Supreme Court Upholds ERISA Preemption

The High Court ruled 7-2 in the case of Egelhoff v. Egelhoff that state law could not preempt a deceased participant’s beneficiary designation according to the terms of a plan document.

Boeing participant David Egelhoff died in an accident shortly after his 1994 divorce from Donna Rae Egelhoff, without removing her as beneficiary of employer-provided pension and life insurance benefits. 

His children from a previous marriage sued, claiming they were entitled to the benefits.  A Washington State law says that a divorce automatically revokes a spouse’s beneficiary designation.

A state judge ruled for Mrs. Egelhoff, but an appeals court and the Washington Supreme Court reversed and held the children were entitled to the benefits.

The Supreme Court overturned, ruling that a primary goal of ERISA was to establish uniform administration of employee benefits.

Justice Clarence Thomas wrote the majority opinion, joined by Chief Justice William Rehnquist and Justices Sandra Day O’Connor, Antonin Scalia, Anthony Kennedy, David Souter and Ruth Bader Ginsburg.

Justices John Paul Stevens and Stephen Breyer dissented, claiming that estate distribution is traditionally regulated by the state, and that Washington’s law did not impede ERISA’s goals.

– Nevin Adams   editors@plansponsor.com

The case is Egelhoff v. Egelhoff, 99-1529.  The opinion is on the Supreme Court Web site .