Ninth Circuit Affirms Decision Finding Legal Separation Agreement Qualifies As a QDRO

In Hartford Life and Accident Insurance Company v. Valois, No. 23-3286, 2024 WL 4678055 (9th Cir. Nov. 5, 2024), an interpleader action, the Ninth Circuit affirmed the district court’s determination that a Legal Separation Agreement (“LSA”) was a Qualified Domestic Relations Order (“QDRO”) and that life insurance benefits payable under an ERISA-governed life insurance plan insured by Hartford Life and Accident Insurance Company must be distributed in accordance with the LSA.

Marilyne Valois, the girlfriend of the decedent and the named beneficiary of his life insurance benefits, appealed the district court’s summary judgment in favor of Haili Kowalski, the decedent’s ex-wife, in an interpleader action initiated by Hartford to determine the recipient of $493,000 in life insurance benefits.

Kowalski and the decedent had a LSA which provided that the decedent “shall carry and maintain a policy of life insurance in the amount of $800,000” and “name [Kowalski’s minor son, E.K.] as sole beneficiary.” Valois argued the LSA is not a QDRO because it does not clearly specify the plan insured by Hartford as required by 29 U.S.C. § 1056(d)(3)(C)(iv). (“A domestic relations order meets the requirements of this subparagraph only if such order clearly specifies . . . . (iv) each plan to which such order applies.”) The court noted that it requires only “substantial compliance” with ERISA’s specificity requirements and the LSA substantially complies with the specificity requirements. Although the LSA only mentions “a policy of life insurance,” the decedent only had one life insurance policy. The LSA requires the decedent to name E.K. as the sole beneficiary of that policy.

Valois also argued the LSA is not a QDRO because it increases the payment burden on the Plan, which is contrary to the requirement of 29 U.S.C. § 1056(d)(3)(D)(ii). (“A domestic relations order meets the requirements of this subparagraph only if such order . . . . (ii) does not require the plan to provide increased benefits (determined on the basis of actuarial value)”. Even though the LSA required the decedent to keep a policy in the amount of $800,000, this agreement was between Kowalski and the decedent, not between Kowalski and Hartford. Hartford does not need to pay more than $493,000. Thus, the LSA does not increase the payment burden on the Plan.