## Facts

- Jimmie Johnson, a General Electric employee, participated in an ERISA-governed welfare benefit plan funded by a MetLife group life insurance policy.
- In 1968, Jimmie designated his then-wife, Mildred Johnson, as the sole beneficiary of his plan life insurance.
- After their divorce, Jimmie completed a new beneficiary designation form in late 1996 naming LaShanda Smith, Leonard Smith, and Carolyn Hall as co-beneficiaries.
- The 1996 form contained technical errors, including checking a box for a plan in which he was not enrolled, listing his mother’s address, and describing his marital status as “separated” rather than divorced.
- General Electric processed the form and recorded the beneficiary change, later reflected by a confirmation letter.
- Jimmie died in 1999 with approximately $104,902 in life insurance coverage under the plan.
- Mildred submitted a claim after being told she was the beneficiary, while the newly named beneficiaries asserted that Jimmie had changed the designation in 1996.
- MetLife filed an interpleader action to have a court determine the proper beneficiary due to competing claims.

## Issues

1. Whether a participant in an ERISA-governed plan effectively changes beneficiaries when the change form contains technical errors but reflects intent and reasonable efforts to comply with plan procedures.
2. Whether ERISA preempts reliance on a substantial-compliance doctrine (including state-law concepts used as guidance) in determining the validity of a beneficiary change.

## Decision

- The Seventh Circuit affirmed summary judgment awarding the plan benefits to LaShanda Smith, Leonard Smith, and Carolyn Hall.
- The court held that Jimmie effectively changed beneficiaries because he substantially complied with plan procedures and demonstrated clear intent to replace Mildred as beneficiary.
- The court held that ERISA did not preempt the substantial-compliance approach because it operated as federal common law to implement plan terms, not as a state rule displacing plan documents.

## Legal Principles

- Under ERISA federal common law, a beneficiary change may be effective despite technical defects if the participant (1) clearly intends to change beneficiaries and (2) takes affirmative steps that are for practical purposes the equivalent of the plan’s required procedure.
- Minor clerical or technical mistakes on a beneficiary designation form do not invalidate a change where the designation of new beneficiaries is clear and the plan administrator treated the change as recorded.
- ERISA preemption bars state rules that alter beneficiary status by operation of law in a way that overrides plan documents, but it does not bar federal courts from developing gap-filling federal common law informed by state doctrine when consistent with the plan’s terms.

## Conclusion

The court enforced the participant’s later beneficiary designation under a substantial-compliance standard, holding that ERISA permits federal common-law rules to validate intended beneficiary changes despite technical errors when the plan’s procedures were effectively satisfied.


Metropolitan Life Ins. Co. v. Johnson, 297 F.3d 558 (7th Cir. 2002)