Two wives...one retirement benefit

[mal]

Participant retired in 1988 with a 50% QJSA in favor of his wife (X). At the time of retirement he presented a valid marriage certificate and things were fine for 25 years. Participant just passed away and the retirement payment was reset to 50% and made payable to X. So far, so good.

The plan administrator received a call from a woman (Y) who alleges that she was married to the participant in the 1960's and they never divorced. She is asking what benefits she is entitled to from the plan.

The QDRO procedures obviously don't address this situation. We are inclined to tell Y that the plan intends to continue to honor the QJSA in favor of X until we receive a domestic relations order that tells us to do otherwise.

I know this has come up before, but I cannot find any cases or guidance.

Ideas are appreciated.

[shERPA]

Sponsor should obtain legal advice. If Y pursues this, perhaps the plan should file an interpleader.

[Andy the Actuary]

You indicated, "We are inclined to tell "Y""

Please, first, please identify yourself generically. Are you benefits manager for the plan sponsor? Actuary? Attorney? Third party administrator?

Suggest at least at this juncture to advise the PA to rip out the telephone and deal with "Y" in writing requesting "Y" to send a letter to the PA with her request and stating her position and to provide any evidence to support her position. If participant was divorced from "Y," there should be public records which current spouse may be able to lead you to. Then, turn this letter over to an attorney who should advise how to proceed. Clearly, it's business as usual until the Plan's counsel advises otherwise. "Y" can cause the plan sponsor to spend a lot of $ if the PA does not proceed with careful guidance.

[QDROphile]

Y needs to submit a claim under the plan's claims procedures. The plan administrator should deal with Y in that context. The proceedings will cover matters described by Andy, but it may not matter. The plan may conclude that the plan properly identified the spouse in accordance with plan procedures and the existence of another marriage does not matter. That conclusion might best be made with advice of legal counsel.

[MoJo]

The plan may conclude that the plan properly identified the spouse in accordance with plan procedures and the existence of another marriage does not matter.

Unfortunately, I disagree. It is "irrelevant" that the plan followed it's procedures and came to a conclusion, if the fact is that Y's marriage precedes the marriage to X. The participant's marriage to X in that situation is, in fact, NOT a marriage (as nowhere in this country can one "legally" marry another person when they are already married). Plan procedures don't override the underlying FACTS - which must be determined. After all, the benefit being paid to X is a "spousal" benefit - and if X isn't the "legal" spouse, then those payments are erroneous.

I agree with Andy. Everything in writing. Everything to (and through) plan counsel.

[Peter Gulia]

mal asked for some cases. Here's a selection from the many cases that refer to bigamy and putative-spouse concepts in a context of considering who is or was a retirement plan participant's spouse or surviving spouse.

Although one might like to think that ERISA section 205's use of the word "spouse" refers only to someone who is or was the participant's spouse, courts' decisions aren't so simple. Whether a putative spouse, a real spouse, both, or neither is treated as a participant's spouse depends on a plan administrator's, arbitrator's, or judge's thoughts about what might be desirable in the particular circumstances.

The courts’ opinions in the following cases state differing reasoning and inconsistent results. In my view, neither court in the first two cases explained the real reason for its decision. A third example illustrates a straightforward application of the law that a person whose marriage has not ended cannot marry another.

Example 1.

In 1965, John and Susie married in Louisiana. In 1970, a Louisiana court ordered a judgment of separation, but not any divorce or dissolution of John and Susie's marriage. In 1973, Susie, while still married to John, “married” Milton. In 2000, John, while still married to Susie, “married” Gwendolyn in Texas. In 2001, John died (while still married to Susie and “married” to Gwendolyn). He was domiciled in Texas when he died. After John's death, Susie and Gwendolyn each submitted a claim to his pension plan for a survivor annuity; each claimed that she was John's surviving spouse. The pension plan included the following provision: “All questions pertaining to the validity of construction of this Pension Plan shall be determined in accordance with the laws of the State of Illinois and, to the extent of preemption[,] with the laws and regulations of the United States.” (As cited below, these are the relevant facts of a real case.) In resolving the plan administrator's interpleader, the court considered whether to apply Louisiana law, Texas law, Illinois law, or some combination of them in deciding which claimant (if either) was John's surviving spouse. Notwithstanding that neither of the claimants had argued for it, the court chose Texas law. Further, the court used Texas property law to resolve the status question needed to apply an ERISA plan's provision that preempts state law. Following this, the court found that Susie's acceptance of the benefits of her fraudulent “marriage” to Milton precluded her from asserting that she was John's surviving spouse, and recognized Gwendolyn as an innocent putative spouse to be treated as if she had been a spouse. Central States, S.E. & S.W. Areas Pension Fund v. Gray, 31 Employee Benefits Cas. (BNA) 1748, 2003 U.S. LEXIS 18282 (N.D. Ill. Oct. 8, 2003).

Example 2.

In 1966, Douglas married Ann in Ohio. They lived together in Ohio from 1966 to 1982. In 1972, Douglas began a relationship with Rita. In 1982, Ann left Douglas and moved to Tennessee. In 1985, Douglas and Rita “married” in Nevada. Each of Ann and Rita submitted claims for several benefits to be provided to Douglas' surviving spouse. The pension plan provided that it “shall be construed, governed[,] and administered in accordance with the laws of the State of Michigan[,] except where [sic] otherwise required by Federal law.” In resolving the plan administrator's interpleader, the court considered whether to apply Federal law, Michigan law, or Ohio law, or some combination of them in deciding which claimant (if either) was John's surviving spouse. The court denied summary judgment to allow further development of the facts, and to consider whether laches might estop a claimant from asserting the invalidity of the participant’s “marriage” to the other claimant. Croskey v. Ford Motor Co.-UAW, 28 Employee Benefits Cas. (BNA) 1438, 2002 U.S. Dist. LEXIS 8824 (S.D.N.Y. May 2, 2002).

Note 1. In both of these cases, the court did not apply the contractual choice of law and, even further, ignored the plan's provision that the plan be construed using the plan-specified state law.

Note 2. Courts' procedures for an interpleader, which focus on the arguments of the competing claimants and often do not require a stakeholder to assert a position, increase the likelihood that a court will render a decision that is unhelpful for future plan administration.

Example 3.

Philadelphia Eagles running back Thomas Sullivan was a participant under the NFL Player Retirement Plan. Thomas married Lavona in 1979. Thomas and Lavona stopped living together around 1983, and last had contact with one another around 1985. In 1986, Thomas “married” Barbara. Thomas died in 2002. On the plan’s interpleader, the federal court found that neither Barbara’s unawareness of Thomas’s marriage nor an assertion that Lavona “walked out on the marriage,” even if both alleged facts were fully proven, could have changed the fact that Thomas and Lavona remained married until his death. Likewise, Barbara’s belief that she was married to Thomas could not dissolve Thomas’s marriage to Lavona or permit Thomas’s marriage to anyone while he still was married to another. Lavona is entitled to the pension benefits that were the subject of the court proceeding. Hill v. Bell, 50 Employee Benefits Cas. (BNA) 1220 (E.D. Pa. Nov. 4, 2010).

The suggestions that a plan's administrator consider claims procedures and experienced employee-benefits lawyers' advice seems apt.

[Kevin C]

Not all states automatically assume the first marriage is the valid one. Here is a link to a decision regarding Douglas, Ann and Rita from Example 2. Starting at the bottom of page 6 is a discussion of the differences between Michigan and Ohio law.

http://www.ca6.uscourts.gov/opinions.pdf/06a0181p-06.pdf

Here is an passage from page 8. Rita is wife #2 and Ann is wife #1.

Under Michigan law Rita's marriage is presumed to be valid and Ann has the burden of proving that her marriage was never dissolved. That burden is substantial. Ann's own testimony that she never obtained a divorce, her testimony that she was never served with divorce papers, and her unproductive search of divorce records in the counties where she and Douglas resided is not sufficient to overcome that presumption. Ohio law evidences a policy of protecting individuals like Ann from bearing the burden of proof, and instead protects them while requiring individuals in Rita's position to obtain concrete proof of a prospective spouse's availability or bear the risk of not ascertaining that information. Application of Michigan law would be contrary to this policy. Moreover, the policy is fundamental. The mere fact that the result would be different is not enough to demonstrate that a fundamental policy is at issue. See Rest. (Second) Conflict of Laws § 187 cmt. g (“The forum will not refrain from applying the chosen law merely because this would lead to a different result than would be obtained under the local law of the state of the otherwise applicable law.”) However, this case involves more than simply two legal systems which happen to reach a different result. Instead, the different outcome is the result of conflicting value judgments about which party in this situation deserves protection. The restatement's commentary states that a policy which protects people from the oppressive use of superior bargaining power is one example of a fundamental policy. Rest. 2d Conflict of Laws, cmt. g. Ohio's policy at issue here protects individuals from having their marital rights cut off by the unilateral, and usually unknown, actions of their spouse. Both types of polices recognize vulnerabilities and choose to protect individuals from consequences they are ill-prepared to prevent on their own. Ohio's presumption in favor of the continuation of the first marriage demonstrates a fundamental policy. Application of Michigan law pursuant to the choice of law provision would be contrary to that fundamental policy.

[MoJo]

What is interesting here is that in the cited cases, with the exception of Peter's third example, is that the courts applied "equitable principles" (latches, fraud) to "award" the benefit to another, without addressing the threshold question of "who is the spouse." Kevin's comment points out who has the "burden of proof" (at least in that case), but otherwise the premise is the same: ERISA says a benefit goes to the "spouse." Proving who is the spouse, or whether some equitable theory can "divest" one of their spousal rights (a theory I think wholly incorrect as it applies to ERISA covered plans) is another matter entirely.

Interplead. Let a court decide the issue (whether you agree with it or not). At least you won't have to pay twice....