Don’t Wait to Obtain a QDRO (Patterson v. Chrysler Group)Carolyn Woodruff, J.D., C.P.A, C.V.A.
Patterson v. Chrysler Group, LLC, 845 F.3d 756 (6th Cir. 2017)
Facts: A divorce decree awarded the wife an interest in the husband’s retirement and survivor benefits, expressly ordering him not to elect a survivor beneficiary other than the wife. The wife did not obtain a QDRO.
Upon retirement, the husband elected to receive retirement benefits without survivor benefits, thereby violating this provision. The wife sought to enforce the decree by sending a copy to the plan. The plan refused to comply with the decree, finding that the decree did not meet the requirements for a QDRO.
The wife did nothing for the next 13 years. Then the husband died. She submitted a claim to the plan, which denied the claim on the basis that the husband had not elected retirement benefits. For the next six years, the wife and her attorney kept submitting claims, and the plan kept denying them.
The wife obtained a nunc pro tunc QDRO in state court and submitted that to the plan. When the plan refused to follow the QDRO, the wife sued. The district court held for the wife, and the plan appealed.
Issue: Was the wife entitled to survivor benefits?
Answer to Issue: No.
Summary of Rationale: The relevant statute of limitations, borrowed from state law, was six years. The statute began running when the plan first rejected the wife’s claim, 13 years before the husband died. By the time the wife submitted her claim after the husband died, the statute of limitations had run.
The nunc pro tunc QDRO did not change anything:
[If entry of a nunc pro tunc QDRO reset the statute of limitations,] no matter how long ago a plan denied a domestic-relations order, the denied claimant could circumvent the statute of limitations and revive his cause of action by obtaining and submitting a nunc pro tunc version of the denied order to the pension plan, force the plan to reiterate its denial, and effectively reset the statute of limitations. In such a world, no claim would ever truly be time-barred, but merely waiting for a nunc pro tunc order to issue. Such a system defeats the clearly understood policy goals of statutes of limitations.
845 F.3d at 761. A district court decision holding that the claim was not time-barred was reversed.
Observation: The wife was amazingly, astoundingly negligent in enforcing her rights. She knew that the husband had violated the state court order, and for 13 years before the husband’s death she did nothing. Then she waited six more years before bringing suit.
It is utterly critical that QDROs be entered promptly after the parties are divorced.
The wife in Patterson asked for trouble several times over.
Whenever a court divides ERISA-regulated benefits via future payments, always, always, ALWAYS get a DRO. When the plan refuses to qualify a DRO, always either file a timely appeal or obtain a timely modification of the DRO to address the plan’s concerns. Delay of the sort seen in Patterson is recipe for disaster.
Richardson-Roy v. Johnson, 657 F. App’x 113 (3d Cir. 2016) (unpublished)
Facts: When the husband and wife were divorced, the court awarded the wife a share of the husband’s retirement benefits. But the wife did not obtain a DRO enforcing the award.
Four years after the divorce, the husband actually retired. The wife still did not obtain a DRO enforcing the award.
In 2010, 16 years after the divorce and 12 years after the husband retired, the husband died. Two months later, the wife finally obtained from a Delaware state court a DRO enforcing the award.
The plan administrator refused to qualify the DRO. The wife waited for four more years, and then finally sued to enforce her QDRO. The district court held that the wife’s claim was time-barred, and the wife appealed.
Issue: Is the wife’s claim time-barred?
Answer to Issue: Yes.
Summary of Rationale: “The ERISA statute does not have its own statute of limitations for recovery of benefits, but federal courts are authorized to borrow the most analogous limitations period from the forum state when deciding whether a federal claim has been timely pursued.” 657 F. App’x at 115. “The one-year limitation period set forth under Delaware law for employment disputes, 10 Del. Code § 8111, is applicable to a claim for recovery of benefits under an ERISA plan.” Id. The wife waited for four years after initial rejection of her claim before filing suit. The one-year statute of limitations had expired.
The court then went out its way to hold that the wife would lose on the merits anyway. The Third Circuit has held that a QDRO cannot be entered after a spouse remarries and dies. Samaroo v. Samaroo, 193 F.3d 185, 190 (3d Cir. 1999).
Observation: The wife was amazingly, astoundingly negligent in enforcing her rights. She did not obtain a QDRO between divorce and retirement, she did not obtain a QDRO before retirement and death, and when she finally did get a QDRO, she waited four more years before enforcing it.
Like the wife in Patterson, the wife in Richardson-Roy had asked for trouble many times over.
Note: The wife’s claim on the merits was not as weak as the court thought. Samaroo is a minority decision that had been criticized in other Circuits. See the next case.
By Carolyn J. Woodruff, North Carolina Family Law Specialist