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Klem v. Procter & Gamble Disability Plan

August 7, 2008


The opinion of the court was delivered by: Edwin M. Kosik United States District Judge

(Judge Kosik)


Plaintiff Phil Klem commenced this action under the Employee Retirement Income Security Act of 1974 ("ERISA"), codified as amended at 29 U.S.C. § 1001-- 1191c, to recover long-term disability benefits he claims were due him under the Procter & Gamble Long-Term Disability Allowance Policy ("LTDA"). See 29 U.S.C. § 1132(a)(1)(B). The Trustees of the plan terminated Klem's benefits after determining he was not totally disabled as required by the plan. Plaintiff Klem has asked this court to overturn the Trustees' decision. The matter is before us because the parties have filed cross-motions for summary judgment.

There is no serious dispute as to the facts bringing us to this point or the appropriate summary judgment standard to be applied.*fn1 The principal issue is to determine the appropriate standard in reviewing the Trustees' determination.


The plaintiff began his employment with Procter & Gamble (P&G) in 1998. The plaintiff participated in a disability benefits plan sponsored by P&G. Under the plan, a participant who is partially or totally disabled is paid benefits for up to 52 weeks from a trust funded by employee contributions and administered by a Board of Trustees consisting of four persons, two of whom are appointed by P&G. The plan is known as the Procter & Gamble Disability Benefit Plan ("Disability Plan"). Benefits are not the liability of the company itself.

After 52 weeks of disability, participants who continue to be disabled become automatically entitled to benefits from the LTDA. Benefits under this plan are provided through a trust which is funded by P&G, and not paid out of operating costs. It is administered by two company-appointed Trustees.

The Trustees of the Disability Plan and LTDA Plan are given discretion to determine benefit eligibility and to interpret the plans. The procedure for benefit determinations is to have the participant first submit a claim to a Reviewing Board, which consists of three persons, which reviews, investigates and makes recommendations on the claim to the Board of Trustees. The Reviewing Board is an elected board; two of the three members are elected by employee participants and one is appointed by the Trustees.

The plaintiff applied for benefits from the Disability Plan on August 22, 2005. He supported his application with a Physician's Certificate Form from his primary care physician, Dr. Michael Kovalick. Noting the plaintiff's condition, the physician indicated the plaintiff could return to work at the end of September, in 2005. Additional certificates from Dr. Kovalick indicated various conditions with "uncertainty" as to his return to work, "reevaluate at the end of Dec," "unchanged," temporary restrictions, "not able to return to work." Dr. Kovalick also offered a medical history and listed reports of doctors to whom he referred the plaintiff, such as a neurologist.

On November 30, 2005, the Reviewing Board scheduled the plaintiff for an Independent Medical Evaluation. Dr. Michael D. Wolk reported the plaintiff could do sedentary work. The results of this examination were forwarded to the plaintiff's physician with an invitation to discuss Dr. Wolk's report. It does not appear that Dr. Kovalick accepted the invitation. Based on Dr. Wolk's report, the Reviewing Board recommended that the plaintiff be placed on partial disability rather than total disability effective December 9, 2005. The plaintiff appealed. The Reviewing Board requested another outside medical review. Dr. Howard M. Futerman reviewed the medical history and concluded that there was no objective medical documentation ever provided that would demonstrate an inability to work in any capacity. The Trustees denied the appeal.

On November 16, 2006, the plaintiff again appealed and submitted additional medical documentation of examinations by other physicians. At the instance of the Trustees, a Dr. Richard Kaplan, Board Certified in Physical Medicine, was referred the case and all records to date. On December 26, 2006, he, too, found no credible evidence to support total disability. The Trustees finally denied the plaintiff's appeal on January 4, 2007.*fn2 At this point, the plaintiff had received payments for partial disability until December 7, 2006 for a total of 52 weeks. After each appeal, the Trustees offered detailed reasons for their decision based on the review of all the evidence.

Discussion and Conclusion

As we noted at the outset, the principal issue is whether the plaintiff's claim for long-term disability benefits was reviewed under an appropriate standard.

The parties have agreed with the existing authority that when benefits are denied under a plan which gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of a plan, judicial review of the decision is limited to ascertaining whether the denial is arbitrary and capricious. See Vitale v. Latrobe Area Hosp., 420 F.3d 278, 281-82 (3d Cir. 2005). Under Vitale, an administrator's decision can be overturned only if it is clearly not supported by the evidence in the record or the administrator has failed to comply with the plan's procedures. See id. However, if an administrator with discretionary authority is burdened by a conflict of interest, the "conflict must be weighed as a ...

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