Summary
In Egelhoff v. Egelhoff, 532 U.S. 141 (2001), the U.S. Supreme Court held that ERISA expressly pre-empts a Washington statute automatically revoking a former spouse’s beneficiary designation upon divorce. The Court found the statute had a forbidden “connection with” ERISA plans because it forced plan administrators to disregard plan documents and pay benefits according to state law, thereby interfering with nationally uniform plan administration and imposing administrative burdens that ERISA was designed to eliminate. The decision reinforces that state laws governing core plan administration matters like payment of benefits are pre-empted, even in areas of traditional state regulation such as family law, when they conflict with ERISA’s requirements that fiduciaries administer plans in accordance with plan documents.
Topics
Practice areas
Questions Presented
- Whether the Employee Retirement Income Security Act of 1974 (ERISA) pre-empts a Washington statute that automatically revokes a former spouse's beneficiary designation under an ERISA employee benefit plan upon divorce.
Holdings
- The Washington statute has a 'connection with' ERISA plans and is therefore expressly pre-empted under 29 U.S.C. § 1144(a) because it binds plan administrators to choose beneficiaries according to state law rather than plan documents, conflicts with ERISA's commands that plans specify payment bases and fiduciaries administer plans according to governing documents, and impermissibly interferes with nationally uniform plan administration by imposing administrative burdens and choice-of-law complexities.
Key quotations
“The statute binds ERISA plan administrators to a particular choice of rules for determining beneficiary status. The administrators must pay benefits to the beneficiaries chosen by state law, rather than to those identified in the plan documents.” (at 147)
“One of the principal goals of ERISA is to enable employers 'to establish a uniform administrative scheme, which provides a set of standard procedures to guide processing of claims and disbursement of benefits.' Uniformity is impossible, however, if plans are subject to different legal obligations in different States.” (at 148-149)
“This 'tailoring of plans and employer conduct to the peculiarities of the law of each jurisdiction' is exactly the burden ERISA seeks to eliminate.” (at 150)
Factual background
David A. Egelhoff, while married to petitioner Donna Rae Egelhoff, designated her as the beneficiary of his ERISA-governed life insurance policy and pension plan provided by his employer, Boeing. The couple divorced in April 1994, and David died intestate in an automobile accident just over two months later. At his death, Donna remained the listed beneficiary. The life insurance proceeds were paid to her. David's children from a prior marriage, the statutory heirs, sued to recover the insurance proceeds and pension benefits, invoking a Washington statute that automatically revokes a former spouse's designation as beneficiary of a nonprobate asset upon divorce. The case presents whether ERISA pre-empts that state statute.
Procedural history
David A. Egelhoff's children from a prior marriage (respondents) sued petitioner Donna Rae Egelhoff in Washington state court to recover life insurance proceeds and pension plan benefits, relying on a Washington statute that automatically revokes a former spouse's beneficiary designation upon divorce. The trial courts granted summary judgment for petitioner, concluding ERISA governed. The Washington Court of Appeals consolidated the cases and reversed, concluding the statute was not pre-empted by ERISA. The Washington Supreme Court affirmed, holding the statute lacks a connection with or reference to an ERISA plan. The United States Supreme Court granted certiorari to resolve a split among the circuits.
Remand instructions
Remanded for further proceedings not inconsistent with this opinion.