## Facts

- David A. Egelhoff, a Washington resident employed by Boeing, participated in an ERISA-governed life insurance policy and pension plan.
- While married, David named his wife, Donna Rae Egelhoff, as beneficiary on both plans.
- David and Donna divorced, and David did not change the beneficiary designations.
- Two months after the divorce, David died intestate in a car accident.
- David’s children from a prior marriage sued in Washington state court, relying on a Washington statute that automatically revoked an ex-spouse’s beneficiary designation for certain “nonprobate assets,” including employee benefit plans, upon divorce.
- The children argued the statute treated Donna as no longer the beneficiary, so plan proceeds should pass to them as David’s heirs under state law.

## Issues

1. Whether ERISA § 514(a), 29 U.S.C. § 1144(a), preempts a state statute that automatically revokes a former spouse’s beneficiary designation upon divorce as applied to ERISA-governed plans.
2. Whether such a statute has a prohibited “connection with” or “reference to” ERISA plans by requiring administrators to follow state-law beneficiary rules rather than plan documents.

## Decision

- The U.S. Supreme Court reversed the Washington Supreme Court.
- The Court held that the Washington revocation-on-divorce statute, as applied to ERISA-governed plans, has an impermissible “connection with” ERISA plans and is expressly preempted by ERISA § 514(a).
- Because the statute was preempted, plan administrators were required to distribute benefits according to the plan documents, which named Donna as beneficiary.
- A concurrence agreed preemption followed from the statutory text but criticized the indeterminacy of the Court’s “connection with” analysis.
- A dissent would have upheld the statute as a generally applicable family-law rule with only a remote effect on ERISA plan administration.

## Legal Principles

- ERISA preempts state laws that “relate to” employee benefit plans, including laws that have a substantial “connection with” plan administration.
- A state law has a prohibited connection with ERISA plans when it binds plan administrators to state rules for determining beneficiary status and requires payment to state-selected beneficiaries rather than those identified in plan documents.
- ERISA’s requirements that plans specify the basis for payments and that fiduciaries administer plans in accordance with governing documents support a plan-documents-based distribution rule.
- ERISA preemption protects nationally uniform plan administration by preventing state-by-state rules from altering claims processing and benefit payment determinations.

## Conclusion

The Court held that ERISA preempts a state revocation-on-divorce statute that would automatically remove an ex-spouse as beneficiary of ERISA-governed plans, requiring administrators to pay benefits to the beneficiary named in the plan documents.


Egelhoff v. Egelhoff, 532 U.S. 141 (2001)