Appellate Judges Uphold Beneficiary Designation

May 8, 2007 ( - A federal appellate court has upheld a lower court ruling that the ex-wife of a dead life insurance plan participant is the proper beneficiary of the participant's benefits.

In an opinion written by Circuit Judge Jeffrey S. Sutton, the 6 th U.S. Court of Appeals turned aside claims by the participant’s father that the participant’s divorce from his ex-wife nullified his designating her as beneficiary of his employer-sponsored life insurance policy.

Sutton said the plan insurer acted reasonably by concentrating on the plan documents, which listed the ex-wife as the beneficiary.

According to the appellate court, Joseph M. Kmatz and Jennifer Gaines were married in November 1999. One week later, Kmatz named Gaines as the beneficiary of his life insurance plan sponsored by his employer, ABX Air Inc. The two divorced in July 2000 and Kmatz died in August 2003, having never changed the beneficiary designation.

The plan insurer, Metropolitan Life Insurance Co., paid $128,000 in benefits to Gaines. After the payment was made by MetLife, Kmatz’s parents argued that under Ohio law, Kmatz’s designation of Gaines as his plan beneficiary was automatically revoked once the couple’s marriage was dissolved.

According to the appeals court, MetLife responded to the parents’ claim for benefits by advising them that the Ohio law cited by them was preempted by the Employee Retirement Income Security Act and that MetLife was obligated by the terms of the plan to pay benefits to Gaines, who was the named beneficiary at the time of Kmatz’s death.

A lower court judge in the U.S. District Court for the Southern District of Ohio ruled against the parents and found that it was reasonable for MetLife to pay the benefits to Gaines as she was Kmatz’s named beneficiary.

The ruling in Kmatz v. Metropolitan Life Insurance Co., 6th Cir., No. 06-3826, unpublished 5/7/07 is here .