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ex-spouse's right to file a lawsuit


Guest trishfri

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Guest trishfri

Ex-spouse signed away her surviving spousal rights to her ex-spouse's retirement plan after taking 50% lump-sum. It was an erisa plan. She had a QDRO. Now she is claiming there was fraud, stating her ex-spouse lied a out assests and she is entitled to some or all of his retirement. I have been named as the surviving spouse by the plan. We were married at the time of his death (last yr. 5/27/99) She has been denied twice by the plan. Now I understand her attorney is asking the plan to interplead the funds into federal court and let them decide. What can she do? How far can she go? She has no proof of fraud, there divorce was 12 yrs ago

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Guest [Pat M]

It's difficult to know from your info why the attorney feels that there are grounds to try to amend or appeal the original order.

Congress has required QDROs to be quite specific in order to convey ERISA benefits. If the original divorce decree and the QDRO did not mention survivorship, then they were not awarded. See Samaroo v. Samaroo http://vls.law.vill.edu/locator/3d/Sep1999/985245.txt

You can check caselaw on QDROs using online law libraries. Search using phrases like QDRO AND CASELAW or QDRO AND SURVIVORSHIP.

In order to draft the QDRO and award a lump sum from a retirement plan - even 12 years ago - the attorneys or marital parties would have had to collect detailed Plan information, such as benefit levels, forms of benefit allowed,etc. It's hard to see how the opposing attorney did not know that there were survivorship benefits available. But that's just an opinion.

Also, at this time, if you are receiving benefits as the survivor, a former spouse wanting survivorship from the Plan is asking the Plan to provide increased benefits not otherwise provided. That is not allowed in QDROs.

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Guest trishfri

There was a QDRO and I have a copy of it. It states that she gave up all surviving sposal rights. My Attorney specializes in ERISA law, hers does not. He has sent a letter to the disciplinary board asking them to monitor this case. The plan's Attorney is afraid to mess with this and feels he should interplead the money to the court in order to protect the plan, even though her Attorney did not submit any "proof" of her entitlement to benefits from the plan.

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Many states have statutes that exempt employee benefit plans from liability for the payment of benefits subject to state community property laws in the absence of the plan receiving a prescribed notice of the interest of an adverse party. For example, California law exempts an employee benefit plan from liability to a nonemployee spouse if it pays a benefit to an employee under the terms of the plan in the absence of the being served a Notice of Adverse Interest. You may want to ask your lawyer if the applicable state law has a similar statute. If it does, then, assuming the conditions are satsified, and so long as the validity of the QDRO itself is not subject to attack, the plan should be in a strong position to deny the former spouse's claim for additional plan benefits.

Also, federal courts have grown increasing loathe to grant an employee benefit plan's petition for interpleader. Even if the court grants the petition and the funds in dispute are deposited with the court, the plan is typically not discharged from liability until the underlying issue is settled or adjudicated. In my experience, federal courts view interpleader with suspicion. It has too frequently been employed by plan fiduciaries "punting" issues that are their fundamental responsibility to resolve in the first place.

[This message has been edited by PJK (edited 05-30-2000).]

Phil Koehler

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Guest Jeff Kropp

I'll answer Kirk's question. California state law absolving plan fiduciaries would be completely preempted by ERISA. This is because Section 206 of ERISA (re: QDROs) already addresses fiduciary liability for determining the status of a QDRO (and presumably federal common law would fill in the gaps as to the scope of this exemption).

In my opinion, an interpleader is the best way to go to resolve the issue (although more expensive). When a dispute revolves around whether an ex-spouse has waived benefits under a state domestic relations law, the courts have not provided a clear answer. Most of the courts ignore the strict requirements of QDRO provisions (for reasons unknown) and instead have created federal common law to resolve the issue. Most circuits will uphold the waiver if it is voluntary, specific, and explicit. Other courts will look at state laws to fill in the gaps.

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Well, Jeff your opinion differs from that of the California Court of Appeal. See In Re Baker, 204 Cal. App. 3d 206 (1988) and Helen v. Gowan, 54 Cal. App. 4th 80 (1997). You might also want to look at a 1997 California Supreme Court decision which favorably cites these cases for the proposition that federal law does not preempt California notice and joinder provisions. In re Oddino, 16 Cal. 4th 67, fn 7, (1997). Your view is also at odds with the California legisature, which reenacted the provisions for giving a notice of adverse interest in 1992 and renumbered the prior statute as Cal. Fam. C. Sec. 755(B).

These cases stressed the legal arguments that Cal. Fam. C. Sec. 755(B) satisfies well established exceptions to ERISA preemption regarding laws of general application and for traditional state jurisdiction, e.g. division of community property. But just simple logic would also suggest this outcome. This statute is a "hands-off the employee benefit plan" statute. It does not allow plaintiffs to bring state court actions against the plan sponsor, the administrator, or trustee if it pays benefits in the normal course. Jeff, maybe you can answer this question too: Why would Congress have drafted ERISA to preempt laws that insulate Title I plans from liability in state court?

As far as interpleader goes: you only have to have represented a petitioner in a federal interpleader action a few times to realize that it can be far more expensive for the plan to litigate this matter. The perception that the plan just deposits the funds in dispute and then takes off, is hopelessly naive. In an interpleader action almost everyone looses. The plan is the plaintiff and it will be exposed to significant attorney fees, and if the court feels that the interpleader was improper, it can even be held liable for the attorney fees of the claimants. The amount in dispute raised in this thread appears to fall far short of the amount that could justify the time and expense of an interpleader action. Far better to process any claim through the plan's claim procedure and deny the claim in routine, if the facts so warrant, letting the claimant exhaust his administrative remedies and bring a wrongful denial action, where the standard of review will be in the plan's favor.

[This message has been edited by PJK (edited 05-31-2000).]

Phil Koehler

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Guest trishfri

The plan has denied the ex-spouse's claim and denied again on appeal. The ex-spouse's Attorney wrote a letter saying that the plan should interplead the funds into the court, or into the deceased husband's estate. My Attorney told me that the Plan's Attorney must protect the plan and it has been two months since this happened and they(the plan) haven't done anything. I don't understand why they won't disburse the funds to me, when I was found to be the only rightful beneficiary by the plan. I live in Delaware, it is not a community property state. The QDRO was a "qualified" domestic relations order tht specifically stated that she(the ex-spouse) would give up all surviving spousal rights as soon as she was paid her 50% lump sum.

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As the former nonemployee spouse of the deceased participant, the ex-spouse's claim for benefits arises solely from her status as an "alternate payee" under the QDRO. As such she is entitled only to the benefit prescribed in the QDRO. The Plan's only function in reviewing her claim should be to determine whether or not anything has occurred that would adversely affect its prior determination that the domestic relations order was a QDRO. Even if the ex-spouse could show she had been defrauded in stipulating to the order, that should not affect the determination of whether or not it was a QDRO. It is not the Plan's function to provide her with a remedy in that situation. We have a court system for that. If the ex-spouse could show that she had been defrauded in giving her prior consent, she probably has grounds to request the court to modify the QDRO. In the absence of the court entering such a modification, the Plan appears to have no basis on which to deny your claim as the surviving spouse.

It sounds as if the Plan has not formally denied your claim. Your attorney should advise you on the time limits for processing your claim. The Plan probably wants to proceed slowly and use up as much time as is permitted under ERISA so that the record will show that the ex-spouse was given full access to the claims procedure under the Plan. Such a record indirectly benefits you, because it makes it more difficult for her to litigate the matter against the plan successfully.

I assume you or your attorney has filed all the prescribed benefit election forms and other evidence of your eligibility for the surviving spouse's benefit and the Plan knows full well that your claim is pending and the clock is running out.

Phil Koehler

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Guest trishfri

yes, the plan sent me the letter they sent to her attorney(the ex-spouse) It stated that her appeal was denied and they saw no reason not to disburse the funds to me. That was in April. My attorney called a week ago to say her attorney wanted the funds interplead into court or into my deceased husband's estate. My lawyer wrote a letter to her attorney stating we were prepared to bring a lawsuit on him for damages and that he had reported him to disciplinary counsel and asked them to monitor the case. I submitted a formal claim to the funds a long time ago. Any other suggestions or comments on this would be appreciated.

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Your attorney is in the best position to know the overall posture of your claim for these benefits. No one else is really in a position to comment much beyond saying that he should be acting to protect your ERISA rights, which, among other things, entitles you to the have your claim processed in accordance with the plan's claims procedure within the times specified in the procedure. I assume that in addition to sounding out the other claimant's intentions, he has obtained the Plan Administrator's assurances that it will discharge it's duties in that manner. He should be able advise you about the absolute deadline for the plan administrator to pay you the benefit, barring an interpleader action. In general, ERISA requires a plan make its initial determination on a claim for benefits within 90 days of receipt (and it can use up to another 90 days if special circumstances exist, which they very well might in this case, because the Plan Administrator is on notice of a competing claim). This means, the Plan could make you wait up to 180 days from the date your claim was filed at the outside before it

notifies you of its initial decision.

If the Plan Administrator denies a claim, as it apparently did in the case of the ex-spouse, the Plan must allow the claimant 60 days from the date she receives written notice of the denied claim to request an administrative review of its decision. The Plan Administrator in turn has 60 days from the receipt of her request for administrative review to render a final and binding decision (and it can use additional time specified in the plan if special circumstances exist). If the claimant fails to make a request for administrative review within the initial 60-day period following notice of the initial denial, she waives her right to seek a review later, and the Plan Administrator's decision becomes final and binding. The Plan may be anticipating that the ex-spouse will request an admininstrative review on or about the end of the 60-day period.

You should sit down with your lawyer, ask him or her to familiarize you with the plan's claims procedure and do the math to figure out how long, at the outside, you may to have to wait.

Phil Koehler

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Guest trishfri

Thank You for all your help. My Lawyer and I have talked about this at length, I guess I was just hoping to hear what I want to hear. As far as the plan's claim procedure, she presented her claim in December 1999, was denied then appealled,and was denied again. The plan as of April, 2000, then sent her a letter stating they were going to dispurse the funds to me due to her not presenting any added info for her appeal. I guess the plan is being extra cautious, because they have not transferred the funds to me due to her attorney (who does not or has not offered any info supporting any claim she may have)wants the plan to puta the funds into the court and let them decide. I just was curious if anyone had come across anything similar to this situation and what happened. Thanks again

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