Matschiner et al v. Lewis et al

Filing 62

MEMORANDUM AND ORDER - Defendants' Motion for Reconsideration 50 is denied. Plaintiffs' Motion for Leave to File a Reply Brief or for Oral Argument 59 is denied as moot. Judgment is entered in the amount of $73,200 in favor of pla intiffs and against Hartford on the plaintiff's claim for benefits under defendant Hartford's ERISA plan. Hartford Life shall distribute the $73,200 equally to both plaintiffs, Katherine and Kristina Matschiner. Ten working days from the date of this order, plaintiffs' counsel shall schedule and initiate a telephone conference with Magistrate Judge Thomas D. Thalken and the parties for the purpose of scheduling the remaining claims in plaintiffs' complaint for trial. Ordered by Chief Judge Joseph F. Bataillon. (JAE, )

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEBRASKA KATHERINE MATSCHINER and KRISTINA MATSCHINER, Plaintiffs, v. ALAN L. LEWIS, HARTFORD LIFE, INC., a Delaware corporation, and HARTFORD LIFE & ACCIDENT INSURANCE COMPANY, a Connecticut corporation, Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

8:07CV435

MEMORANDUM AND ORDER

This matter is before the court on the defendants' Motion for Reconsideration (Filing No. 50) and the remaining issue concerning the distribution of the funds awarded pursuant to the court's Memorandum and Order dated January 6, 2009 (Filing No. 46). On January 6, 2009, the court entered an order (Filing No. 46) granting plaintiffs' motion for summary judgment (Filing No. 20). In its order, the court found that defendants had abused their discretion in distributing benefits from Rojane Lewis's employersponsored welfare benefit life insurance policy to her ex-husband, Alan Lewis (Filing No. 46). In their Motion for Reconsideration (Filing No. 50), defendants now ask the court to reconsider its January 6, 2009 order (Filing No. 46) in light of the Supreme Court's recent decision in Kennedy v. Plan Adm'r for DuPont Sav. and Inv. Plan, --- S. Ct. ---, 2009 WL 160440 (2009). In Kennedy, the Supreme Court addressed the question of "whether the terms of the limitation on assignment or alienation invalidated the act of a divorced spouse, the designated beneficiary under her ex-husband's ERISA pension plan, who purported to waive her entitlement by a federal common law waiver embodied in a divorce decree

that was not a QDRO." Kennedy, --- S. Ct. ---, 2009 WL 160440 at *3. The court has reviewed the Supreme Court's decision and the parties' arguments and concludes that the Supreme Court's decision in Kennedy does not change the outcome of this court's decision in this matter. The decedent in Kennedy, William Kennedy, was a participant in his employer's savings and investment plan ("SIP"), under which he signed a form naming Liv Kennedy, his then spouse, as a beneficiary under the plan. Id. "William and Liv divorced in 1994, subject to a decree that Liv `is . . . divested of all right, title, interest, and claim in and to . . . [a]ny and all sums . . . the proceeds [from], and any other rights related to any . . . retirement plan, pension plan, or like benefit program existing by reason of [William's] past or present or future employment.'" Id. In Kennedy, the parties disputed whether or not W illiam and Liv Kennedy's divorce decree served to disclaim Liv Kennedy's interest as a beneficiary in William Kennedy's pension plan. Id. The plan, however, "provided a way to disclaim an interest in the SIP account, but Liv did not purport to follow it." Id. at *10. The Supreme Court addressed the question of whether a designated beneficiary to a pension plan could waive her interest through an alternative method other than the proscribed method found within the plan. See id. at *3-11. Although the factual circumstances of Kennedy and the present case under consideration are quite similar, an important distinction between the two exists: in contrast to the plan at issue in Kennedy, the Hartford Plan at issue here does not provide a method or provision by which a beneficiary can disclaim his or her interest in the benefits. See

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Filing No. 29, Group Benefits Plan at HART000222-HART000236.1 This distinction is important because it removes this action from the reaches of the Kennedy holding. The Supreme Court expressly limited its holding in Kennedy, stating that its decision does "not address a situation in which the plan documents provide no means for a beneficiary to renounce an interest in benefits." Kennedy, --- S. Ct. ---, 2009 WL 160440 at *10, n.13. This case is that situation.2 Because the plan in Kennedy provided a method by which the ex-spouse beneficiary could disclaim his or her interest, the Supreme Court concluded that "the plan administrator properly disregarded the ex-spouse's waiver owing to its conflict with the designation made by the former husband in accordance with plan documents." Id. at *3. In contrast, the Hartford Plan at issue here presents "a situation in which the plan documents provide no means for a beneficiary to renounce an interest in benefits," id. at *10, n.13. As a result, this court concludes that the Supreme Court's holding in Kennedy

W h ile the Hartford Plan provides no m e a n s by which a beneficiary can disclaim his or her interest, th e plan at issue in Kennedy does so explicitly. Kennedy, --- S. C t . ---, 2009 W L 160440 at *3 ("The plan d o e s , however, perm it a beneficiary to subm it a `qualified disclaim e r ' of benefits as defined under the Tax C o d e , see 26 U.S.C. § 2518, which has the effect of switching the beneficiary to an `alternate . . . determ in e d a c c o r d in g to a valid beneficiary designation m a d e by the deceased.'"). In its reply brief (Filing No. 5 6 ) , defendants assert that the Hartford Plan is analogous to the plan a t issue in Kennedy because the Hartford Plan also provides a m e a n s by which a beneficiary can renounce h is or her interest. Defendants state that under the Hartford Plan, "a person m a y elect not to subm it a claim . " F ilin g No. 56 at 7. According to defendants, this constitutes a "m e a n s " to renounce an interest because a b e n e f i c ia r y m u s t "subm it a required claim form as a prerequisite to receiving benefits." Filing No. 56 at 7. This is a far cry from the "m e a n s " in the plan at issue in Kennedy. The plan in Kennedy "provides form s for d e s i g n a t in g or changing a beneficiary." Kennedy, --- S. Ct. ---, 2009 W L 160440 at *3. The Hartford Plan o u t lin e s no analogous form s , provisions, or form a l procedures a beneficiary m u s t com p le t e or follow to r e n o u n c e his or her interest. Consequently, this court finds that the Hartford Plan is "a situation in which the p la n docum e n t s provide no m e a n s for a beneficiary to renounce an interest in benefits." Id. at *10, n.13 3
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does not change the outcome of this court's prior order granting summary judgment to the plaintiffs.3 Filing No. 46. The issue of the distribution of the funds also remains before the court. When the court entered its order on January 6, 2009 (Filing No. 46), the plaintiffs had not presented evidence showing that the divested interest should be distributed to them in place of RoJane Lewis's Estate (if an estate existed). On January 16, 2009, the court held an evidentiary hearing, giving all parties the opportunity to present evidence and arguments on the issue of the distribution of the $73,200 beneficiary interest.4 See Filing No. 49. The court has considered the arguments the parties presented at the hearing, as well as the record before it, and concludes that Alan Lewis's divested interest should be distributed to plaintiffs Katherine Matschiner and Kristina Matschiner. In its January 6, 2009 order, the court found the divorce decree between Rojane and Alan Lewis effectively waived any interest Alan Lewis previously held in the proceeds from Rojane Lewis's life insurance policy. The court finds that because the divorce decree terminated Alan Lewis's interest prior to Rojane Lewis's death, Section V(2) of the Group Benefits Plan (Filing No. 29, Group Benefits Plan at HART000236) requires Hartford Life to distribute his share

The court notes that the Suprem e Court further expressly refrained from addressing the issue of w h e t h e r a beneficiary could bring an action in state or federal court against a disclaim in g beneficiary court "to o b ta in the benefits after they were distributed." Id. at *8, n.10. The Court also expressed no view "regarding th e ability of a participant or beneficiary to bring a cause of action under 29 U.S.C. § 1132(a)(1)(B) where the te r m s of the plan fail to conform to the requirem e n ts of ERISA and the party seeks to recover under the term s o f the statute." Id. at 9, n.11. Both of these scenarios are arguably applicable to the present situation.

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On January 16, 2009, counsel for plaintiffs and counsel for Hartford Life m a d e their appearances. A la n Lewis was not present. 4

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equally among the remaining named beneficiaries: Katherine and Kristina Matschiner.5 As a result, the court now finds that the destruction of Alan Lewis's interest operated to divide equally his share between the plan's two remaining beneficiaries. Accordingly, IT IS ORDERED: 1. Defendants' Motion for Reconsideration (Filing No. 50) is denied. 2. Plaintiffs' Motion for Leave to File a Reply Brief or for Oral Argument (Filing No. 59) is denied as moot. 3. Judgment is entered in the amount of $73,200 in favor of plaintiffs and against Hartford on the plaintiff's claim for benefits under defendant Hartford's ERISA plan. 4. Hartford Life shall distribute the $73,200 equally to both plaintiffs, Katherine and Kristina Matschiner. 5. Ten working days from the date of this order, plaintiffs' counsel shall schedule and initiate a telephone conference with Magistrate Judge Thomas D. Thalken and the parties for the purpose of scheduling the remaining claims in plaintiffs' complaint for trial. DATED this 13th day of February, 2009. BY THE COURT:

s/ Joseph F. Bataillon Chief United States District Judge

Specifically, Section V(2) of the Group Benefits Plan states that "[i]f any nam e d beneficiary dies b e f o r e [the policy holder], his share will be divided equally am o n g the nam e d beneficiaries who survive [the p o lic y holder]." Filing No. 29, Group Benefits Plan at HART000236. 5

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