Court Opinion

ID: 9750684
Source: CourtListenerOpinion
Date Created: 2023-08-28 15:21:18.078847+00
Date Added: 2024-06-11T07:26:18.052902
License: Public Domain

OPINION BY FREEDBERG, J.:
¶ 1 This matter is before the Court on an appeal from the order entered in the Court of Common Pleas for York County directing Jodie L. Sauers (“Appellant”) to surrender all of the life insurance proceeds which she received following the death of her former husband. We affirm.
¶ 2 Pursuant to an employee group benefit plan, effective June 1, 1997, Paul J. Sauers, III, (“Decedent”) obtained a $40,000.00 life insurance policy issued by the Hartford Life Insurance Company (“Insurer”). There is no dispute that the insurance policy is part of an employee benefit plan subject to the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq. On June 27, 1998, Decedent married Jodie L. Sauers (“Appellant”). On October 13, 1998, Decedent named Appellant as beneficiary and his nephew, Ian D. Rehn (“Nephew”), as contingent beneficiary. On June 11, 2002, Decedent and Appellant divorced. Decedent died on September 19, 2006. He had not changed the designation of Appellant as beneficiary. In accordance with plan documentation, Insurer paid to Appellant $40,000.00 on March 19, 2007.
¶ 3 On September 26, 2006, William F. Sauers (“Administrator”) received letters of administration for the estate of Decedent. On February 16, 2007, Administrator filed a petition requesting Appellant to show cause why she should not relinquish all interest and title to the proceeds of Decedent’s life insurance policy for the benefit of Nephew. Appellant filed preliminary objections on March 30, 2007. The trial court overruled Appellant’s preliminary objections on April 27, 2007. Appellant filed a motion to dismiss on April 25, 2007. On May 16, 2007, the trial court denied Appellant’s motion to dismiss and directed Appellant to surrender the life insurance proceeds to Nephew.
¶ 4 Appellant filed a notice of appeal on June 15, 2007. On June 25, 2007, the trial court ordered Appellant to file a statement of matters complained of on appeal. Appellant filed a Pa.R.A.P. 1925(b) statement *1268on July 5, 2007. The trial court filed a Pa.R.A.P. 1925(a) statement on July 16, 2007.
¶ 5 Appellant raises three questions for our consideration: (1) whether ERISA pre-empts 20 Pa.C.S.A. § 6111.2, a beneficiary re-designation statute; (2) whether the Administrator lacked the capacity to bring this suit; and (3) whether the petition brought by the Administrator should have been dismissed for lack of subject matter jurisdiction. We address each question in turn.
¶ 6 Appellant contends that the trial court erred in not concluding that ERISA pre-empts 20 Pa.C.S.A. § 6111.2 which provides:
If a person domiciled in this Commonwealth at the time of his death is divorced from the bonds of matrimony after designating his spouse as beneficiary of a life insurance policy, annuity contract, pension or profit-sharing plan or other contractual arrangement providing for payments to his spouse, any designation in favor of his former spouse which was revocable by him after the divorce shall become ineffective for all purposes and shall be construed as if such former spouse had predeceased him unless it appears from the wording of the designation, a court order or a written contract between the person and such former spouse that the designation was intended to survive the divorce. Unless restrained by court order, no insurance company, pension or profit-sharing plan trustee or other obligor shall be liable for making payments to a former spouse which would have been proper in the absence of this section. Any former spouse to whom payment is made shall be answerable to anyone prejudiced by the payment.
20 Pa.C.S.A. § 6111.2.
¶ 7 This is a question of law subject to plenary review. See C.B. ex rel. R.R.M. v. Com., Dept. of Public Welfare, 567 Pa. 141, 786 A.2d 176, 180 (2001) (noting that “the proper interpretation and interplay of statutes” is a question of law).
¶ 8 Federal pre-emption originates in the Supremacy Clause of the United States Constitution. U.S. Const. Art. VI, cl. 2. “Congress has the undisputed power to pre-empt state law in areas of federal concern.” Stone Crushed Partnership v. Kassab Archbold Jackson & O’Brien, 589 Pa. 296, 908 A.2d 875, 880 (2006), citing Pac. Gas & Elec. Co. v. State Energy Res. Conservation & Dev. Comm’n, 461 U.S. 190, 103 S.Ct. 1713, 75 L.Ed.2d 752 (1983). In those areas traditionally regulated by the states, “it should be presumed that Congress did not intend to supersede state authority absent a clear and manifest legislative purpose to the contrary.” Stone Crushed Partnership, 908 A.2d at 880. There are three forms of federal pre-emption:
First, state law may be pre-empted where the United States Congress enacts a provision which expressly preempts the state enactment. Likewise, preemption may be found where Congress has legislated in a field so comprehensively that it has implicitly expressed an intention to occupy the given field to the exclusion of state law. Finally, a state enactment will be pre-empted where a state law conflicts with a federal law. Such a conflict may be found in two instances, when it is impossible to comply with both federal and state law, or where the state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.
Id. at 881 (internal citations omitted). Because the ERISA statute explicitly defines the extent of its pre-emptive power, we are dealing with express pre-emption in this case.
*1269¶ 9 In Egelhoff v. Egelhoff, ex rel. Breiner, 532 U.S. 141, 121 S.Ct. 1322, 149 L.Ed.2d 264 (2001), the scope of ERISA pre-emption was discussed as follows:
ERISA’s pre-emption section, 29 U.S.C. § 1144(a), states that ERISA “shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan” covered by ERISA. We have observed repeatedly that this broadly worded provision is clearly expansive. But at the same time, we have recognized that the term “relate to” cannot be taken to extend to the furthest stretch of its indeterminacy, or else for all practical purposes preemption would never run its course.
We have held that a state law relates to an ERISA plan if it has a connection with or reference to such a plan. Petitioner focuses on the “connection with” part of this inquiry. Acknowledging that “connection with” is scarcely more restrictive than “relate to,” we have cautioned against an uncritical literalism that would make pre-emption turn on infinite connections. Instead, to determine whether a state law has the forbidden connection, we look both to the objectives of the ERISA statute as a guide to the scope of the state law that Congress understood would survive, as well as to the nature of the effect of the state law on ERISA plans.
Egelhoff, 532 U.S. at 146-147, 121 S.Ct. 1322 (internal citations and quotations omitted).
¶ 10 A principal objective of ERISA is “to establish a uniform administrative scheme, which provides a set of standard procedures to guide processing of claims and disbursement of benefits.” Egelhoff at 148, 121 S.Ct. 1322, quoting Fort Halifax Packing Company v. Coyne, 482 U.S. 1, 9, 107 S.Ct. 2211, 96 L.Ed.2d 1 (1987). ERISA directs fiduciaries to administer a plan “in accordance with the documents and instruments governing the plan.” 29 U.S.C. § 1104(a)(1)(D). Any state law which undermines this goal is subject to pre-emption.
¶ 11 In Egelhoff, children from an intestate’s first marriage sued intestate’s second wife whose marriage to intestate had been dissolved shortly before his death, claiming entitlement to life insurance proceeds and pension plan benefits. Washington had a beneficiary re-designation statute which provided:
If a marriage is dissolved or invalidated, a provision made prior to that event that relates to the payment or transfer at death of the decedent’s interest in a nonprobate asset in favor of or granting an interest or power to the decedent’s former spouse is revoked. A provision affected by this section must be interpreted, and the nonprobate asset affected passes, as if the former spouse failed to survive the decedent, having died at the time of entry of the decree of dissolution or declaration of invalidity.
Wash. Rev.Code § 11.07.010(2)(a) (1994).
¶ 12 Because the Washington statute required that plan administrators “pay benefits to the beneficiaries chosen by state law, rather than to those identified in the plan documents,” the statute implicated an area of core ERISA concern. Egelhoff at 147, 121 S.Ct. 1322. Thus, the Supreme Court found that the state statute ran counter to ERISA’s provisions that a plan shall “specify the basis on which payments are made to and from the plan,” Id., quoting 29 U.S.C. § 1102(b)(4), and that the plan fiduciary shall administer the plan “in accordance with the documents and instruments governing the plan,” Id., quoting 29 U.S.C. § 1104(a)(1)(D), making payments to a beneficiary “designated by a participant or by the terms of the plan.” Id., quoting 29 U.S.C. § 1002(8). In addition, the Washington statute interfered with the objective of a nationally uniform plan ad*1270ministration. “Uniformity is impossible, ... if plans are subject to different legal obligations in different states.” Id. at 148, 121 S.Ct. 1322.
¶ 13 Unlike the Washington statute, Section 6111.2 ensures that Pennsylvania’s re-designation statute has no impact on ERISA plan administrators. Thus, the second sentence of the statute provides: “Unless restrained by court order, no insurance company, pension or profit sharing plan trustee, or other obli-gor shall be liable for making payments to a former spouse which would have been proper in the absence of this section.” 20 Pa.C.S.A. § 6111.2. (“prior restraint clause”). Plan documents continue to control the administration, and the objective of a national uniform administrative format is maintained. Because of the expansive nature of the immunization, the Pennsylvania statute has no effect on the administration of ERISA plans.1 Therefore, we hold that Section 6111.2 is not pre-empted by ERISA. There is no need for preemption by ERISA because there is no conflict between ERISA and state law.
¶ 14 The Dissent is concerned that the reference to restraint by court order in Section 6111.2 authorizes court orders “restrain[ing] a plan fiduciary prior to distribution of plan benefits.” This concern is not well founded. Egelhoff holds that, except as expressly authorized by ERISA, judicial re-designation of plan proceeds is pre-empted. See Egelhoff at 149-150 n. 3, 121 S.Ct. 1322 (suggesting that court intervention increases costs and creates unwanted delay and uncertainty). Thus, Egelhoff forecloses the possibility of a court order to a plan administrator requiring distribution of “the plan proceeds either into court or to a person who is not the plan beneficiary.”
¶ 15 The prior restraint clause envisions a far narrower grant of judicial authority. Qualified domestic relations orders [QDROs] are expressly provided for by ERISA. See 29 U.S.C.A. §§ 1056(d)(3)(A) (excepting QDROs from the prohibition against assignment or alienation), 1056(d)(3)(J) (providing that a “person who is an alternate payee under a [QDRO] shall be. considered for purposes of any provision of [ERISA] a beneficiary under the plan”). The Supreme Court of the United States has recently recognized that ERISA enforcement of QDROs effectively provides an exception to the general rule that administrators rely solely upon plan documents. See Kennedy v. Plan Administrator for DuPont Savings and Investment Plan, —U.S. -, at -, 129 S.Ct. 865, 876, 172 L.Ed.2d 662, 2009 WL 160440, at *9 (2009) (quoting from Section 1056(d)(3)(J) and stating, “But this in effect means that a plan administrator who enforces a QDRO must be said to enforce plan documents, not ignore them.”).
¶ 16 In concluding that the re-designation clause of Section 6111.2 is preempted by ERISA, the Dissent cites favorably Metropolitan Life Ins. Co. v. Walsh, 892 F.Supp. 671 (W.D.Penn.1995) (“Walsh”), wherein the federal district court held that ERISA pre-empts Section *12716111.2.2 Decisions of a federal district court, while deserving of respectful consideration, are not controlling precedent. See Carbis Walker, LLP v. Hill, Barth and King, LLC, 930 A.2d 573, 581 n. 9 (Pa.Super.2007). Further, the brief discussion of the issue by the district court predates the United States Supreme Court’s adoption of a narrower interpretation of the impact of the “relate to” preemption standard in ERISA. See New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 655-656, 115 S.Ct. 1671, 131 L.Ed.2d 695 (1995); Egelhoff at 147, 121 S.Ct. 1322; compare Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 139, 111 S.Ct. 478, 112 L.Ed.2d 474 (1990).3
¶ 17 In summary, the Pennsylvania legislature accomplished the policy objective of re-designation of beneficiaries after divorce. It did so while enabling ERISA plan administrators to perform their functions as specified in ERISA and without limitation by Pennsylvania law. Finally, by providing that a former spouse who receives payment is “answerable to anyone prejudiced by the payment,” 20 Pa.C.S.A. § 6111.2, it has established a basis for resolution of disputes between claimants which does not impact on plan administrators.4 Therefore, Section 6111.2 is not pre-empted by ERISA.
¶ 18 Appellant also contends that the trial court erred in overruling her pre*1272liminary objections that the Administrator lacked the capacity to bring this suit and that the trial court lacked subject matter jurisdiction to hear it. “This Court will reverse the trial court’s decision regarding preliminary objections only where there has been an error of law or abuse of discretion.” Clemleddy Const., Inc. v. Yorston, 810 A.2d 693, 696 (Pa.Super.2002), citing Denlinger, Inc. v. Agresta, 714 A.2d 1048, 1050 (Pa.Super.1998).
¶ 19 Appellant’s contention regarding the Administrator’s lack of capacity is based entirely upon the alleged pre-emption of Section 6111.2 by ERISA. See Brief of Appellant, p. 17. Because ERISA does not pre-empt Section 6111.2, we conclude that this claim is without merit.
¶ 20 Finally, Appellant contends that the trial court lacked subject matter jurisdiction. The Pennsylvania Probate, Estate and Fiduciary Code vests the orphans’ court division with mandatory jurisdiction in the “administration and distribution of the real and personal property of decedents’ estates” and the “adjudication of the title to personal property” of the decedent or his nominee. 20 Pa.C.SA. § 711(1) and (7) (respectively). A life insurance policy is an asset of the estate; therefore, it is subject to the administration of the estate.
[0]ur Supreme Court has held that even though life insurance proceeds are not estate assets, the life insurance policies producing the proceeds are personal property of the decedent in his possession at death, vesting the Orphan’s Court with jurisdiction to order the appropriate delivery of the proceeds.
In re Shahan, 429 Pa.Super. 91, 631 A.2d 1298, 1302 (1993), citing In re Henderson’s Estate, 395 Pa. 215, 149 A.2d 892 (1959). Accordingly, we find that the trial court properly exercised its jurisdiction over this matter.
¶21 The Order of the trial court is affirmed.
¶ 22 Judge CLELAND concurs in the result.
¶ 23 Judge BOWES files a Concurring/Dissenting Opinion.

. The Washington statute had a more limited immunization provision which protected plan administrators from liability for making payments to the named beneficiary unless they had "actual knowledge of the dissolution or other invalidation of marriage;” also, it permitted administrators to refuse to make payments until resolution of any dispute among claimants to the benefits. The Supreme Court commented that administrators were subjected to a risk that a court might hold that payments were made with "actual knowledge” of a divorce. Further, waiting to pay benefits until resolution of the dispute among claimants would "simply transfer to the beneficiaries the costs of delay and uncertainty.” Egelhoff at 149, 121 S.Ct. 1322. Section 6111.2 has no such limitations on its grant of immunity.

. The Walsh decision mirrors that in Metropolitan Life Insurance Company v. Hanslip, 939 F.2d 904 (10th Cir.1991), cited by the Dissent at p. 1276. The Oklahoma statute at issue in the Hanslip case is significantly different than Section 6111.2 in that the Oklahoma statute does not insulate plan administrators from liability for implementing a plan according to its documents, nor does it create a cause of action for persons prejudiced by an inappropriate payment or assign liability to the named beneficiary. Walsh, 892 F.Supp. at 674 n. 1, quoting 15 Okl.St.Ann. § 178.

. The Walsh decision cites to the United States Supreme Court case, Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 111 S.Ct. 478, 112 L.Ed.2d 474 (1990), thus incorporating that case's analysis of the "relate to” phrase which defines the scope of ERISA preemption. See Ingersoll-Rand Co., 498 U.S. at 139, 111 S.Ct. 478 ("Under this broad, common-sense meaning, a state law may relate to a benefit plan, and thereby be pre-empted, even if the law is not specifically designed to affect such plans, or the effect is only indirect.”). However, subsequent to Ingersoll-Rand, the Supreme Court has adopted a narrower interpretation of the "relate to” phrase.
If “relate to” were taken to extend to the furthest stretch of its indeterminacy, then for all practical purposes pre-emption would never run its course, for really, universally, relations stop nowhere. But that, of course, would be to read Congress’s words of limitation as a mere sham, and to read the presumption against pre-emption out of the law whenever Congress speaks to the matter with generality. That said, we have to recognize that our prior attempt to construe the phrase "relate to" does not give us much help drawing the line here.
New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 655-656, 115 S.Ct. 1671, 131 L.Ed.2d 695 (1995) (internal citation omitted) (concluding that the statutory language is unhelpful and a proper analysis requires an evaluation of the objectives of the ERISA statute).

.The dispute resolution provision provides a remedy comparable to a constructive trust as advocated in Sarabeth A. Rayho, Note, Divorcees Turn About in Their Graves as Ex-Spouses Cash In: Codified Constructive Trusts Ensure Equitable Results Regarding ERISA-Governed Employee Benefit Plans, 106 Mich. L.Rev. 373 (2007); see also Kennedy v. Plan Administrator for DuPont Savings and Investment Plan, - U.S. -, at - n. 10, 129 S.Ct. 865, 875, n. 10, 172 L.Ed.2d 662, 2009 WL 160440, at *8 n. 10 (2009) (declining to express any view regarding "whether the [estate] could have brought an action in state or federal court against [former spouse] to obtain benefits after they were distributed.”).