ERISA-Fourth Circuit Holds That The Plan Administrator Properly Paid Life Insurance Proceeds To A Designated Beneficiary, Even Though That Beneficiary Had Earlier Waived Any Claim To The Proceeds

In Boyd v. Metropolitan Life Insurance Company, No. 10-1702 (4th Cir. 2011), Emma C. Boyd (“Emma”) was an employee of Delta Airlines, Inc. While so employed, she participated in a life insurance plan, which was insured and administered by Metropolitan Life Insurance Company (“MetLife”). The plan was governed by ERISA (the “Plan”). At the time of Emma’s death in November 2008, the plan documents on file with MetLife designated Emma’s husband, Robert Alsager (“Alsager”), as the primary beneficiary of the plan. In accordance with these documents, MetLife paid the plan proceeds to Alsager, even though he and Emma had previously separated, and even though he had previously signed a separation agreement in family court waiving any claim to the benefits.

In response, Mary Emma Boyd (Emma’s mother) and W. P. Boyd (Mary Emma’s son and the personal representative of Emma’s estate) (together, the “Boyds”) filed this suit, claiming eligibility for the benefits on the theory that Alsager had relinquished his right to receive them. The district court dismissed their suit, and the Boyds appealed. The Fourth Circuit Court stated that it agreed with the district court, based on the Supreme Court’s recent decision in Kennedy v. Plan Administrator for DuPont Savings & Investment Plan, 129 S.Ct. 865 (2009). It therefore affirmed the district court’s decision.

The Fourth Circuit Court said that, in Kennedy, the Supreme Court applied ERISA’s “plan documents rule”, under which a plan administrator looks solely at “the directives of the plan documents” in determining how to pay benefits. As in Kennedy, the plan documents on file at the time of Emma’s death declared Alsager to be the primary beneficiary of the Plan, as Emma never took advantage of her option to designate a new beneficiary. Also as in Kennedy, Alsager had previously waived any claim to the benefits as part of his divorce proceedings. Given these similarities, the Court felt compelled to reach a similar conclusion to the Supreme Court in Kennedy, namely, that Alsager’s waiver does not supersede plan documents, and that Metlife acted properly in disbursing benefits according to the plan documents on file. The Court concluded that the Boyds did not provide any arguments for departing from the Kennedy decision, even though: (1) Kennedy involved a pension plan, while this case involved life insurance proceeds payable under a welfare benefit plan and (2) the Plan-unlike the plan in Kennedy– did not have a formal provision under which Alsager could waive his benefits, since Alsager could nevertheless have choosen to not accept the benefits.

The Court noted that the waiver in the settlement agreement is not irrelevant. However, its interpretation and enforcement are not the plan administrator’s concern, but are between Alsager and the Boyds.

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