Human resource managers and pension plan administrators should know about a recent court decision involving the effect of a change in marital status for several pilots employed by Continental Airlines Inc., Rose●Walker attorney Jody Rudman told Texas Lawyer senior writer John Council recently on the Texas Lawyer video blog “Reversed and Remanded.”

The case discussed by Rudman and Council involved a Continental pilot retirement plan that included a lump-sum distribution to ex-spouses through Qualified Domestic Relations Orders. When the airline’s pension plan administrators questioned whether some divorces involving continental pilots were shams, the administrators sued to get the lump-sum payments back. The pilots and their ex-spouses, with whom each had now reconciled, won.

On July 18, the U.S. Court of Appeals for the Fifth Circuit affirmed a ruling that the Employee Retirement Income Security Act of 1974 (ERISA) doesn’t allow plan administrators to question the intentions or the good faith of a divorce.

Rudman says the decision could present similar issues for benefit plan administrators at other companies: “I would say to the plan administrator, take a good hard look at the terms of your employee benefit plan, so if something like this comes up again, (if) you get a Domestic Relations Order, and have no choice but to qualify it under the terms of erisa, what will you be looking at paying out?”

Yet as the Fifth Circuit’s opinion indicated, Rudman said the decision was a narrow one.

“I don’t know if this opens the floodgates necessarily,” she told Texas Lawyer. Rudman reiterated that while the case is an important one to know about, it involved a unique set of facts and appeared to be a case of first impression.