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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Yvette M. Wilkins v Paul D. Wilkins (3/29/2019) sp-7348

Yvette M. Wilkins v Paul D. Wilkins (3/29/2019) sp-7348

         Notice:  This opinion is subject to correction before publication in the PACIFIC REPORTER .  

         Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts,  

         303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email  

         corrections@akcourts.us.  



                   THE SUPREME COURT OF THE STATE OF ALASKA  



YVETTE M. WILKINS,                                    )  

                                                      )   Supreme Court No. S-16618  

                           Appellant,                 )  

                                                      )   Superior Court No. 3AN-15-08094 CI  

         v.                                           )  

                                                      )   O P I N I O N  

PAUL D. WILKINS,                                      )  

                                                      )   No. 7348 - March 29, 2019  

                           Appellee.                  )  

                                                      )  



                  Appeal from the Superior Court of the State of Alaska, Third  

                                                                 

                  Judicial District, Anchorage, William F. Morse, Judge.  



                  Appearances: Kenneth P. Jacobus, Kenneth P. Jacobus, P.C.,  

                                      

                  Anchorage, for Appellant.  Michael Gershel, Law Office of  

                                                                                

                  Michael Gershel, Anchorage, for Appellee.  



                  Before:  Bolger, Chief Justice, Winfree, Stowers, Maassen,  

                  and Carney, Justices.  



                  WINFREE, Justice.  

                  CARNEY, Justice, dissenting.  



I.       INTRODUCTION  



                  A wife with serious medical conditions filed for divorce, but during trial the  

                                                                                                 



parties agreed to a legal separation to ensure the wife's continued access to her husband's  

                                                                                               



employer-sponsored health insurance.  The separation agreement's primary focus was  



delaying the divorce for 4 years, until the wife reached age 62 and became eligible for  

                                                                                 


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36 months of post-divorce continuing health insurance coverage through the husband's  

                                                          



employer-sponsored health insurance.  The superior court divided the marital estate and  

                                                                                                         



ordered the husband to pay spousal support for 3 years and to pay for the wife's health  

                                                                                    



insurance coverage after the expected later divorce.  The wife appeals, arguing that the  

                                                                                                           



court erred by failing to value the husband's post-retirement medical benefits, declining  



                                                                         

to consider her agreement to legally separate as a factor in her favor when dividing the  



                                                                        

marital  estate,  wrongfully  conflating  spousal  support  with  its  property  award,  and  



                                                                                                            

unfairly allocating the overall property division. We reverse the court's ruling that it did  



not need to value the husband's retirement health benefits and remand for its valuation  



and a renewed equitable property distribution consistent with this opinion.  



II.       FACTS AND PROCEEDINGS  



                    Yvette  and  Paul  Wilkins  married  in  1980.    Yvette's  serious  medical  



                                           

conditions leave her unable to work and require her to take expensive medications.  She  



                                                   

receives a disability annuity and has a federal thrift savings plan.  Paul works for the  



                               

State of Alaska; his employer-sponsored health insurance covers a significant portion of  



Yvette's  medical  expenses.    Paul's  other  employment  benefits  include  retirement  



                                                                   

healthcare, deferred compensation through the Public Employees' Retirement System  



                                                                                                

(PERS), and a supplemental annuity (SBS).  Paul also receives military retirement and  



Veteran's Affairs disability benefits.  



                    Yvette filed for divorce in 2015; she later amended her complaint to convert  



                                                            1  

                                                                 Both  Paul  and  Yvette  believed  that  a  legal  

the  proceeding  into  a  legal  separation. 



separation postponing divorce for 7 years would allow Yvette, who was 58, to continue  

                                                                                   



receiving health insurance through Paul's employer until becoming Medicare-eligible  

                                                                                



          1         A  court  may  grant  legal  separation  upon  finding  that  the  parties  are  



incompatible and that preserving the marriage protects significant legal, financial, social,  

                                                                                  

or religious interests.  AS 25.24.410.   



                                                               -2-                                                         7348
  


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at 65. Paul, who was 57, opposed the proposed lengthy legal separation, and the divorce            



trial began.   



                                                                                                                       

                       At trial Yvette presented expert testimony regarding valuation of Paul's  



post-retirement health insurance benefits.  Basing his valuation estimates on medical- 



costs  trends  discounted  to  present  value,  the  expert  provided  a  range  of  values  



corresponding to Paul's normal, probable, and expected retirement ages.  



                                                              

                       During trial the court observed that legally separating could delay divorce  



                                                                

by only 4 years rather than 7 as the parties had assumed.  Because Yvette was eligible  



                                                                                                                                 2 

for 36 months of post-divorce health insurance coverage under federal law,  a separation 

                                                                                                                           



need only remain in effect for the next 4 years until she turned 62.  She then could obtain  

                                                     



COBRA coverage until becoming eligible for Medicare at 65. Paul agreed to this shorter  

                                                                                                                     



legal separation and to not file for divorce until Yvette turned 62.  He also agreed to pay  



for Yvette's COBRA coverage.  



                       The court later issued a "Decree of Legal Separation," directing that its  



property  division  order  "constitutes  a  final  division  of  the  marital  estate."    In  that  



property division order the court stated that Yvette's medical needs "make it nearly  



impossible simply to divide the marital estate (even unequally) and give the parties  



financial  independence."    The  court  identified  its  "primary  and  essential  goal"  as  



ensuring that "Yvette has adequate medical coverage" and stated that legal separation  



                                                                                                                

would provide the parties "equal health care coverage," which "eliminates the need to  



                                                                                                    

place an artificial value on the employer's contribution to Paul's healthcare coverage  



during his retirement."  



            2          See Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA),  



29 U.S.C.  1161-1169 (2012).  



                                                                         -3-                                                                        7348  


----------------------- Page 4-----------------------

                   The  court  awarded  Yvette  50%  of  the  marital  share  of  Paul's  military  



retirement benefits by qualified military retirement order, and, by qualified domestic  



                                                                                 

relations orders, 55% of the marital share of his PERS and roughly 20% of the marital  



                                                                                                    

share of his SBS accounts.  Yvette retained the marital home, as she had requested; she  



                     

was required to refinance in her name and release Paul from the mortgage obligation.  



                

The court awarded Paul the remaining value of his military benefits, PERS, and SBS  



accounts.  The court also distributed a variety of other assets and liabilities, including  



                                                                         

ordering Paul to pay the parties' remaining debts.  Finally the court ordered Paul to pay  



spousal support for 36 months and to pay for Yvette's post-divorce COBRA coverage.  



                   Yvette moved for reconsideration, arguing that the court erred by failing  



to value Paul's post-retirement health benefits and by placing greater weight on her  



insurance costs than on other factors.  She also requested a more equitable property  



division.  The court denied the motion.  Yvette appeals.  



III.      DISCUSSION  



                              

                   There       are   three   basic   steps   in   equitably   dividing   marital   assets:  



                                                                                              

"(1) deciding what specific property is available for distribution, (2) finding the value of  

                                                                               3  Yvette argues that the superior  

the property, and (3) dividing the property equitably."                                                

court erred by not valuing Paul's post-retirement health insurance benefits.4  She requests  



the court be directed to value them and consequently redistribute the marital estate.  We  

                                                                              

agree and remand for the court to do so.5  



          3        Beals v. Beals , 303 P.3d 453, 458 (Alaska 2013).  



          4        See Hansen v. Hansen, 119 P.3d 1005, 1015 (Alaska 2005) (holding that         



health insurance benefits earned during marriage are marital assets).  



          5        See Grove v. Grove, 400 P.3d 109, 112 (Alaska 2017) ("A court's decision
  

                                                                       

whether to value personal property . . . is a legal question that we review de novo."
  

                                                                                                          (continued...)
  



                                                             -4-                                                       7348
  


----------------------- Page 5-----------------------

                    In  Grove v. Grove we reversed the superior court's order requiring the  



husband to pay his wife's post-divorce health insurance premiums as an alternative to  



                                                                                                6  

                                                                                                       We  held  that  this  

distributing  the  value  of  his  post-retirement  health  benefits. 



alternative distribution "[did] not qualify as a valuation . . . and [could] not substitute for                 

an appropriate equitable distribution of the marital estate."                         7  Despite noting the difficulty  



in  valuing  post-retirement  benefits,  we  nonetheless  instructed  the  superior  court  on  

                                                        

remand to rely on expert testimony and value the benefits consistent with Alaska law.8  

                                                                                                                



                    The superior court in this case, in exchange for "freeing Paul from the  



house obligation after a reasonable period," ordered Paul to pay spousal support and  



Yvette's COBRA costs.  The court stated that this exchange "eliminates the need to place  



an artificial value on the employer's contribution to Paul's healthcare coverage during  

                                       



his retirement.   That value simply cannot be captured or transferred to Yvette in any  

                         

other meaningful way."  But this "equalization payment" cannot qualify as a valuation.9  

                                                                                                 



As we stated in Grove, absent findings about the value of marital property, we have "no  

                                                                                                                      



'means of evaluating whether an equitable distribution has been achieved'; not making  

                                                                 

such findings 'constitutes reversible error.' "10  

                                                                         



                    When  in  Hansen  v.  Hansen  we  first  identified  post-retirement  health  

                                                 



benefits as a potential marital asset subject to valuation and division, we stated, without  



          5         (...continued)
  



(citing Mellard v. Mellard , 168 P.3d 483, 486 (Alaska 2007))).
  



          6         Id. at 116.  



          7         Id. at 114.  



          8         Id. at 115.  



          9         See id. at 114.  



          10        Id . (quoting Cox v. Cox, 882 P.2d 909, 918 (Alaska 1994)).  



                                                               -5-                                                         7348
  


----------------------- Page 6-----------------------

                                              

any analysis or discussion, that when valuing this asset the superior court "should look"  



to the employer's premium subsidy rather than to "either the proceeds or the cost of  



                                                 11  

procuring comparable insurance."                     We recently reiterated that Hansen is the controlling  



                                                         

law on valuing post-retirement health benefits, stating that we had not been asked to  



                12 

                                                       

overrule it.        But we note two things:  First, we have approved variations of the premium  

                           13  and  second,  other  courts  have  permitted  valuation  methods  we  

subsidy  approach;                                                                                          



summarily discounted without discussion in Hansen :  



                   First, "a trial court might value health insurance benefits by  

                   considering  the  cost  of  obtaining  comparable  alternative  

                                                    

                   benefits."    Second,  the  court  could  "discount[]  to  present  

                   value all the premiums an employer had agreed to pay on  

                   behalf  of  a  party"  over  the  party's  future  life  expectancy.  

                   Third, the trial court could "discount[] to present value the  

                   expected costs of the medical services a health insurance plan  

                                                               

                                                                                            [14] 

                   would cover" during the party's expected lifetime.  



          11        119 P.3d 1005, 1016 (Alaska 2005) (citing BRETT R. TURNER , EQUITABLE  



DISTRIBUTION OF PROPERTY  6.26 (2d ed. Supp. 2004)).  



          12       Grove, 400 P.3d at 114.  See also Gordon v. Gordon, 425 P.3d 142, 148                         



(Alaska 2018) (citing Hansen  for the proposition that courts should value retirement  

medical benefits based on employer-provided premiums); Ethelbah v. Walker , 225 P.3d  

                                       

1082, 1089 (Alaska 2009) (noting that Hansen requires courts to value retirement health  

insurance benefits based on employer premium subsidies).  



          13  

                                                                                            

                   See Engstrom v. Engstrom, 350 P.3d 766, 771-72 (Alaska 2015) (using an  

                           

"individual rate," which is "the amount the employee would pay if she were required to  

                                                                                    

pay her own premiums to insure only herself"); Ethelbah, 225 P.3d at 1090 (calculating  

values using individual, rather than composite, rate).  



          14       2 BRETT R. TURNER , EQUITABLE DISTRIBUTION OF PROPERTY  6.90 (3d ed.  



2017) (quoting Bingley v. Bingley , 935 N.E.2d 152, 157-58 (Ind. 2010)); see also Paul  

v. Paul , 648 So. 2d 1211, 1213 (Fla. Dist. App. 1995) (remanding for benefits' valuation  

                                                                                                    

using  cost  of  comparable  policy  if  husband  had  procured  it  for  himself  on  private  

                                                                                         

                                                                                                          (continued...)  



                                                             -6-                                                      7348
  


----------------------- Page 7-----------------------

                         We now recognize that our one-size-fits-all premium subsidy approach to       



post-retirement health insurance benefits may not have been correct, and we leave it to   



the superior court in the first instance to exercise its gate-keeping function with respect       



to expert witness approaches to valuing these assets.  



                                                        

                         It was error not to value Paul's post-retirement health insurance benefits.  



                                                                                                                                                  

We remand for the court to provide a value, and, because this value likely will affect the  



                                                                                         

marital estate's overall value, the court  may,  in its discretion, need to reconsider its  



                             

distribution of the marital estate.  We therefore decline to address Yvette's arguments  



                                                                                                                                         

that the superior court:  abused its discretion by emphasizing her medical needs over her  



purported  consideration  for  agreeing  to  legally  separate;  improperly  tied  its  spousal  



support and property division awards together; and made an overall manifestly unjust  



property award.  These issues may be addressed on remand.   



IV.          CONCLUSION  



                         We REVERSE the superior court's ruling that it did not need to value  



Paul's retirement health insurance benefits and REMAND for valuation and equitable  



division consistent with this opinion.  



             14          (...continued)  



insurance market).  



                                                                               -7-                                                                             7348  


----------------------- Page 8-----------------------

CARNEY, Justice, dissenting.  



                    Because I find that unique facts - most significantly the parties' agreement  



                                             

to a legal separation in lieu of a divorce - distinguish this case from any other in which  



we have reviewed the financial impact of a marriage's end, I respectfully dissent from  



                  

the court's decision to reverse and remand the superior court's treatment of medical  



benefits.  



                                                               

                    As the court acknowledges, the superior court adopted the parties' shared  



                          

goal of ensuring that "Yvette has adequate medical coverage" for her serious medical  



          1  

                                                     

needs.      The superior court not only recognized that the impetus for the divorce trial itself  



                                                                                                                     

was the parties' disagreement over how to best achieve that goal, it offered its own  



                                  

alternative, which the parties accepted when they agreed to a four-year legal separation  



                                             2  

instead of a decree of divorce.   



                    The mechanism by which this legal separation would accomplish the goal  

                                                                                          



of providing Yvette with adequate medical coverage is detailed in the court's Order.  



                                                                                                   

Paul specifically agreed to the period of separation so that Yvette could continue to be  



covered under his health insurance until she turned 62.  He also agreed that for three  



years,  until  she  turned  65  and  thereby  became  eligible  for  Medicare  and  no  longer  



                                                              

required  coverage  under  his  insurance,  he  would  continue  paying  for  her  to  have  



COBRA coverage.  



                    The parties' separation agreement thus specifically required their ongoing  



"financial entanglement" until Yvette turned 65.  This specific agreement renders their  



          1         Opinion at 3.  



          2         Opinion at 2-3.  



                                                              -8-                                                           7348  


----------------------- Page 9-----------------------

                                                                                                 3  

agreement unlike the arrangement we disapproved in                         Grove v. Grove.   In that case we  



agreed  with  the  husband,  who  objected  that  he  should  not  be  required  to  remain  

financially entangled with his former wife.4  



                   Based  upon  the  unique  nature  and  the  limited  duration  of  the  specific  



agreement that the parties reached to achieve the shared goal of maintaining adequate  



medical insurance for Yvette's significant health needs, I would affirm the superior  



court's order implementing their agreement.  



         3         400 P.3d 109 (Alaska 2017).  



         4        Id. at 115.  



                                                           -9-                                                       7348  

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