Philadelphia based law firm, Cozen O’Connor, has asked the Eastern District of Pennsylvania for guidance as to the validity of a beneficiary designation form submitted by the parents of a deceased partner in their Chicago office. The parents of Ms. Sara Ellyn Farley, Esquire are seeking to receive the proceeds due to their daughter from the firm’s Profit Sharing Plan. Complicating this issue is that Ms. Farley was married to Ms. Jennifer Tobits in Toronto in 2006 and Ms. Tobits has asked that the proceeds be distributed to her as the plan holder’s surviving spouse.

Many plans of this nature have a default distribution provision in that if there is not a named beneficiary, then the proceeds from the plan pass to the surviving spouse, then parents, etc. In this instance, Ms. Farley’s parents presented Cozen with a beneficiary form dated one day before Ms. Farley’s September 2010 death which identifies themselves as the beneficiaries of the Profit Sharing Plan and identifying Ms. Farley as “single”.  This designation form is unsigned by Ms. Farley but purportedly has Ms. Tobits’ signature relinquishing her role as beneficiary.

Under most insurance or retirement/investment plans in which a beneficiary may be designated, it requires the signature of the named beneficiary before beneficiary designations can be changed to another party. The reason for this is, essentially, that the named beneficiary has certain property rights in the asset and cannot knowingly have them removed without their authorization. Much of this restriction is based upon the rules of the Plan, ERISA law, and other state and federal statutes.

What makes this situation interesting is that it appears that Ms. Farley had not filed a valid designation form with Cozen O’Connor prior to her death. The subsequent form which was provided by her parents, contained conflicting information of Ms. Farley being “single” but also purportedly has the signature of Ms. Tobits relinquishing her claim as beneficiary. Finally, we have the parents’ position, as articulated by their counsel, that under the Defense of Marriage Act, Ms. Farley and Ms. Tobit’s marriage is not valid. The Defense of Marriage Act essentially permits states to refuse to offer a legal same-sex marriage in one state the “full faith and credit” of validity in another state. Worth noting, however, is that in July 2010 a U.S. District Court Judge found that Section 3 of the Defense of Marriage Act, which defines “marriage” and “spouse”, violated the Equal Protection Laws guaranteed by the Fifth Amendment of the U. S. Constitution. This ruling was appealed by the U.S. Department of Justice in October 2010 and the appeal will eventually be heard by the First U.S. Circuit Court of Appeals located in Boston, Massachusetts. 

For Cozen O’Connor’s part, they are not asking the Eastern District to determine whether or not Ms. Tobits’ and Ms. Farley’s marriage was valid, but for Ms. Tobits and Ms. Farley’s parents to be compelled to litigate their dispute between each other and that Cozen undertake to distribute the Profit Sharing Plan proceeds to the appropriate party.

When you consider the facts thus far presented, you have Ms. Farley’s parents offering an unsigned designation form identifying her as “single,” pre-dates her death by a day, and lists her same-sex spouse as agreeing to relinquish a right in the plan which she may not have based on a Federal law currently under appeal. This is shaping up to be quite a case.

Although it is unlikely the Eastern District of Pennsylvania will touch the marriage issue, issues such as the right to designate a same sex spouse as beneficiary or for a same-sex spouse to claim default spousal benefits under the terms of the plan may ultimately be the context in which same sex marriage is dealt with judicially and legislatively in Pennsylvania.  Having already seen some Pennsylvania municipalities such as Allentown extend medical benefits to same sex partners, the extension of employment benefits may be the vanguard issue for addressing same sex marriage in Pennsylvania.   

If you are interested in reading the full article, it can be found in the January 7, 2011 issue of the Legal Intelligencer, Vol. 243, No. 5, and is written by Gina Passarella.