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Friday, April 1, 2011

There Is A Need To Cross All Of The “T”s And Dot All Of The “I”s

by Stephen P. Groves, Sr.

Boyd v. Metropolitan Life Insurance Company, ___ F.3d ___ (4th Cir 2011)

(Case No. 10-1702, filed 31 March 2011) (

While this case is essentially directed to all of the Family Court practitioners out there, the basic premises apply to all attorneys. Make sure all of the “T”s are crossed and the “I”s are dotted. When your client or their opposition waives a right to something, such as insurance benefits, pension benefits, etc., make sure everyone who should know about the waiver does know – especially the plan administrator.

Emma Boyd lived in Charleston, South Carolina and worked for Delta Airlines. She participated in Delta’s ERISA-governed life insurance program administered by Metropolitan Life Insurance Company. Emma was married to Robert Alsager and he was her designated primary insurance beneficiary. Emma’s mother, Mary Boyd, was the contingent beneficiary. Sometime in 2007 or so Emma and Robert separated and, in April 2008, the Charleston County Family Court approved their separation and property settlement agreement. As part of the settlement, both Emma and Robert agreed to waive any of their respective rights to the other’s estate and/or property, including specifically any rights to life insurance proceeds. Emma did not, however, notify MetLife to change the policy beneficiary from Robert to either Mary or someone else.

Unfortunately, on November 8, 2008, Emma passed away suddenly. Mary Boyd and others filed a claim with MetLife for the insurance proceeds, noting Robert had previously waived any claim thereto, notwithstanding the settlement agreement. Robert also filed a claim with MetLife. Based upon the plan documents, MetLife determined Robert was entitled to the proceeds and ultimately paid the benefits to him.

Mary sent a letter to MetLife appealing the claim determination on the basis Robert had specifically waived his right to recover any of Emma’s insurance benefits. After the claim decision was upheld, Mary sued MetLife in Federal Court in Charleston. Senior United States District Judge C. Weston Houck granted MetLife’s motion to dismiss “concluding that MetLife had carried out its statutory obligations by disbursing benefits in accordance with the beneficiary designation form on file with the plan. (Slip Op., pp.4-5). Mary appealed to the Fourth Circuit.

Relying on Kennedy v. Plan Administrator for DuPont Savings & Investment Plans, ___ U.S. ___, 129 S.Ct. 865 (2009), the United States Court of Appeals for the Fourth Circuit affirmed the District Court. In Kennedy, the Supreme Court had concluded that ERISA required the plan administrator to disburse benefits “ ‘in accordance with the documents and instruments governing the plan.’ ” (Slip Op., p.5) (quoting 29 U.S.C. § 1132(a)(1)(D)). Furthermore, the Kenney Court concluded that “ ‘ERISA’s statutory scheme ‘is built around reliance on the face of written plan documents.’ ” (Slip Op., p.5) (quoting Kennedy, ___ U.S. ___, ___, 129 S.Ct. 865, 875) (quoting Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73, 83 (1995)).

In Kennedy, a case similar to this one, the ex-wife was a party to a divorce decree which divested her of any proceeds to her ex-husband’s retirement and/or pension benefits, but remained as the designated beneficiary on the plan documents for one of his pension benefit plans. After Mr. Kennedy passed, his estate’s executrix claimed the pension benefits for the estate based on the ex-wife’s benefit’s waiver. The Court rejected the argument and determined the plan administrator was statutorily required to pay benefits pursuant to the plan documents on file, regardless of any alleged waiver. Stated otherwise, “even though [the] ex-wife’s waiver was clear, the [Supreme] Court concluded it could not trump the plan documents.” (Slip Op., p.7) (citing Kennedy, ___ U.S. ___, ___, 129 S.Ct. 865, 874-875). See also Matschiner v. Hartford Life & Accident Insurance Co., 622 F.3d 885 (8th Cir. 2010) (similar case holding).

While this may seem a harsh result given Robert’s clear waiver of Emma’s insurance benefits in the settlement agreement, Emma’s (or her attorney’s) failure to actually have MetLife change the beneficiary is the real problem. To require a plan administrator to honor a beneficiary’s waiver as opposed to simply following the plan documents would clearly open the door to questions of whether the waiver was “voluntary”, “knowing”, “based upon adequate consideration”, and so on. This would be very time consuming, likely to engender significant litigation, and plainly unnecessary. A plan participant, like Emma, could easily avoid all of these machinations by changing the beneficiary designation to another person once the original primary beneficiary, like Robert, has waived his rights to the proceeds.

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