Life Insurance And ERISA

Here is a case arising out of the Employee Retirement Income Security Act (ERISA) which involves life insurance.  The case is from the Northern District of Texas, Lubbock Division.  It is styled, Elizabeth Hernandez v. Unum Group v. Sara Hernandez and Jose Hernandez.

The basic Facts are that Xavier Hernandez had a policy of live insurance with his employer that was part of an ERISA plan.  On May 24, 2018, Xavier was killed in an auto accident.

From August 2015, until May 2018, Xavier was married to Sara Hemandez.  In January 2018, Xavier designated Sara as the beneficiary of his life insurance policy.  Weeks before Xavier’s death, he and Sara divorced.  The divorce decree indicates that both Sara and Xavier were present at the proceeding and does not mention Xavier’s life insurance policy.  Sara represents that, at the time of the divorce, she was unaware that she was the beneficiary under Xavier,s policy and only became aware once Xavier’s employer advised her of her status.  She maintains that she did not waive her rights as a beneficiary under the policy in the divorce decree or elsewhere.

Once Sara learned that she was the beneficiary under Xavier’s policy, she submitted a written claim to Unum Life, which was received on June 29,2018.  Around that time, Elizabeth and Jose Hernandez, Xavier’s parents-advised Unum Life through the their attorney that they would also be claiming the life insurance proceeds.  Elizabeth and Jose based their claim on Texas Family Code, Section 9.301, which revokes spousal designations in life insurance policies following a divorce.

Sara filed this motion for summary judgment seeking a declaration that she alone is entitled to the life insurance proceeds.

In reviewing the case, this Court pointed out that ERISA regulates the administration of employee welfare plans.  29 U.S.C., Section 1102(a)(1), states that benefit plans must be established and maintained pursuant to a written instrument.  This instrument must “specify the basis on which payments are made to and from the plan,” and administrators must manage benefits plans “in accordance with the documents and instruments governing the plan.  As a result, if a plan’s governing documents direct an administrator to pay benefits to a participant’s designated beneficiary, they must do so.

There is no dispute that Xavier designated Sara as the beneficiary under the policy.  Instead, Elizabeth and Jose argue that Sara’s designation should be invalidated based on Texas Family Code, Section 9.301.

Despite Texas Family Code, Section 9.301, ERISA’s statutory text and binding precedent preclude its operation here.  ERISA preempts “any and all state laws insofar as they . . .relate to any employee benefit plan” according to 29 U.S.C., Section 1144.  The U.S. 5th Circuit has ultimately determined that ERISA preempted Texas Family Code, Section 9.301 and, therefore, can not form the basis of a challenge to an ex-spouse’s claim.  Because ERISA preempts Texas Family Code, Section 9.301, the court must reject Elizabeth and Jose’s claim.

Because Xavier designated Sara as the beneficiary under his life insurance policy, the Court concludes that Sara is entitled to the proceeds.  Further, no evidence in the record suggests that either Elizabeth or Jose have a right to the life insurance proceeds at issue.

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