Opinion
No. 10-CV-02099.
March 3, 2011
K L GATES LLP, David J. Lenci, WSBA #7688, Heidi L. Craig, WSBA #41399, Attorneys for Plaintiffs, Premera Blue Cross and PREMERA.
ORDER GRANTING INTERPLEADER AND ORDERING PAYMENT OF PROCEEDS TO ADULT CHILDREN [PROPOSED]
This matter comes before the court on the parties' Agreed Motion for Interpleader and Summary Judgment. The parties seek discharge of Premera Blue Cross and PREMERA (collectively, "Premera") and an order directing Premera to pay the interpleaded funds to Anne Brown, Kelly Melton, and Matthew Melton (collectively, the "Adult Children") in the proportions specified on the beneficiary designation forms completed by Stephen D. Melton before his death.
This court has reviewed the Agreed Motion and attachments thereto, including the beneficiary designation forms and the Qualified Disclaimer of Judy Melton. Based on the pleadings and evidence presented, the court concludes:
1. This Court has subject matter jurisdiction over this action because it arises under federal law, specifically the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq.
2. The deceased, Stephen D. Melton, was a participant in the two ERISA employee pension benefit plans at issue in this case while employed by Premera Blue Cross. The first is the Premera Blue Cross Supplemental Defined Contribution Retirement Program ("DC SERP") established and maintained by Premera Blue Cross, and the second is the PREMERA 401(k) Savings Plan ("401(k) Plan") established and maintained by PREMERA.
3. Stephen D. Melton's most recent beneficiary designation form for the DC SERP on file with Premera is dated December 27, 2005. That form designates Judy Melton as the primary beneficiary of the DC SERP, to receive 100% of the plan proceeds, and names "Anne E. Brown, Kelly C. Melton, Matthew W. Melton 1/3 Each" as contingent beneficiaries in the event the primary beneficiary did not survive him or died prior to receiving all payments to be made under the DC SERP.
4. Stephen D. Melton's most recent beneficiary designation form for the 401(k) Plan on file with Premera is dated October 29, 2001. That form designates Judy Melton as the primary beneficiary on the 401(k) Plan and directs that she should receive 100% of the benefits payable under the 401(k) Plan. That form also designates Anne Melton, Kelly Melton, and Matthew Melton as secondary beneficiaries and directs that they should receive 33.34%, 33.33%, and 33.33%, respectively, of the benefits payable under the 401(k) Plan, in the event that the benefits do not pass to Judy Melton.
5. Carolyn Porter, the Personal Representative for the Estate of Stephen D. Melton, sent Premera a Letter of Instruction dated October 18, 2010, asking Premera to remove Judy Melton as the beneficiary of the Plans.
6. As a result of Ms. Porter's letter, Premera was presented with conflicting claims for which it may be exposed to multiple liability. Accordingly, interpleader is proper.
7. In most cases, an administrator of an ERISA plan is obligated to pay the proceeds of the plan to the designated primary beneficiary. But an exception to this general rule exists if a beneficiary disclaims his or her interest in the proceeds.
8. On February 21, 2011, Judy Melton executed a Qualified Disclaimer in which she disclaimed her interest in the Proceeds and caused it to be delivered as required under Section 2518 of the Internal Revenue Code and RCW 11.86.031.
9. The Qualified Disclaimer is effective to disclaim Judy Melton's interest in the Proceeds. As a result, she is no longer a proper payee of the Proceeds and is treated as if she had predeceased Stephen D. Melton.
10. Because Judy Melton is not a proper payee of the Proceeds and is treated as if she had predeceased Stephen D. Melton, the beneficiary designation forms require that the Proceeds be distributed to the Adult Children.
11. Under the Plan documents and the facts of this case, the Estate of Stephen D. Melton is not entitled to receive any of the Proceeds.
Accordingly, it is hereby ORDERED that:
1. The motion for interpleader is GRANTED.
2. Premera Blue Cross and PREMERA are hereby discharged of all liability and dismissed from this case subject only to their obligation to distribute the Proceeds in the manner directed below.
3. The motion for summary judgment is GRANTED.
4. Premera shall pay the Proceeds to the Adult Children in the proportions prescribed by the beneficiary designation forms. No Proceeds shall be paid to Judy Melton or the Estate of Stephen D. Melton. Specifically, the Proceeds should be paid as follows:
Beneficiary 401(k) Plan DC SERP Anne Brown 33.34% 1/3 Kelly Melton 33.33% 1/3 Matt Melton 33.33% 1/3 Dated this 28th day of February, 2011.