Colorado Woman Wins Appeals Court Pension Ruling

April 28, 2003 ( - A Colorado woman waging a legal battle for survivor benefits from her ex-husband's pension plans has won a second skirmish - this time from a federal appeals court.

>The 10 th US Circuit Court of Appeals upheld a ruling by a federal judge in the US District Court for the District of Colorado throwing out a challenge to plaintiff Barbara Patton’s efforts to enforce the property settlement contained in her divorce decree with ex-husband William Phipers. Patton has contended that the divorce ruling represented a qualified domestic relations order (QDRO) under ERISA. A state judge issued the property settlement order after Phipers’ 1999 death, but made it effective retroactively to the couple’s actual divorce date in February 1988.

>Complicating the case was that Denver Post benefits officials had only informed Phipers of one of the two pension programs in which he was enrolled, according to the appeals court decision. In an earlier divorce order, the benefits from the one plan the parties knew about was divided up; Patton eventually received a lump-sun payment out of the known plan. After Patton discovered the second pension plan, the administrator refused to divide the benefits up according to the original divorce order.

>Patton asked a state court judge for a ruling that the second plan would be divided up as the first pension program was. The state judge agreed and made the latest order retroactive to the date of the couple’s divorce. The Post plan administrator rejected the latest court ruling as well, prompting Patton to go into federal court where the trial judge ruled in her favor.

>The company argued that the Patton-Phipers divorce order was not a QDRO as defined by ERISA because it effectively increased the benefits Patton would have ordinarily received and because it wasn’t officially recognized by the plan before Phipers’ death. The appeals judges rejected the arguments.

The Value of ‘Nunc Pro Tunc’ Orders

>The 10 th Circuit judges also rejected the Post’s contention that the retroactive orders like the one issued in the Patton-Phipers case – known as nunc pro tunc rulings – effectively rewrote the history of the benefits dispute. “The nunc pro tunc order here does not attempt to write historical facts. Rather, it is more than akin to the correction of a clerical error,” appeals judges ruled. “All that occurred in this case is that the state court and the parties previously lacked full information as to the assets to be distributed in the divorce settlement. When those assets were finally discovered, the court simply allotted them as it had intended under the original plan, i.e., as it would have done had it been aware of their existence at the time.”

>The appeals judges also contended that the nunc pro tunc rulings played an important role in domestic relations law. “Courts in domestic relations contexts must have the power to effect equitable settlements by responding to newly acquired information or to changes in circumstances,” the judges wrote. “If necessary changes once effected by the state court are not recognized by plan administrators or by federal courts adjudicating disputes, state courts are equitably stripped of their ability to equitably distribute marital assets in a divorce.”