Another embarrassing example of a poorly drafted separation agreement appears in McCoy v. McCoy, (Court of Appeals of Virginia, Record No. 3087-08-3, January 12, 2010). Health insurance can be part of spousal support or not, depending how an agreement is written. Do it wrong, and somebody could end up paying far more money than they expected. That’s what happened here.
The parties signed an agreement containing an open-ended obligation of husband to pay wife’s health insurance. The parties incorporated the agreement into their final decree of divorce. After a few years, the guy stopped paying health insurance, and predictably his ex filed a rule to show cause. She alleged her former husband was in contempt of court for violating the terms of their divorce judgment.
Husband countered that he was not in contempt because there was no spousal support payable, and health insurance is part of spousal support.
The Court of Appeals ruled that in this case the health insurance was not part of spousal support – and husband still owed it — for three reasons:
(a) The agreement said husband owed no spousal support. (Wife had waived spousal unless husband breached the agreement, and at the time of agreement ratification, husband was not in breach. Ergo, no spousal support in existence).
(b) The health insurance provision was in a separate paragraph from the spousal support (and was not even in an adjoining paragraph).
And (c), even if husband breached the agreement triggering commencement of a spousal support obligation, that breach would not create any obligation to pay health insurance.
It would have been easy to avoid this drafting error: If the property settlement agreement had stated that health insurance was spousal support, then health insurance (like spousal support) would, according to statute, have been modifiable upon a change in circumstances and terminable if wife remarried.
Not only was this hapless ex-husband’s contempt affirmed on appeal, even his former spouse’s re-marriage failed end to his obligation.