Sagicor Life Insurance Company v. Houchins et al

Sagicor Life Insurance Company initiated an interpleader lawsuit over a $150,000 life insurance policy covering Roger Houchins, who died in 2016. The decedent’s ex-wife, Judith Houchins, was the original designated beneficiary, while his surviving spouse, Deborah Houchins, claimed entitlement under a divorce decree. The divorce settlement contained a mutual clause by which each party relinquished all rights to the other’s property, including insurance. Sagicor deposited the proceeds with the court. The district court granted summary judgment for Deborah Houchins, finding that the divorce waiver was valid under federal common law. On December 6, 2018, the Fifth Circuit affirmed, holding that Judith Houchins knowingly and voluntarily waived her beneficiary rights through the separation agreement, and that ERISA preempted any conflicting state-law requirements.

The Fifth Circuit affirmed the lower court’s summary judgment, ruling that the ex-wife’s waiver in the divorce decree was effective under federal common law and that the life insurance proceeds must be paid to the surviving spouse.

Whether a general waiver of property rights in a divorce decree is sufficient under the Employee Retirement Income Security Act to divest a former spouse of her beneficiary interest in a life insurance policy, or whether a specific change-of-beneficiary form must be submitted to the plan administrator.

The ruling reinforced ERISA’s preemptive effect over state domestic relations law, clarifying that a clearly expressed waiver in a divorce settlement can override a prior beneficiary designation without additional plan filings. It prompted family law practitioners to draft more explicit insurance-specific waiver language and highlighted the importance of consistent beneficiary designations in estate planning.