upheld the district court's decision to dismiss the plaintiff's claim, finding that: (i) there was substantial evidence in the record to support the defendant's conclusion that the plaintiff may have been malingering in the neuropsychological tests used to confirm his disability; and (ii) the plaintiff had failed to provide sufficient evidence of continuing disability.