Seventh Circuit rejects employee's fax, vindicates HR's insistence on proper forms

A federal appeals court just handed benefits administrators the backup they need when employees try to bypass proper beneficiary change procedures. 

The U.S. Court of Appeals for the Seventh Circuit ruled February 2 that a faxed request to remove an ex-spouse as a retirement plan beneficiary doesn't cut it, even when the employee's intentions are crystal clear. The decision should resonate with every HR professional who has heard "can't I just email you this?" or "do I really need to fill out the form?" 

Carl Kleinfeldt worked at Packaging Corporation of America for 32 years. When he married Dená Langdon in 2006, he named her as the sole beneficiary of his retirement plan, with his sisters Terry Scholz and Lisa Kottke as backups. 

The marriage ended in September 2022. The divorce settlement included a Qualified Domestic Relations Order that gave Langdon a portion of the retirement account, which the plan separated and paid out to her. The rest stayed in Kleinfeldt's name. 

Shortly after the divorce, Kleinfeldt wanted Langdon off everything. On October 4, 2022, he arranged for a fax to be sent to the benefits center with instructions to remove his former spouse from his health insurance, dental coverage, vision plan, and as beneficiary on his 401(k), pension, and life insurance. 

The benefits team did what they could. They removed Langdon from the health benefits and changed her retirement account status from "spouse" to "ex-spouse" in the system, but left her listed as primary beneficiary. 

Kleinfeldt died in January 2023. 

What followed was the kind of mess benefits administrators dread. The plan initially told Langdon she would get the money. Then Kleinfeldt's estate, represented by his sister Scholz, filed a claim for the full amount, arguing the fax had done the job. The plan denied that claim. The estate appealed. Langdon filed her own claim. 

Facing dueling demands, the plan deposited the money with the court and asked a judge to sort it out. 

The district court sided with the estate, ruling that Kleinfeldt had substantially complied with the plan's requirements. Under this legal doctrine, courts sometimes accept that a person did enough to show clear intent and took meaningful steps toward making a change, even if they didn't follow every procedural requirement to the letter. 

Langdon appealed, and the Seventh Circuit reversed. 

The plan documents gave participants two ways to update beneficiaries: call the benefits center or go online. The fax met neither requirement, and that mattered. 

Circuit Judge Lee noted that in past cases where courts found substantial compliance, people had at least tried to use the right process. They obtained the correct forms. They filled them out, even if they made mistakes or left something blank. 

Kleinfeldt never attempted the proper procedure. His fax even acknowledged he might need to complete additional paperwork, asking the benefits center to "feel free to fax any necessary paperwork to the above fax that I may need to complete." 

That sentence proved telling. Kleinfeldt clearly wanted Langdon removed as beneficiary. But he seemed to understand that the fax alone might not finish the job. He never followed up. He never called. He never went online. He completed no forms. 

The court held that wasn't enough. The manner Kleinfeldt chose went beyond a careless mistake. It was a method that strayed too far from what the plan required. 

The decision landed firmly in Langdon's favor. At Kleinfeldt's death, she remained the valid primary beneficiary. 

For benefits administrators, the ruling delivers a clear message. When employees try shortcuts or push back against filling out forms, HR has the law on its side. Plan procedures exist for a reason, and courts will enforce them. 

The next time an employee insists a quick fax or email should handle a beneficiary change, benefits teams can point to this case. Following the prescribed process isn't red tape. It's protection against the exact scenario that played out here: years of litigation, competing claims, and uncertainty over who gets the money. 

The case proves what HR professionals have long maintained. Those forms and procedures aren't obstacles. They're guardrails that keep everyone out of court.