Taylor v. The Prudential Insurance Company of America, 3:12-cv-00702

Background

Plaintiff Theresa A. Taylor stopped working on February 2, 2011, alleging disability from fibromyalgia, sleep apnea, and spinal disease; she participated in Wrigley’s ERISA-governed disability plan administered by Prudential.
Plan provided Short-Term Disability (STD) benefits up to 52 weeks (disability = inability to perform regular occupation + ≥20% loss of weekly earnings) and Long-Term Disability (LTD) benefits after a 52-week elimination period (first 12 months same standard as STD; thereafter any gainful occupation standard).
Taylor filed a single disability application on Feb 2, 2011; Prudential initially denied and after appeal awarded a closed four-week STD benefit only and upheld denial of ongoing STD benefits on administrative review.
Taylor sued seeking STD and LTD benefits; Prudential moved to dismiss the LTD claim for failure to exhaust administrative remedies (motion converted to summary judgment).
Court found Taylor exhausted administrative remedies for her STD claim but did not administratively pursue LTD benefits through or beyond the 52-week elimination period; however, the court held further exhaustion of LTD remedies would be futile because the STD and LTD first‑year standards are identical and the same administrator makes the final determination.
The court dismissed Taylor’s LTD claim without prejudice (so she may pursue LTD administrative remedies later if she prevails on STD benefits), and left the STD claim pending for adjudication on the merits.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Taylor exhausted administrative remedies for LTD benefits	Taylor contends her single application covered all available disability benefits (STD and future LTD) and she exhausted available remedies through the STD appeal	Prudential argues Taylor did not present evidence of continuous disability through the 52-week LTD elimination period and thus did not exhaust LTD administrative remedies	Taylor did not exhaust LTD administrative remedies; she did exhaust STD claim only
Whether exhaustion is excused by futility	Taylor argues that denial of her STD claim makes it certain her LTD claim would be denied, so further administrative review would be futile	Prudential contends futility is not shown (and cites Fifth Circuit precedent that absence of demonstrated bias/hostility is fatal to a futility claim)	Court finds futility exception applies here because the STD and first‑year LTD definitions are identical, the same administrator decides both, and STD denial makes LTD denial certain
Whether the court may award LTD benefits now despite futility	Taylor seeks entitlement to LTD benefits now if STD denial indicates LTD denial; she asks court to decide LTD claim	Prudential urges dismissal for failure to exhaust and argues absence of administrative record precludes judicial award	Court declines to award LTD benefits now due to absence of an administrative record; dismisses LTD claim without prejudice so Taylor can pursue LTD procedures if she prevails on STD claim
Remedy and disposition	Taylor seeks full payment of STD and LTD benefits	Prudential seeks dismissal of LTD claim for failure to exhaust	Court grants Prudential’s motion as to LTD: LTD claim dismissed without prejudice; STD claim remains for adjudication

Key Cases Cited

Denton v. First Nat'l Bank of Waco, Texas, 765 F.2d 1295 (5th Cir.) (administrative appeal procedures are adequate absent evidence of bias)
Bourgeois v. Pension Plan for Employees of Santa Fe Int'l Corp., 215 F.3d 475 (5th Cir.) (failure to show bias by the administrative committee defeats futility claim)
McGowin v. ManPower Int'l, Inc., 363 F.3d 556 (5th Cir.) (claimant must show hostility or bias to invoke futility exception)
Lindemann v. Mobil Oil Corp., 79 F.3d 647 (7th Cir.) (requirement that claimant show certainty of adverse decision to establish futility)
Amato v. Bernard, 618 F.2d 559 (9th Cir.) (internal administrative appeals may be adequate even when decided by trustees)
Communications Workers of America v. AT&T, 40 F.3d 426 (D.C. Cir.) (futility exception requires certainty of adverse decision)
Barnett v. International Business Machines Corp., 885 F. Supp. 581 (S.D.N.Y.) (futility often found when one fully exhausted claim’s denial makes denial of related claim certain)