Virginia Legal Trends and More: Husband Gets Wife's Life Insurance, Despite Property Settlement Agreement

Article from VLW:

By Deborah Elkins
Published: April 5, 2011

Although a husband signed a separation agreement waiving any claim to benefits from wife, husband – and not wife’s mother or the estate – can keep life insurance proceeds from the wife’s ERISA-approved plan because she did not change the beneficiary designation before she died, says the 4th Circuit.

The wife worked for Delta Airlines before her untimely death. Her employee life insurance plan allowed her to unilaterally change the designated beneficiary at any time by sending a signed, dated written request to the carrier, MetLife. In the event she failed to designate a beneficiary at the time of her death, the plan made clear that MetLife would disburse benefits to her estate. The plan did not specify any procedure for beneficiaries to follow in order to waive their claims to benefits.

Six years after wife designated husband as beneficiary on the MetLife policy, they separated and a South Carolina family court entered their separation and property settlement agreement, which included a waiver of “the right to receive proceeds, funds or property as a beneficiary under any life insurance policies.” However, wife never changed the name of the beneficiary. MetLife paid the proceeds to husband, and appellants filed suit, and later, this appeal.

Kennedy v. Plan Adm’r for DuPont Savings & Investment Plan, 129 S.Ct. 865 (2009), seems rather straightforwardly to foreclose appellants’ claims. As in Kennedy, it is undisputed that the plan documents on file at the time of death declared husband to be the primary beneficiary of the plan, as wife never took advantage of her option to designate anew beneficiary.

Appellants’ arguments do not provide any basis for this court to depart from the clear and evident thrust of the Kennedy decision. Nothing in Kennedy authorizes a plan administrator to disregard a validly executed beneficiary designation form where the beneficiary has made no effort to disclaim his right to benefits. Rather, the court wished to give meaning to the plain intent of Congress in 29 U.S.C. § 1104(a)(1)(D); it wished to provide beneficiaries the prospect of prompt receipt of benefits without the benefits of uncertainty; and it wished to relieve plan administrators of the need to divine obscure participant intentions and of the specter of a lengthy fight in court.

We need not rest our ruling on our interpretation of Kennedy, for the 8th Circuit addressed this very issue in Matschiner v. Hartford Life & Accid. Ins. Co., 622 F.3d 885 (8th Cir. 2010). That court reached the same result we reach here: the plan documents, not the divorce decree, are controlling, and footnote 13 of Kennedy only addresses situations where a plan precludes a pension benefit plan beneficiary from disclaiming an unwanted interest. Also, the Secretary of Labor, with considerable enforcement ERISA enforcement authority, agrees with MetLife.

We see no need and possess no authority to unwind em>Kennedy and make a puzzle of plan administration.

Judgment for MetLife affirmed.

Boyd v. Metropolitan Life Ins. Co. (Wilkinson) No. 10-1702, March 31, 2010; USDC at Charleston, S.C. (Houck) Robert E. Hoskins for appellants; Lowell D. Kass for appellee. VLW 011-2-066, 13 pp.