Crites v. Anthem Life Ins. Co.
2014 Ohio 1682
Ohio Ct. App.2014Background
- Decedent (Keith Crites) had an ERISA-governed employer-sponsored group life policy ($30,000).
- In June 2007 decedent named his then-wife Barbara Crites as beneficiary; his children Tyler and Lindsay were contingent beneficiaries.
- In February 2010 the parties executed a separation agreement incorporated into the dissolution judgment that (among other things) released each other from any rights “as beneficiary in any life, or any other type of insurance policy” and stated the husband would retain ownership of his employer-sponsored life policy free of wife’s claims.
- Decedent died April 10, 2010. The named beneficiary was Barbara; the children sued Anthem for the death benefit. Anthem impleaded Barbara and deposited the proceeds into counsel’s trust account by agreement.
- The trial court initially awarded benefits to the children; this court reversed because ERISA requires plan administrators to pay the named beneficiary. On remand the trial court awarded proceeds to Barbara but imposed a constructive trust for the children based on the separation agreement.
- This appeal challenges the imposition of the constructive trust and whether the separation agreement clearly and convincingly waived Barbara’s rights to the ERISA-governed policy proceeds.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a state court may impose a constructive trust on ERISA-plan proceeds after the named beneficiary receives them | T. & L. Crites: state court equity can impose a constructive trust post-disbursement under state law to remedy unconscionable retention | B. Crites: ERISA preempts such remedies; a QDRO is required to change beneficiary rights | Court: Post-disbursement state equitable remedies (constructive trust) are permissible under Sixth Circuit precedent; ERISA does not bar later equitable remedies against the recipient |
| Whether the separation agreement waived Barbara’s rights to the employer-sponsored life insurance proceeds | T. & L. Crites: the separation agreement’s specific language waived all beneficiary rights, including to the employer-sponsored policy | B. Crites: the agreement lacked the specificity required to waive ERISA-plan beneficiary rights | Court: The separation agreement’s language specifically referencing the husband’s employer-sponsored life insurance clearly and convincingly established waiver; constructive trust was proper |
| Whether Kennedy/Egelhoff require a QDRO to effect post-divorce transfers of ERISA benefits | B. & L. Crites: QDRO needed only to change plan designation pre-disbursement; does not preclude state equitable remedies after payment | B. Crites: ERISA and Supreme Court precedent require a QDRO for any diversion of ERISA-plan benefits | Court: Kennedy and Egelhoff control administrators’ duty to follow plan documents pre-disbursement, but do not prohibit state courts from imposing equitable remedies after funds are paid to the named beneficiary |
| Burden and standard to impose a constructive trust under Ohio law | T. & L. Crites: separation agreement and equitable principles meet the clear-and-convincing standard | B. Crites: evidence insufficient to satisfy clear-and-convincing proof of waiver | Court: Plaintiff met clear-and-convincing burden; constructive trust may be imposed where retention would be unconscionable |
Key Cases Cited
- Egelhoff v. Egelhoff ex rel. Breiner, 532 U.S. 141 (ERISA-plan administrators must follow plan beneficiary designation)
- Kennedy v. Plan Adm'r for Dupont Sav. & Inv. Plan, 555 U.S. 285 (ERISA requires plan administrators to act according to plan; divorce decrees don’t change plan beneficiary without proper order)
- Central States, Southeast & Southwest Areas Pension Fund v. Howell, 227 F.3d 672 (6th Cir. — district courts may impose a constructive trust on ERISA-plan proceeds after distribution under state law)
- Estate of Cowling v. Estate of Cowling, 109 Ohio St.3d 276 (Ohio Supreme Court definition and standards for imposing a constructive trust)