Justices Side With First Wife on Insurance Policy

     WASHINGTON (CN) – A Virginia woman can keep the six-figure check she received on the life insurance policy of her ex-husband, even though he remarried, the Supreme Court ruled Monday.
     Judy Maretta filed a claim for benefits under the Federal Employees’ Group Life Insurance, or FEGLI, policy of her ex-husband after his death in July 2008.
     Though the ex, Warren Hillman, had remarried six years earlier, he never changed the beneficiary designation of Maretta in his FEGLI policy.
     To recoup the $124,558.03 paid to Maretta, the newly widowed Jaqueline Hillman sued under Section 20-111.1(D) of Virginia law.
     The Federal Employees’ Group Life Insurance Act of 1954, or FEGLIA, expressly states that policy benefits go to a named beneficiary first and then to the employee’s widow, and it contains a pre-emption provision sidelining state law.
     Virginia law says that divorce judgments revoke beneficiary designations. The (D) subsection makes Maretta personally liable to Hillman for the benefit she received.
     A Fairfax County judge entered judgment against Maretta, but the Virginia Supreme Court reversed in January 2012 after finding that Congress intended for Maretta to collect her ex-husband’s benefits as the designated beneficiary.
     The U.S. Supreme Court took up the case to resolve conflicting precedent in state and federal courts around the country.
     It sided with Maretta on Monday in a mostly unanimous opinion.
     “Section D interferes with Congress’ scheme, because it directs that the proceeds actually ‘belong’ to someone other than the named beneficiary by creating a cause of action for their recovery by a third party,” Justice Sonia Sotomayor wrote for the court. “It makes no difference whether state law requires the transfer of the proceeds, as Section A does, or creates a cause of action, like Section D, that enables another person to receive the proceeds upon filing an action in state court. In either case, state law displaces the beneficiary selected by the insured in accordance with FEGLIA and places someone else in her stead.”
     Though Congress could have adopted a default rule that favored a widow or widower, and not a named beneficiary, in insurance proceeds, it instead “established a clear and predictable procedure for an employee to indi­cate who the intended beneficiary of his life insurance shall be,” according to the ruling.
     “Like the statutes at issue in Ridgway and Wissner, FEGLIA evinces Congress’ decision to accord federal employees an unfettered ‘freedom of choice’ in selecting the beneficiary of the insurance proceeds and to ensure the proceeds would actually ‘belong’ to that bene­ficiary,” Sotomayor wrote.
     Ridgway v. Ridgway was a 1981 decision that considered a similar question regarding the federal Servicemen’s Group Life Insurance Act of 1965 (SGLIA).
     Wissner v. Wissner, a 1950, meanwhile looked at the National Service Life Insurance Act of 1940 (NSLIA).
     Chief Justice John Roberts joined Sotomayor’s opinion in full, as did Justices Anthony Kennedy, Ruth Bader Ginsburg, Stephen Breyer and Elena Kagan.
     Justice Antonin Scalia joined as to all a footnote about FEGLIA’s pre-emption provision.
     Justices Clarence Thomas and Samuel Alito each wrote separate opinion concurring in judgment.
     “The court correctly concludes that … (Section D) is pre-empted by … (FEGLIA),” Thomas wrote. “But I cannot join the ‘purposes and objectives’ framework that the majority uses to reach this conclusion. That framework is an illegitimate basis for finding the pre-emption of state law, and is entirely unnecessary to the result in this case, because the ordinary meanings of FEGLIA and Section D directly conflict. Accordingly, I concur only in the judgment.”
     Alito meanwhile argued that Virginia’s law should be deemed pre-empted because “it effectively overrides an insured’s actual, articulated choice of beneficiary.”

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