Sometimes determining the correct beneficiary for ERISA-governed life insurance benefits can present real challenges. 

Can the deceased’s will prove the deceased’s intent designating the correct beneficiary?  It depends on the language of the will.

A Plan administrator, vested with discretion, can choose to excuse technical errors in beneficiary-designation forms or it can elect to enforce strictly the terms of the plan.

Here’s the case of Hall v. Metropolitan Life Insurance Company, __ F.3d__ (8th Cir. May 8, 2014)(PDF).

FACTS: Dennis Hall designated his son as sole beneficiary for ERISA-governed life insurance benefits.  In November 2010, however, Mr. Hall completed and signed, but never submitted, a new beneficiary designation claim form naming his wife, Jane Hall, as sole beneficiary.

After Mr. Hall died in 2011, Ms. Hall claimed she was entitled to the life benefits. She claimed Mr. Hall lacked adequate time to submit the approved form. She presented Mr. Hall’s will as evidence that he intended for her to be the sole beneficiary.  The Plan vested Met Life with discretion in determining eligibility.  Met Life denied her claim. Ms. Hall brought suit.

HELD:  Did MetLife abuse its discretion by refusing to recognize the deceased’s will in determining who was the beneficiary?

  1. “MetLife reasonably determined that the will was inadequate to effect a change in beneficiary.” The will “did not expressly address the distribution of assets that were not part of the estate.”  Op. at 6.
  2. The November 2010 form had no effect because “the Plan expressly required Dennis to submit a written beneficiary-change request within thirty days of signature for it to be effective, and he failed to do so.” Op. at 6.
  3. Conflict between language in the Plan and Summary Plan Description (SPD) did not matter. The Plan contained the thirty day requirement but the SPD was silent on this requirement. “The SPD’s silence on this point does not trump the Plan’s clear requirement.”  Op. at 6.
  4. Doctrine of Substantial Compliance. “An insured substantially complies with the change in beneficiary provisions of an ERISA life insurance policy when the insured: [a] evidences his or her intent to make the change and [b] attempts to effectuate the change by undertaking positive action which is for all practical purposes similar to the action required by the change of beneficiary provisions of the policy.”  Op. at 8.
  5. “[Even though] a court may decide as a matter of common law to excuse technical non-compliance with the terms of an ERISA plan, [that]  does not mean an administrator with discretion under an ERISA plan is forbidden to enforce strict compliance with plan requirements.” Op. at 8 (Emph. in original).
  6. In exercising its discretion, an administrator might choose to excuse technical errors in beneficiary-designation forms…or it might elect to enforce strictly the terms of the plan….  MetLife reasonably exercised its discretion in rejecting [the will and the November 2010 beneficiary form].” Op. at 9.
  7. [A]llowing an administrator to require technical compliance with policy provisions protects the administrator from ‘paying the wrong person and being forced to pay twice.’” Op. at 10.