Davis v. Boilermaker-Blacksmith National Pension Trust, ND Ohio No. 3:16-cv-2746 (March 4, 2019).

Issue: Was the Plan’s determination that the former spouse of the participant should receive zero benefits from the Plan proper simply because the deceased participant failed to redesignate his former spouse as the beneficiary of his survivorship benefits after divorce?

Decision: The United States District Court for Northern Ohio, Western Division, determined the Plan’s decision to deny the former spouse survivorship benefits was rational and in accordance with the Plan documents. As such, the Wife received zero benefits from her former spouse’s pension. This case had some unique facts. The Husband and Wife were divorced on August 25, 2014. At the time of divorce, Wife was designated as the beneficiary of Husband’s survivorship benefits from his pension held by the Boilermakers-Blacksmith National Pension Trust (a retirement plan administrated by a board comprised of half union representatives and half representatives of the employers who participate in the Plan; this type of plan is commonly referred to as a “Taft-Hartely plan,” “Multiemployer plan,” or a “Union plan”). After the divorce, Wife and Husband reconciled and planned to remarry in December 2015. However, Husband died on November 28, 2015—15 months after the divorce and one month prior to the planned remarriage. At the time of Husband’s death, Wife was still designated as his beneficiary for the survivorship benefits of his pension but this designation was made prior to the divorce.

When Wife attempted to claim the survivorship benefits, the Plan denied her the benefits and cited to the following Plan provision:

[I]n the event a Participant’s marriage is dissolved, any designation of such Participant’s spouse as beneficiary shall be deemed null and void as of the date of dissolution unless the Participant redesignates such spouse as his beneficiary subsequent to dissolution. (emphasis added).

Courts give retirement plans broad discretion to interpret the provisions of their plan. The plan’s interpretation of its own provisions will be upheld as long as the interpretation is rational; even in the face of another equally rational interpretation. Because the Husband failed to redesignate his former spouse as the beneficiary, and presumably there was no QDRO filed with the Plan, the only argument Wife could make is that the Plan states a designation for survivor benefits of a former spouse are only null and void when after a “dissolution”—not a “divorce.” However, the court rejected the Wife’s argument. The court found the Plan’s interpretation of its provisions that a “dissolution” is the same as a “divorce” for the purposes of rendering a survivor beneficiary designation null and void was rational. As such, the Husband’s retirement benefits reverted to the Plan—they were not paid to the Wife.

Observation: This case demonstrates two key points. First, Taft-Hartley Plans are generally more complex than other retirement plans. Most have very specific requirements when it comes to dividing a retirement benefit. It is extremely difficult to get a court to reverse the plan’s determination after it has been made. As such, the unwary can lose everything.

Second, it is imperative to complete and submit a QDRO or other order dividing retirement benefits as soon as possible after divorce. Unexpected things happen, people die, plan record keepers change, plans change their procedures, etc. Those who wait may end up like the wife in this case—receiving absolutely no benefits.

How we can help: We are keenly aware of Taft-Hartley plans and their complexity. We have drafted tens of thousands of QDROs dividing retirement benefits held by Taft-Hartley plans. Further, we can help you to timely take the correct action to protect your client’s interests. Once we are provided with all necessary information, we complete an order dividing retirement benefits in five to seven business days. We also provide advice to our attorney clients, including making sure to have the participant redesignate former spouse as his/her beneficiary for survivorship benefits immediately after divorce.