Tenth Circuit Finds Divorce Decree Is a Qualified Domestic Relations Order under ERISA

In Festini-Steele v. Exxonmobil Corporation, No. 20-1052, __F.App’x__, 2021 WL 629755 (10th Cir. Feb. 18, 2021), Plaintiff-Appellant Festini-Steele claims a Decree of Dissolution of Marriage (“Decree”) is a Qualified Domestic Relations Order (“QDRO”) under ERISA that entitles her to proceeds of a group life insurance policy that her ex-husband, Steele, held through Defendant ExxonMobil Corporation. To qualify as a QDRO, a domestic relations order must meet four statutory requirements: (i) the name and the last known mailing address (if any) of the participant and the name and mailing address of each alternate payee covered by the order, (ii) the amount or percentage of the participant’s benefits to be paid by the plan to each such alternate payee, or the manner in which such amount or percentage is to be determined, (iii) the number of payments or period to which such order applies, and (iv) each plan to which such order applies.§ 1056(d)(3)(C).

ExxonMobil denied Festini-Steele’s claim for benefits after finding that the Decree was not a QDRO. Its reasons included that the Decree did not meet the QDRO requirements: (1) it did “not specify an amount of insurance to carry” and (2) it did “not specify the name of the benefit plan.” The district court ruled in favor of ExxonMobil, concluding that the Decree does not qualify as a QDRO because the separation agreement does not identify a plan and it is not clear whose life is to be insured and who the intended beneficiary is; and the Decree does not clearly specify the amount or percentage of the participant’s benefits to be paid by the plan to Plaintiff or the manner in which the amount or percentage is to be determined.

On the standard of review, the court noted that it reviews ExxonMobil’s decision to deny the claim, not the district court’s ruling. It construed the issues as follows: (1) whether ExxonMobil impermissibly relied on three rationales raised only in litigation; and (2) whether ExxonMobil erred in determining that the Decree was not a QDRO.

ExxonMobil is Limited to Reasons Given in its Denial Letter. The court agreed with Festini-Steele, in part, that ExxonMobil is limited to the reasons it provided at the administrative level for concluding the Decree does not qualify as a QDRO. ExxonMobil’s “litigation only” reasons included that (1) the Decree did not make it clear whether Steele was required to carry insurance on himself or on Festini-Steele or who the beneficiary was supposed to be; and (2) the Decree did not clearly specify the amount or percentage of benefits or the manner in which they were to be paid (the second QDRO requirement). The court found that ExxonMobil waived the first argument by conceding it during the administrative review process and that the second argument, even if not precluded, is erroneous. The court found that ExxonMobil’s third reason raised in litigation was a legal argument related to the fourth statutory requirement and was sufficiently raised during the review process.

The Decree is a QDRO. The court found that the Decree meets the second QDRO requirement of specifying the amount or percentage of benefits. The Decree directs Steele to designate Festini-Steele as beneficiary; it did not name any other beneficiaries. As the sole beneficiary, she is entitled to 100% of the benefit. The court also found that the Decree meets the fourth QDRO requirement of plan identification. Relying on Jackson, the court found that the checkbox in the Decree providing “[t]he parties agree to the following terms relating to all life insurance accounts,” clearly specifies that Steele was required to name Festini-Steele as the beneficiary of all life insurance plans or policies insuring his life until their daughter turned eighteen. The court considered and rejected several of ExxonMobil’s counterarguments. The court reversed the decision of the district court and ordered judgment in favor of Festini-Steele.