Author: Denise A. Martin
QUESTION
May a court overturn the qualification of a domestic relations order by a pension plan administrator if it is determined that the qualification was made in error?
ANALYSIS
Yes, courts may overturn the incorrect qualification of a domestic relations order (DRO) by a plan administrator.[1] Under the Employee Retirement Income Security Act (ERISA), pension benefits earned through employment are generally not subject to forfeiture or attachment by court order. One exception to this general rule is that a portion of an earned pension may be redirected to a former spouse if a court issues a qualified domestic relations order (QDRO) directing payment of a portion of the benefit to the former spouse. Under ERISA, 29 U.S.C. § 1056(d)(3)(G)(i), a plan administrator typically makes the initial determination regarding whether a domestic relations order received by the plan is a qualified domestic relations order. See Jones v. Am. Airlines, Inc., 57 F. Supp. 2d 1224, 1231 (D. Wyo. 1999). Generally, “[a] QDRO enquiry is relatively discrete, given the specific and objective criteria for a domestic relations order that qualifies as a QDRO, see [29 U.S.C.] § 1056(d)(3)(C), (D), requirements that amount to a statutory checklist working to ‘spare [an administrator] from litigation-fomenting ambiguities.’” See Brown v. Cont’l Airlines, Inc., 647 F.3d 221, 227 (5th Cir. 2011) (citations omitted) (stating the Supreme Court and other federal appellate courts have described the determination of whether a DRO is qualified as a straightforward matter requiring the administrator to take the DRO at face value).
In ERISA, 29 U.S.C. § 1056(d)(3)(H)(i), the Retirement Equity Act contemplates judicial review of an administrator’s determination that a DRO is a QDRO “by a court of competent jurisdiction”, but it does not specify the procedures for obtaining such review or the court or courts having jurisdiction. 57 F. Supp. 2d at 1231. See also Trustees of Directors Guild of Am.-Producer Pension Benefits Plans v. Tise, 234 F.3d 415, 421 opinion amended on denial of reh’g, 255 F.3d 661 (9th Cir. 2000) (“Whether a state court’s order meets the statutory requirements to be a QDRO, and therefore is enforceable against the pension plan, is a matter determined in the first instance by the pension plan administrator, and, if necessary, by a court of competent jurisdiction.”). Various courts have held that state and federal courts have concurrent jurisdiction to review a plan administrator’s determination of whether a DRO is “qualified” for purposes of ERISA. See, e.g., Jones v. Am. Airlines, Inc., 57 F. Supp. 2d 1224, 1231 (D. Wyo. 1999); Eller v. Bolton, 168 Md. App. 96, 115 (2006); Langston v. Wilson McShane Corp., 776 N.W.2d 684, 693 (Minn. 2009).
While a plan administrator is initially given the discretion to determine whether an agreement constitutes a QDRO under the plan, courts will review a plan administrator’s interpretation of the meaning of a QDRO de novo, or without deference. See Matassarin v. Lynch, 174 F.3d 549, 563-64 (5th Cir. 1999) (“A court reviews de novo a plan administrator’s legal conclusions regarding the meaning of a contract or statute.”) (citation omitted). The court in Matassarin stated that a QDRO, unlike the Plan, is a separate, judicially approved contract between two parties, which the Plan administrator has no special discretion to interpret. Id. See also Hullett v. Towers, Perrin, Forster & Crosby, Inc., 38 F.3d 107, 114 (3d Cir. 1994) (finding the district court “did not err in holding that it should review de novo the plan administrator’s construction of the [Divorce] Agreement, which involved issues of contract interpretation under the Agreement and not the Plan.”); Stahl v. Exxon Corp., 212 F. Supp. 2d 657, 665-66 (S.D. Tex. 2002) (“A domestic relations order is considered a judicially approved contract not subject to discretionary determination by the Plan Administrator. Therefore, the court must examine the terms of the domestic relations orders at issue and determine whether they are ‘qualified’ under federal law.”) (citation omitted).
[1] Sometimes an Administrator does interpret a domestic relations order (DRO) in deciding whether it constitutes a qualified domestic relations order (QDRO). E.g., if a DRO is interpreted to provide a form of benefits not provided in the plan, it normally will be found not to be a QDRO, but if it is interpreted to provide a form of benefits recognized by the plan, the administrator will find it to be a QDRO.
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