QDRO Cannot Override ERISA Rules for COBRA and Retirement Benefits

October 2, 2009 (PLANSPONSOR.com) - The U.S. District Court for the Eastern District of Pennsylvania has ruled that the former spouse of an employee cannot get continued health care benefits as dictated by a qualified domestic relations order (QDRO) because the plan was not notified of her divorce within the 60-day notice requirement for a qualifying event under the Consolidated Omnibus Budget Reconciliation Act (COBRA).

Granting summary judgment to the Carpenters Health & Welfare Fund of Philadelphia & Vicinity, the court pointed out that the Employee Retirement Income Security Act (ERISA) obligates the employee or the former spouse to notify the Welfare Fund “administrator of the occurrence of [the divorce] within 60 days after the qualifying event.” The divorce was final on November 6, 2006, and the plan received written notice of the divorce in June 2007.

The court rejected Doreen Ludwig’s argument that the fund knew she and her husband were going through a divorce from requests made by attorneys during the divorce proceedings, making notification of the final divorce unnecessary, saying a “pending divorce” is not a qualifying event within the ambit of the plan or COBRA. The court also determined that a union member’s oral statement that Ludwig would receive COBRA benefits did not obligate the plan to provide benefits.

In addition, the court agreed with the defendants that Ludwig was not entitled to a lump sum of retirement plan benefits granted to her by the QDRO. The court said that because ERISA provides that a QDRO cannot require increased benefits or a type or form of benefit not otherwise provided by the plan, under plan terms Ludwig will be eligible for a distribution of benefits when her ex-husband dies, retires, is separated from contributory service for twenty-four months, or reaches age fifty.

The court’s opinion is here .