Justices Debate Death Benefit Claims

Divorce can create sticky situations, especially if the husband dies soon afterward without removing his ex-wife as his life-insurance beneficiary. The Supreme Court wrangled Wednesday over what law governs who gets someone’s employee benefits after they die.

“What about ordinary common sense?” Justice Stephen G. Breyer said during arguments in a dispute between a Washington state woman and her late ex-husband’s children from a previous marriage.

Ordinarily, Breyer suggested, “people would prefer that their . . . share would go to their children rather than to their just-divorced wife.”

Donna Rae Egelhoff contends she is entitled to the life insurance and pension benefits of her ex-husband, David, who died in an accident shortly after they were divorced in 1994. His children from an earlier marriage say they should get the benefits.

Egelhoff died intestate with his ex-wife still designated as beneficiary of his employer-provided insurance and pension benefits. But his children sued under a Washington state law that says a divorce revokes a spouse’s designation as beneficiary.

At issue is whether that state law is overridden by a federal law that governs employee benefit programs, the federal Employee Retirement Income Security Act. Donna Rae Egelhoff says the federal law protects plan participants and beneficiaries by overriding state laws that would divert benefits to someone else.

Justice Department lawyer Barbara McDowell, arguing in support of Egelhoff, said her ex-husband’s wishes were not known but that the only way to change his beneficiary was if he had filed a form doing so.

“Don’t you think there’s a reasonable probability here that the plan participant thought the money would not go to his divorced wife?” Justice John Paul Stevens asked.

But Justice Ruth Bader Ginsburg suggested a hypothetical case involving “a man who has just divorced a woman, is tired of her . . . he’s off with a young thing, he’s not married and he’s feeling tremendous remorse” and decides to let his ex-wife have his benefits.

Justice Antonin Scalia said that perhaps Mrs. Egelhoff had a good lawyer who knew the federal law and told her, “Maybe he doesn’t know that, but boy, we’re walking away with a good settlement.”

Thomas Goldstein, attorney for David Egelhoff’s children, Samantha and David, said the couple had a detailed divorce decree.

“He got the tan area rug and she got the Exercycle,” Goldstein said. But he said that if she wins, “the children are going to be out of luck for no sensible purpose.”

The case is Egelhoff vs. Egelhoff, 99-1529.