Sixth Circuit Guidance on ERISA Plan Language Requiring an “Approved” Form “Filed with the Records” for a Change of Beneficiary Thumbnail

Sixth Circuit Guidance on ERISA Plan Language Requiring an “Approved” Form “Filed with the Records” for a Change of Beneficiary

In Guinn v. GM, LLC et al., No. 18-3522, 2019 U.S. App. LEXIS 8062 (6th Cir. Mar. 19, 2019), the Sixth Circuit recently addressed whether an insured complied with an ERISA plan’s requirements for effecting a change of beneficiary. Reversing the district court, the panel unanimously held that, even though the plan rejected the change of designation during the administrative process, the insured properly changed her beneficiary when, consistent with the plan requirements, she relied on the form designated by the plan for changes of beneficiary and submitted it to the benefits office for processing.

The insured in the Guinn case, Julia Tolliver, submitted a change of beneficiary form to Metropolitan Life Insurance Company  (“Met Life”), the plan administrator for her life insurance benefits, identifying her nephew, plaintiff James Guinn, as the new beneficiary. Id. at *2–3. Although Tolliver correctly completed the first half of the form related to the change of beneficiary, she also added her name and address to the second half of the form related to existing trusts. Id. The form specifically stated that an insured should only complete one of the two sections. *3. Met Life informed Tolliver that it could not process her request as written, but Tolliver apparently did not respond to Met Life before her death. When plaintiff made a claim for benefits under the plan, Met Life denied the claim because it had rejected the change of beneficiary form as improperly completed, and plaintiff filed suit.

Although the district court dismissed the plaintiff’s complaint, the Sixth Circuit concluded that Tolliver successfully changed her designated beneficiary. Id. at *13. ERISA requires that plan administrators act “in accordance with the documents and instruments governing the plan.” 29 U.S.C. § 1104(a)(1)(D). In relevant part, the plan at issue required Tolliver to submit any change of designation on “a form approved” by Met Life and “file the form with the records” for the plan. Id. at *7–8.  Likewise, the plan stated that the change would take effect as of the date the insured signed the form.

Although Met Life argued that, because it did not accept the form as properly completed, Tolliver never submitted an “approved” change of beneficiary, the Sixth Circuit rejected that interpretation. Id. at *10–11. In concluding that Tolliver submitted the change on an “approved” form by relying on the actual form used by Met Life for changes of beneficiary, the Court pointed out: “It would defy logic for the form to simultaneously take effect when Met Life receives it and to depend on some sort of further review by Met Life in order to become effective.” *9.

Similarly, the Court agreed with the plaintiff that Tolliver properly filed the form with the plan records simply by submitting the completed form to the benefits office. Id. at *11. The Court specifically rejected any reading of the plan language that would give Met Life “the discretion to reject forms after receiving them by declining to literally place them in the correct file of the Plan participants.” Id. at *12.
Given the Court’s interpretation of the language at issue in Guinn, the Sixth Circuit will not allow a plan administrator more expansive latitude when the language of the plan does not confer any further discretion on the administrator to accept or reject a beneficiary designation before it takes effect.

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