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Oklahoma: Beneficiary Disputes and Interpleader Under Oklahoma Law

Oklahoma's divorce-revocation statute is in its contracts title, not its insurance code. That placement led the Tenth Circuit to hold that ERISA preempts it for employer plans. Even outside ERISA, the statute applies only when Oklahoma law governs the policy.

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On this page
  1. A contracts statute with dates and six exits
  2. ERISA: the statute is not insurance regulation
  3. Decisions
  4. Elsewhere on this site
  5. Related guides

A contracts statute with dates and six exits

Under 15 O.S. § 178(A), if a person who can name a beneficiary on a death-benefit contract dies after a divorce or annulment, “all provisions in the contract in favor of the decedent’s former spouse are thereby revoked.” The former spouse is “treated for all purposes under the contract as having predeceased the decedent.” The statute covers life insurance, annuities, retirement arrangements, compensation agreements, depository agreements and security registrations.1

Subsection B lists six situations where revocation does not apply:1

  1. The decree is vacated.
  2. The decedent remarried the former spouse and was married to them at death.
  3. The decree states a contrary intention.
  4. The decedent made the contract after the divorce.
  5. The contract states a contrary intention.
  6. After the divorce, the decedent delivered a writing to the payor renaming the former spouse.

The statute excludes joint-tenancy property and certain express trusts. It applies to contracts made on or after Nov. 1, 1987, and to depository agreements and security registrations made on or after Sept. 1, 1994. Older policies, and accounts opened before the 1994 date, can fall outside it.1

ERISA: the statute is not insurance regulation

The location of § 178 in the Oklahoma code mattered in MetLife v. Hanslip. An employee named his new wife on his employer-plan life insurance two weeks after they married. They divorced about two months later, and he died about six months after that. The insurer paid the former wife $32,500, and the estate invoked § 178. The Tenth Circuit held that ERISA preempts the statute and that the insurance “saving clause” did not apply: “The statute at issue here is not directed toward the insurance industry.” It “is found not in Oklahoma’s insurance code, but in the contracts section of the state statutes,” and “[i]t is directed toward the actions of the insured in designating beneficiaries.”2

Its conclusion was that “absent any applicable divorce decree dictating otherwise, the beneficiary designation on file controls the disposition of this case.”2 The U.S. Supreme Court later reached the same result for a Washington statute in Egelhoff v. Egelhoff (2001). For employer plans, ERISA decided the outcome. See federal programs.

Which state's law?

Section 178 is Oklahoma contract law. In Marlow, the insured had lived in Mississippi and signed the policy there, so the court held that "Oklahoma law does not apply to the policy," even though the case was filed in Oklahoma.

The insurer had filed the interpleader because of § 178, but the court’s ruling turned on where the policy was made.3

Decisions

Metropolitan Life Ins. Co. v. Hanslip (10th Cir. 1991)

  • No. 90-6285; 939 F.2d 904 (published); appeal from the W.D. Okla.
  • Judges Anderson (author), Tacha and Brorby
  • Decided July 16, 1991
Facts
A GM employee's ERISA-plan life insurance named his wife. They divorced weeks later without addressing the insurance, and he died about six months after that. The insurer paid her, and the estate demanded the proceeds under § 178.
Holding
ERISA preempts § 178, which does not regulate insurance. The designation on file controlled, and the judgment for the insurer and the former wife was affirmed.
Why it matters
For employer-plan coverage, Oklahoma's revocation rule does not change who the plan pays. A specific divorce decree is the exception the court left open.

Opinion: GovInfo.

American National Ins. Co. v. Marlow (W.D. Okla. 2019)

  • No. CIV-18-1098-C, Doc. 17
  • Memorandum opinion and order; Judge Robin J. Cauthron
  • Decided June 26, 2019
Facts
The insured's former wife was still the sole beneficiary. The divorce decree required him to keep the policy for the children. The insurer interpleaded the proceeds, citing § 178, and was dismissed. Then all the defendants jointly moved for summary judgment, and the motion was unopposed.
Holding
The policy was contracted for in Mississippi while the insured lived there, so Oklahoma law did not apply. Under the policy terms, the former wife was the beneficiary. The court did not decide whether the decree was breached or whether the minor child had a claim: "Those matters are more properly decided by the appropriate state court."
Why it matters
Choice of law comes before § 178. A claim based on the decree may have to be brought in a separate case.

Opinion: GovInfo.

Elsewhere on this site

Footnotes

  1. Okla. Stat. tit. 15, § 178(A)–(D) (as amended through Laws 1994, c. 313, § 4). OSCN. ↩ ↩2 ↩3

  2. Metropolitan Life Ins. Co. v. Hanslip, 939 F.2d 904 (10th Cir. 1991) (No. 90-6285), slip op. at 2–6 (July 16, 1991). GovInfo; CourtListener. ↩ ↩2

  3. American National Ins. Co. v. Marlow, No. CIV-18-1098-C, mem. op. at 1–3 (W.D. Okla. June 26, 2019), Doc. 17. GovInfo. ↩