In ERISA, Do It NOW!!!


A recent case involving the Federal Employees’ Group Life Insurance Act (FEGLI) reminded us again of the way some Federal statutes, including ERISA, can defeat the intentions of a policyholder even though basic common sense might dictate otherwise.

This most important topic has received our attention several times before
but repeated reminders are warranted so that beneficiaries and their attorneys remain alert to the danger of not checking and updating ERISA plan documents pertaining to those beneficiaries.

Courts consistently hold that in ERISA cases, the ERISA plan documents are the one and only contract to be looked to in a dispute. What the plan says is the rule of law and must be followed when a question of plan administration arises. This is so even when it is apparent from the facts that the policyholder would have clearly wanted another outcome.

In this reminder case, Hillman v. Maretta, 133 S. Ct. 1943 (2013), Mr. Hillman had been married to Judy Maretta, and while he was married to her, he named Judy as the beneficiary of his FEGLI policy. Mr. Hillman divorced Judy several years later and then married Jacqueline Hillman to whom he was married at the time of his death.

Judy Maretta sought Mr. Hillman’s FEGLI policy benefits and because she was still listed on his policy as his beneficiary, Judy received them even though she was no longer his wife.

His wife, Jacqueline, sued under a Virginia statute which gave her rights to the policy benefits under the facts of this case.

As in similar ERISA cases, the Supreme Court ruled preempted Virginia’s statute and that the policy proceeds were to stay with the beneficiary listed in the FEGLI policy. The Court upholds the principle that in these types of disputes court should uphold the law as it was written by Congress and unless specifically exempted, the Federal law preempts state law.

The lesson for ERISA policyholders is clear: If you want to change a beneficiary or in any way alter what an ERISA plan calls for, DO IT NOW!!! If you die or become incompetent before you get around to making the change, forget about it. It won’t happen.

Whether it’s a tax plan, divorce, remarriage or some other event which requires a change in what an ERISA plan calls for, notify the plan administrator immediately and complete the necessary paperwork to effect the change.

To do otherwise clearly jeopardizes what you have in mind.