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Cehovic-Dixneuf v. Wong

United States Court of Appeals, Seventh Circuit

July 11, 2018

Emma Cehovic-Dixneuf, Plaintiff-Appellee,
v.
Lisa Wong, Defendant-Appellant.

          Argued January 16, 2018

          Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 15-CV-8785 - Samuel Der-Yeghiayan, Judge.

          Before Bauer, Rovner, and Hamilton, Circuit Judges.

          Hamilton, Circuit Judge.

         The federal Employee Retirement Income Security Act of 1974 (ERISA) requires administrators of employee benefit plans to comply with the documents that control the plans. 29 U.S.C. § 1104(a)(1)(D). In the case of life insurance policies, that means death benefits are paid to the beneficiary designated in the policy, notwithstanding equitable arguments or claims that others might assert.

         In this case, the deceased employee was Georges Cehovic, whose employer offered its employees an insurance benefit plan through ReliaStar Life Insurance Company. Georges had two policies under the plan with ReliaStar: a basic life insurance policy with a death benefit of $263, 000, and a supplemental life insurance policy with a death benefit of $788, 000. On both policies, Georges listed his sister, plaintiff Emma Cehovic-Dixneuf, as the sole and primary beneficiary. After Georges died, his ex-wife, defendant Lisa Wong, claimed that she and the child she had with Georges were entitled to the death benefits from the supplemental policy. Any equitable arguments Wong might make can gain no traction, however, if the supplemental life insurance policy is covered by ERISA.

         The district court granted summary judgment for plaintiff Cehovic-Dixneuf, finding that the supplemental life insurance policy is indeed covered by ERISA. We affirm. Defendant Wong failed to offer evidence to the district court showing any genuine issue of any fact material to the case. She did not present her evidentiary objections to Cehovic-Dixneuf's evidence in the district court when she could and should have.

         As noted, ERISA ordinarily requires plan administrators to manage plans according to the governing documents, including beneficiary designations. Kennedy v. Plan Administrator for DuPont Savings & Investment Plan, 555 U.S. 285, 288 (2009) (beneficiary designation for pension plan upon participant's death); Egelhoff v. Egelhoff, 532 U.S. 141 (2001) (life insurance benefits under ERISA plan awarded to designated beneficiary, who was decedent's ex-wife, despite contrary state law); Melton v. Melton, 324 F.3d 941 (7th Cir. 2003) (same). It is virtually impossible to avoid a written designation of a beneficiary for a life insurance policy governed by ERISA. To avoid the effect of beneficiary designation, therefore, Wong has argued in the district court and on appeal that the supplemental policy is not governed by ERISA.

         This question on the merits is governed by our decision in Postma v. Paul Revere Life Insurance Co., 223 F.3d 533 (7th Cir. 2000). We explained there the scope of ERISA's coverage of insurance for the benefit of employees and the scope of the United States Department of Labor's so-called safe-harbor regulation, which offers a way to exclude insurance for employees from ERISA coverage. We explained in Postma that five elements must be shown for ERISA to cover an employee welfare plan like an insurance plan:

(1) a plan, fund, or program, (2) established or maintained, (3) by an employer or by an employee organization, or by both, (4) for the purpose of providing medical, surgical, hospital care, sickness, accident, disability, death, unemployment or vacation benefits, apprenticeship or other training programs, day care centers, scholarship funds, prepaid legal services or severance benefits, (5) to participants or their beneficiaries.

Id. at 537, quoting Ed Miniat, Inc. v. Globe Life Ins. Group, Inc., 805 F.2d 732, 738 (7th Cir. 1986). All of those criteria are satisfied here. The life insurance policy was part of a program established by Georges's employer for the purpose of providing death benefits to participants or their beneficiaries.

         Wong asserts, however, that the supplemental life insurance policy should fall outside ERISA because Georges paid all of the premiums on the policy himself (and, she says, with marital assets), without any direct subsidy from the employer. That is not enough to avoid ERISA coverage, however. The safe-harbor regulation excludes from coverage some group insurance programs, but with four requirements that must all be satisfied:

For purposes of title I of the Act and this chapter, the terms "employee welfare benefit plan" and "welfare plan" shall not include a group or group-type insurance program offered by an insurer to employees or members ...

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