ERISA-Second Circuit Rules That Nunc Pro Tunc Orders Constitute QDROs, Even Though Issued After The Plan Participant’s Death

In Yale-New Haven Hospital v. Nicholls, No. 13-4725 (2nd Cir. 2015), Yale‐New Haven Hospital brought this suit-an interpleader action under ERISA- to resolve competing claims by Barbara Nicholls and Claire Nicholls to certain funds of the late Harold Nicholls held in four retirement plans. In this case, Barbara Nicholls, the surviving spouse of Mr. Nicholls, argues that the funds are payable to her because she is the named beneficiary in the plan documents. Claire Nicholls, the former spouse of Mr. Nicholls, contends that a portion of those funds are instead payable to her. She argues that three state court orders–her divorce settlement agreement and two nunc pro tunc orders entered after Mr. Nicholls’s death–constitute qualified domestic relations orders (“QDROs”) within the meaning of ERISA and thus validly assign those funds to her. The district court granted summary judgment in favor of Claire Nicholls, on the ground that the divorce settlement constitutes a QDRO applicable to all four retirement plans, so that she is entitled to the portion of the funds she is claiming.

Upon reviewing the case, the Second Circuit Court of Appeals (the “Court”) held that that the divorce settlement agreement does not constitute a QDRO, because the agreement fails to comply with the five requirements of 29 U.S.C. § 1056(d)(3)(C). The Court noted that three of the retirement plans were named in the nunc pro tunc orders, while the fourth retirement plan was not. The Court held, as to the three named retirement plans, that the nunc pro tunc orders-which comply with the requirements of § 1056(d), even though the orders were issued after Mr. Nicholl’s death-constitute valid QDROs that assign funds to Claire Nicholls. As to the fourth, unnamed retirement plan, the Court held that the nunc pro tunc orders do not constitute valid QDROs, since the orders failed to name that plan. As such, the Court upheld the district court’s summary judgment as to the three named retirement plans, granting Claire the funds claimed under those plans, but reversed the summary judgment as to the fourth, unnamed retirement plan, thereby denying Claire’s claim.

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