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Seventh Circuit: ERISA Does Not Preempt Slayer Statute; No Plan Benefit for Spouse Who Killed Participant

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EBIA  

Laborers’ Pension Fund v. Miscevic, 880 F.3d 927 (7th Cir. 2018)

Available at http://media.ca7.uscourts.gov/cgi-bin/rssExec.pl?Submit=Display&Path=Y2018/D01-29/C:17-2022:J:Flaum:aut:T:fnOp:N:2098716:S:0

The Seventh Circuit has held that ERISA does not preempt the Illinois slayer statute. (In general, slayer statutes are state laws that treat murderers as having predeceased their victims so that they cannot gain from the crime.) A woman killed her husband and was found not guilty by reason of insanity. The husband had earned a vested benefit in a pension plan that provided survivor benefits if a participant died before commencing benefits—either a surviving spouse benefit (for participants who were married at the time of death) or a minor child benefit (for participants with no surviving spouse). The wife and the couple’s child (through a guardian) each sought to recover a survivor benefit, and the plan administrator asked the court to determine the proper beneficiary. The guardian argued that the slayer statute prevented the wife from receiving the benefit. The wife argued that ERISA preempted the slayer statue or, alternatively, that the statute did not apply because she was not found guilty.

Regarding ERISA preemption, the court looked to a U.S. Supreme Court decision on a state statute that automatically revoked beneficiary designations on divorce (see our Checkpoint article). The statute was held to be preempted because it would bind plan administrators to particular rules for determining beneficiary status, affect payment of benefits (a central matter of plan administration), and interfere with nationally uniform plan administration. The presumption against preemption in areas of traditional state regulation such as family law was overcome in that case because Congress made clear its desire for ERISA to preempt laws affecting core plan administrative matters and interfering with nationally uniform plan administration. Although slayer statutes similarly affect ERISA plan administration, the Supreme Court noted in its decision that they present a different question because their underlying principle is well established and predates ERISA. Expanding on this reasoning, the Seventh Circuit determined that the wife had failed to demonstrate that Congress intended ERISA to contravene this well-established principle and allow an individual to receive plan benefits after killing the participant. The court then applied the slayer statute, concluding that the wife’s actions had brought her within the statute’s terms, regardless of the not guilty finding and lack of criminal conviction.

EBIA Comment: Even in cases where ERISA has been found to preempt a slayer statute, some courts have held as a matter of federal common law that the killer could not receive benefits. However, plan administrators should not undertake this analysis on their own. An “interpleader” action asking the court to determine the proper beneficiary should be considered when these questions arise. For more information, see EBIA’s ERISA Compliance manual at Section XXXIX.H.23 (“State Slayer Statutes”) and EBIA’s 401(k) Plans manual at Section XII.C.5 (“Beneficiary Claims That Are Not Based Solely on a Participant’s Designation or a Plan’s Default Procedure”).

Contributing Editors: EBIA Staff.

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