Sixth Circuit: Slayer Rule Applies to ERISA Life Plans

September 11, 2024

On August 19, 2024, the United States Court of Appeals for the Sixth Circuit (Sixth Circuit) held that the federal common law prevented the named beneficiary of ERISA group life insurance from benefiting from his murder of the insured and a co-beneficiary.

In November of 2016, Joel M. Guy, Jr. murdered his mother, the named insured of an employer-sponsored group life plan which named Guy as one of the two beneficiaries, and his father, the other named beneficiary, in their Knoxville, Tennessee, home, in order to collect the $500,000 life benefit that would be made available to him if both of his parents were dead.

The evidence presented against Guy at trial was overwhelming, including Guy’s own handwritten notes detailing his plans, including his financial motivation (e.g., “He’s not alive to claim her half of the insurance money — all mine ($500.000)”). Consequently, a Tennessee jury found Guy guilty of two counts of first-degree premeditated murder along with other offenses, and Guy was sentenced to two consecutive life terms plus four years in prison.

Standard Insurance Company, which provided the Tennessee-sitused group life insurance policy, denied Guy’s claim for the benefits because Tennessee “slayer statute” provides that “[t]he felonious and intentional killing of the decedent . . . [r]evokes any revocable . . . [d]isposition or appointment of property made by the decedent to the killer in a governing instrument.” Standard, therefore, intended to distribute the proceeds to Guy’s aunt, uncle and half-sisters instead, as they would be the appropriate substitute beneficiaries under the terms of the policy.

Undeterred, Guy argued that ERISA preempted Tennessee’s slayer statute and that, therefore, he remained entitled to the proceeds, after which Standard filed an interpleader action in federal district court to determine who the rightful beneficiary or beneficiaries would be. The court reasoned that since ERISA “does not address the proper designation of beneficiaries where a beneficiary feloniously kills the insured,” either Tennessee law or federal common law would dictate the decision. And since both Tennessee law and federal common law would disqualify Guy (because both have “slayer rules”), he would be disqualified, with no need to directly address the preemption issue.

Guy appealed to the Sixth Circuit, arguing that since ERISA compels unwavering adherence to plan documents when it comes to beneficiary designations and since his mother’s plan was silent on how to handle a slayer scenario, the administrator must pay a slayer who is named as a beneficiary pursuant to the plan documents.

While acknowledging ERISA’s broad preemptive scope as well as its own longstanding position that “the designation of beneficiaries plainly relates to ERISA plans,” the Sixth Circuit nevertheless affirmed the district court’s ruling. Like the lower court, the Sixth Circuit did so without resolving the preemption issue, reasoning that the outcome of the case would not change whether ERISA preempted the slayer statute or not. The Sixth Circuit observed that federal courts “have long applied the common-law slayer rule in the insurance context,” and so, even assuming ERISA did preempt the statute, federal common law principles would still prevent Guy from getting the proceeds just as the statute would have.

Federal courts will often employ common law concepts and principles to decide ERISA cases where the language of ERISA itself may not be sufficient to address the issue at hand, especially when, as here, a strict reliance on the wording of the statute alone would result in a manifestly unjust outcome. While the federal common law “slayer rule” itself may have little practical application in the day-to-day employer or plan sponsor context, this case nevertheless provides a useful reminder that employee benefit plans governed by ERISA are for that very reason also subject to the precepts of federal common law.

Standard Insurance Company v. Guy