A Well-Reasoned But Incorrect QDRO Decision Pertaining to Life Insurance Payments from an ERISA Plan

13 Pages Posted: 7 Sep 2009 Last revised: 13 Jan 2010

Date Written: October 23, 2009

Abstract

In Metropolitan Life v. Drainville, 2009 U.S. Dist. LEXIS 63613 (DC R.I. July 23, 2009), a federal district court in Rhode Island recently explained the requirements that a domestic relations order ("DRO") must satisfy to be a qualified domestic relation order (“QDRO”). The court held an ERISA life insurance plan must treat a divorce decree which required a participant to keep his first wife’s children as his beneficiaries as having gone into effect. The dispute arose because at the time of his death, the participant had not followed the terms of the decree, and his second wife was then his sole beneficiary.

The Drainville court correctly concluded in a well-reasoned manner that (1) strict compliance with the QDRO disclosure requirements is not required, but substantial compliance is adequate; (2) an agreement that is merged or incorporated into a divorce decree may be a QDRO; and (3) a DRO may be a QDRO even if the plan administrator does not determine that it is a QDRO. The Drainville court, like many other courts, incorrectly disregarded the fact that the QDRO requirements, including the requirement that ERISA plans follow the designations of such an order, are applicable only to pension plans. Thus, the court should have (1) directed the life insurance plan to disregard the DRO at issue, and (2) held that the participant’s designee, his second wife, was entitled to his benefits.

Keywords: ERISA, survivor, claim, marital, QDRO, divorce, retirement benefits, benefit designations, life insurance, pension, employee benefit

JEL Classification: J32, K31, K32, K34, M52

Suggested Citation

Feuer, Albert, A Well-Reasoned But Incorrect QDRO Decision Pertaining to Life Insurance Payments from an ERISA Plan (October 23, 2009). Available at SSRN: https://ssrn.com/abstract=1467201 or http://dx.doi.org/10.2139/ssrn.1467201

Albert Feuer (Contact Author)

Law Offices of Albert Feuer ( email )

Suite 7M
110-45 71st Road
Forest Hills, NY 11375
United States
718-263-9874 (Phone)
718-575-0006 (Fax)

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