Supreme Court Ruling Clarifies FEGLI Designation of Beneficiary Issues

 Supreme Court Ruling Clarifies FEGLI Designation of Beneficiary Issues

Federal Employees

A recent U.S. Supreme Court ruling has provided some clarity about Federal Employees Group Life Insurance (FEGLI) designation of beneficiary issues.

The case in question (Hillman v. Maretta; case No. 11-1221) was about a dispute over a deceased federal employee’s FEGLI proceeds. Both his ex-wife and his wife at the time of his death laid claim to the benefits.

The problem was that a Virginia statute revokes a beneficiary designation in any contract that provides a death benefit to a former spouse where there has been a change in the decedent’s marital status.

But at the time of his death, Warren Hillman’s beneficiary of his FEGLI life insurance policy was still his ex-wife Judy, now Judy Maretta.

It seems that after their divorce, Hillman had neglected change his named FEGLI beneficiary to his new wife Jacqueline Hillman. So the FEGLI life insurance benefits should have gone to ex-wife Judy as per federal law, but Virginia law automatically transfers the benefits to his wife Jacqueline.

After Hillman’s death, Judy Maretta filed a claim seeking the FEGLI life insurance benefits and successfully collected said benefits. Jacqueline Hillman then filed suit in a Virginia state court, seeking recovery of the proceeds.

 

Hillman v. Maretta Case About FEGLI Designation of Beneficiary

 

The legal arguments and constitutional questions raised by the case ended up pitting Virginia state law against the Federal Employees Group Life Insurance Act (FEGLI Act) of 1954.

The Virginia Circuit Court found Maretta liable to Hillman, and the appeal ended up in the State Supreme Court which reversed the verdict and upheld FEGLI Act over Virginia state law. The U.S. Supreme Court has now endorsed this ruling, so Section D of Virginia state law stands preempted by FEGLI Act.

This verdict is about FEGLI life insurance proceeds, but it will now serve as a reference for just about any type of case where state and federal law are in conflict over federal employee benefits and designation of beneficiaries.

 

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