Fifth Circuit Finds No Abuse of Discretion in Refusing to Pay Default Beneficiary Benefits to Step-Children
A Fifth Circuit case involved a participant in a retirement plan who did not name any other beneficiary after his spouse passed away. The stepchildren and siblings of the participant made a claim to the remaining benefits. Because the plan document did not specify whether stepchildren were “children” for purposes of paying benefits to default beneficiaries, the plan administrator determined that stepchildren were not included in the definition of “children.” The Fifth Circuit upheld the administrator’s determination. In their ruling, the Court applied the “abuse of discretion” standard and looked at whether the plan was administered uniformly, the interpretation was a fair reading, and whether other interpretations would result in unanticipated costs. The Court also held that ERISA does not require plans to apply the doctrine of equitable adoption.
By Conchita Lozano-Batista