Supreme Court rules federal insurance beneficiary statute preempts Virginia law

[JURIST] The US Supreme Court [official website] ruled [opinion, PDF] Monday in Hillman v. Maretta [SCOTUSblog backgrounder] that a Virginia law insurance beneficiary law is preempted by the Federal Employees Group Life Insurance Act of 1954 (FEGLIA) [text]. Jacqueline Hillman was widowed by her husband, Warren Hillman. Warren's ex-wife, Judy Maretta, was designated the beneficiary for his FEGLIA proceeds. Hillman sued under Va. Code Ann. § 10-111.1(D) [text], which the Virginia Supreme Court ruled was preempted by FEGLIA. In an opinion by Justice Sonia Sotomayor, the court affirmed that ruling:

The [FEGLIA] establishes a life insurance program for federal employees. FEGLIA provides that an employee may designate a beneficiary to receive the proceeds of his life insurance at the time of his death. ... Separately, a Virginia statute addresses the situation in which an employee’s marital status has changed, but he did not update his beneficiary designation before his death. Section 20-111.1(D) of the Virginia Code renders a former spouse liable for insurance proceeds to whoever would have received them under applicable law, usually a widow or widower, but for the beneficiary designation. ... This case presents the question whether the remedy created by §20-111.1(D) is pre-empted by FEGLIA and its implementing regulations. We hold that it is.
Sotomayor's opinion was joined by Chief Justice John Roberts and by Justices Anthony Kennedy, Ruth Bader Ginsburg, Stephen Breyer and Elena Kagan. Scalia joined as to all parts except footnote 4, which discusses the legislative history. Justices Clarence Thomas and Samuel Alito filed concurring opinions.

The court heard oral arguments [JURIST report] in the case in April. Counsel for Hillman argued that "Congress intentionally designed FEGLIA so that the Federal interest ends once the insurance proceeds are paid out. FEGLIA was established to enable Federal employees to carry out their responsibilities to their families. And Congress knew that some of its employees would get divorced, and it was depending upon State laws to help make sure that these family duties and obligations were carried out, because Congress doesn't want to get into the—the business of regulating the divorce." Counsel for Maretta argued that FEGLIA creates an absolute right to direct proceeds that cannot be interfered with. "[W]e are not dealing with the generally applicable body of law; we are dealing with something that is quite openly an attempt to do an end run on preemption. The only thing that triggers section D is being a former spouse and receiving the proceeds. The statute doesn't make any inquiry into intent, into whether there has been a tort or an independent contract. It simply reallocates the proceeds. It substitutes a new beneficiary."

 

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