Court decisions clarify QDRO rules for ERISA plans.

• Author: Kautter, Dave
• Position: Qualified domestic relations orders

A domestic relations order is a qualified domestic relations order (QDRO) if it complies with a set of requirements aimed at relieving plan administrators from the burden of interpreting a state court divorce decree. Despite the detailed legal requirements applicable to QDROs, several issues remain for plan administrators. Two recent court decisions clarify the issues of (1) whether administrators must give effect to a QDRO affecting welfare plan benefits and (2) the extent to which a domestic relations order must precisely track the statutory requirements of Sec. 414(p) to be a QDRO.

In Metropolitan Life Insurance Co. v. Fowler, Mich., 4/15/96, the district court held that ERISA QDRO requirements govern the allocation of benefits from an employer-provided life insurance plan. The court reversed its position and followed the 1994 Seventh Circuit's decision in Metropolitan Life Insurance Co. v. Wheaton. The court was faced with competing claims to a life insurance death benefit by a deceased employee's ex-wife, minor children, and adult children from a prior marriage. The plan document named the ex-wife as the sole beneficiary, but a divorce order designated the minor children as beneficiaries of the employees life insurance policies. That court held that the ERISA preemption exception for QDROs should apply to pension as well as welfare benefits. As a result, the court ruled that the QDRO should be given effect, and the benefits paid to the minor children.

In Hawkins, 6/14/96, the Tenth Circuit held that a state divorce order created a QDRO even though it did not precisely track the statutory requirements set forth in Sec. The marital settlement called for the wife to receive $1 million...