Estate of Kensinger v. URL Pharma, Inc.
674 F.3d 131
| 3rd Cir. | 2012Background
- Decedent William Kensinger had a 401(k) plan with URL Pharma naming Adele Kensinger as primary beneficiary.
- William and Adele divorced in 2008 and signed a Property Settlement Agreement waiving each party’s interest in the other’s retirement benefits.
- The PSA was incorporated into the final divorce decree; Adele’s waiver stated she relinquished any claim to the other’s retirement plans.
- William died nine months after the divorce without updating the beneficiary designation on the 401(k) plan.
- The PSA waivers did not control the plan administrator’s obligation under ERISA to pay the plan proceeds to Adele as the named beneficiary.
- The Estate sought to recover the funds after distribution, while Adele argued ERISA required payment to the named beneficiary; the district court held the Estate could not sue Adele post-distribution; the Third Circuit reversed in part.
- The Supreme Court’s Kennedy decision held plan administrators must follow plan documents when distributing benefits, but left open whether estates can sue a beneficiary after distribution to enforce waivers.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Can the Estate sue Adele after plan distribution to enforce her waiver? | Estate | Adele | Yes; Estate can sue Adele to enforce waiver post-distribution. |
| Does Kennedy’s plan-documents rule apply after distribution to preclude post-distribution suits? | Estate | Adele | No; post-distribution suit against beneficiary is permissible. |
| Should ERISA’s anti-alienation provision shield Adele from enforcement of a state-law waiver after distribution? | Estate | Adele | No; post-distribution enforcement of waiver is permissible under contract principles. |
| Do state-law waivers survive ERISA enforcement after benefits are distributed? | Estate | Adele | Yes; waiver may be enforced as a contract against the recipient after distribution. |
Key Cases Cited
- Kennedy v. Plan Administrator for DuPont Savings & Investment Plan, 555 U.S. 285 (2009) (plan documents rule; post-distribution waiver issue left open; ERISA duty to follow plan documents)
- Boggs v. Boggs, 520 U.S. 833 (1997) (pre-distribution; ERISA preemption of state law; interest in undistributed benefits distinct from distributed funds)
- Sweebe v. Sweebe, 712 N.W.2d 712 (Mich. 2006) (estate may enforce waiver against beneficiary after distribution under state law)
- Pardee v. Pardee, 112 P.3d 308 (Okla. Civ. App. 2004) (waiver enforceable against beneficiary after distribution; ERISA funds no longer protected)
- Alcorn v. Appleton, 708 S.E.2d 390 (Ga. App. 2011) (Georgia court; estate may sue beneficiary to enforce waiver after distribution)
- Truckin g Emps. of N. Jersey Welfare Fund v. Colville, 16 F.3d 52 (3d Cir. 1994) (creditors may enforce rights against beneficiary after distribution; funds not protected by ERISA post-distribution)
- Kickham Hanley P.C. v. Kodak Ret. Income Plan, 558 F.3d 204 (2d Cir. 2009) (post-distribution enforcement against beneficiary permitted)