Life Insurance Beneficiary Deported after Participant's Death - If Beneficiary Cannot Be Located, Can the Plan Treat the Beneficiary as a Missing or Deceased Beneficiary?

[rocknrolls2]

A participant of a welfare benefit fund passed away. However, his primary beneficiary has been deported and the plan officials have been unsuccessful in attempt to locate her. Can the plan treat the beneficiary as having predeceased the participant and make the benefit payable to any contingent beneficiary or, if none, the plan's default beneficiary? Alternative, can the plan treat the beneficiary as a missing beneficiary and treat the death benefit as it would with respect to any other missing participant or beneficiary under the plan?

[Peter Gulia]

Is this benefit provided under an employment-based employee-benefit plan?

If so, is the plan ERISA-governed?

If so, one presumes the plan’s trustee or administrator must administer one’s responsibility “in accordance with the documents and instruments governing the plan insofar as such documents and instruments are consistent with the provisions of this title [I] and title IV.” ERISA § 404(a)(1)(D).

Is the death benefit provided by a life insurance contract, from the plan’s trust, or from an employer’s assets?

Is there a written plan?

If there is a life insurance contract, does the written plan make the life insurance contract a part of the plan such that the life insurance contract also is in the writings “governing the plan”?

Of “the documents and instruments governing the plan”, do they state a provision about an unlocated beneficiary?

Do the documents state or omit a provision for giving up a beneficiary’s death benefit?

If there is a forfeiture provision, in what circumstances does it apply?

Without a supporting plan-document provision, I would be reluctant to deprive a participant-named beneficiary of a death benefit merely because the plan’s administrator has not located the beneficiary.

Does the plan set a time limit on a beneficiary’s claim for the benefit?

Does the plan set a time by which a death benefit must be paid, even as an involuntary payment?

This is not advice to anyone.

[fmsinc]

Who do you think has the burden of proof that the benefidciary is dead?  I am guessing that it falls on the contingent beneficiary (and mabe the plan as well).  Here are a few quickly located cases that may be helpful. 

https://scholar.google.com/scholar?hl=en&as_sdt=20000006&q="burden+of+proof+of+death"&btnG=

Here are a few more: https://scholar.google.com/scholar?hl=en&as_sdt=20000006&q="burden+of+proof+of+the+death"&btnG=

Who is at risk of having to pay twice when the deported beneficiary is found alive and well on a beach in Thatiti. 

How can RocknRolls2 protect his plan and his job.  File an interpleader naming the contingent beneficiary and whoever represents the deported one, and have the court make a dead or alive decision. Deposit the proceeds into the Registry of the Court.  

David

[Peter Gulia]

Even if an interpleader otherwise would be something an employee-benefit plan’s administrator might consider (and evaluate according to one’s fiduciary duties, including not incurring an imprudent expense if it would be paid or reimbursed from plan assets), an interpleader might not fit the Federal statute—28 U.S.C. § 1335.

Among many possible reasons:

There might not be competing claims, whether now or even potentially. (For example, if the participant named no contingent beneficiary and the default beneficiary under the plan’s governing documents—for example, the participant’s estate—is administered by the same person as the not-yet-located primary beneficiary.)

If no one has submitted a claim for the death benefit and the documents governing the plan do not compel an immediate payment or delivery, there might not be competing claims.

Absent competing claims, there might be no controversy until a plan provision compels an immediate payment or delivery.

If none of the competing claimants resides in the United States, there might be no U.S. district that is a proper venue for a § 1335 interpleader. See 28 U.S.C. § 1397.

There might not be “[t]wo or more adverse claimants, of diverse citizenship as defined in [28 U.S.C. § 1332](a) or (d) [who] are claiming or may claim to be entitled to [the death benefit][.]” 28 U.S.C. § 1335(a)(1).

The required diversity of citizenship might not exist if none of the competing claimants is a citizen or resident of any U.S. State or territory.

If the facts a complaint alleges do not show adversity of claims to the judge’s satisfaction, a court might dismiss the interpleader for not fitting the statute or not stating a controversy under the U.S. Constitution’s Article III.

Despite 28 U.S.C. § 2361’s provision for nationwide service of process, the plan’s administrator, trustee, or other stakeholder might be unable to serve process on one or more of the potential claimants. (rocknrolls2’s originating post says the plan fiduciaries have not located the primary beneficiary.)

An ERISA § 502(a)(1)(B) claim “to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan” won’t work because only “a participant or beneficiary” may bring such a claim.

An action for a declaratory judgment might be inapt because there might be no Article III controversy. 

If no claim is submitted, more likely a fiduciary might hold the death benefit until applicable law treats the right to that benefit as abandoned property.

This is not advice to anyone.

[rocknrolls2]

Peter,

To answer your questions: the death benefit is provided by a life insurance contract under an ERISA governed plan. The SPD is the plan document. The SPD provides that the designated beneficiary needs to file a claim for life insurance within one year from the employee's date of death. If no claim is timely filed and the whereabouts of the beneficiary are unknown, the disposition of the benefit will be determined by the provisions of the claim policy of the life insurance carrier indicated in the summary of benefits insert. If the plan were to be amended to adopt a missing participant policy, which should require that the whereabouts of the beneficiary be attempted in spite of his or her deportation and such attempt is unsuccessful, even though it is after the fact, since we are not talking about a qualified retirement plan and there is no vesting for welfare benefits (absent a plan provision to the contrary), could the plan treat the beneficiary as having predeceased the participant? I could see that such a provision could apply prospectively, but I am concerned that the amendment would not be valid retroactively.

[Peter Gulia]

So, the documents governing the plan set provisions for determining the beneficiary.

Including what to do when there is no claim.

And perhaps providing for the insurer to do it.

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The plan sponsor might be reluctant to amend the plan for at least two reasons:

The insurance contract might provide that plan provisions accepted by the insurer is a condition to the insurer’s obligation.

A custom provision might call the employer/administrator to do work that otherwise the insurer is willing to do if the insurer has no obligation beyond following its own procedure. The plan sponsor might prefer that the insurer do the work of applying its procedure for difficult claims.

If, however, the plan sponsor considers a plan amendment, the plan sponsor and each plan fiduciary might want each’s lawyer’s advice about whether a new provision ought to apply to a claim that arose before the amendment is made, and, if it applies, how it applies.

Further, what would the written plan describe as the set of facts that result in a beneficiary being deemed to have predeceased the participant or otherwise treated as not a beneficiary? How might a reader of the summary plan description perceive that description?

This is not advice to anyone.

[rocknrolls2]

Thank you, Peter. Those are excellent points to consider in dealing with this issue. And thank you, Frank (fmsinc) for the helpful case references.