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The anti-alienation provision in the Employee Retirement Income Security Act does not apply to welfare benefits, according to the 8th U.S. Circuit Court of Appeals.
This suit was brought to determine who was entitled to the proceeds of a life insurance policy governed by ERISA. The decedent's widow, Nancy Crysler, claimed as his last designated beneficiary under the policy, while his former wife, Phyllis Crysler, claimed under a divorce decree that allegedly prohibited beneficiary changes. Phyllis demanded payment of her divorced husband's $45,000 basic death benefits.
Nancy then sued the insurer to recover the entire death benefit.
The insurer filed this action in federal court requesting the court to decide who was entitled to the benefit. The trial court awarded the benefit to Nancy, the deceased's widow.
The appellate court said that ERISA's anti-alienation provision did not bar Phyllis' claim because this was a welfare benefit plan, not an employee pension benefit plan.
The court said that Congress elected to regulate welfare benefit plane less rigorously. Furthermore, the court said that Congress had not prohibited the assignment or alienation of welfare plan benefits. Thus, the court said, a state law divorce decree effecting or prohibiting such a transfer did not conflict with ERISA.
The trial court decision was reversed and the case was sent back to the trial court for further proceedings.
Equitable Life Assurance Society of U.S. vs. Crysler, 8th U.S. Circuit Court of Appeals, Sept. 29, 1995 (BI/03/F.-$10)
Ambiguity leads to coverage
The 4th U.S. Court of Appeals ruled that an ERISA health insurance policy was ambiguous with regard to high dose chemotherapy treatment and, thus, the ambiguity had to be construed against the insurer.
Mary Bailey suffers from stage IV breast cancer and has health insurance with Blue Cross. In 1994, She sought coverage for a procedure known as HDC with peripheral stem cell rescue. The policy excluded treatment for '....other forms of stem cell rescue....with high dose chemotherapy." She conceded that the PSCR portion of her treatment was excluded but said the HDC was covered since chemotherapy was listed under the policy's definition of covered services. The insurer denied coverage. Ms. Bailey sued and won in the trial court.
The appellate court rejected the insurer's contention that the word "with" in the exclusionary clause unambiguously meant "and." The court pointed out that the lower court found that the record did not preclude the possibility that there may indeed by cases where HDC was not accompanied by PSCR. The court said that possibility was consistent with Ms. Bailey's interpretation of the policy as providing coverage for all types of chemotherapy-including treatment with high dose. The trial court decision was affirmed.
Bailey vs. Blue Cross and Blue Shield of Virginia, 4th U.S. Circuit Court of Appeals, Oct. 11, 1995 (BI/05/F.-$10)