Hillman v. Maretta
569 U.S. ___ (2013)

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Justia Opinion Summary
The Federal Employees’ Group Life Insurance Act (FEGLIA) permits an employee to name a beneficiary of life insurance proceeds, and specifies an “order of precedence” providing that an employee’s death benefits accrue first to that beneficiary ahead of other potential recipients, 5 U.S.C. 8705(a). 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, Va. Code 20–111.1(A). When the provision is preempted by federal law, Section D of that law provides a cause of action rendering the former spouse liable for the proceeds to the party who would have received them were Section A not preempted. Hillman named then-spouse, Maretta, as beneficiary of his FEGLI policy. After their divorce, he married Jacqueline but never changed his named FEGLI beneficiary. After Hillman’s death, Maretta, still the named beneficiary,collected the FEGLI proceeds. A Virginia Circuit Court found Maretta liable to Jacqueline under Section D for the FEGLI policy proceeds. The Virginia Supreme Court reversed, concluding that Section D is preempted by FEGLIA because it conflicts with the purposes and objectives of Congress. The Supreme Court affirmed. FEGLIA creates a scheme that gives highest priority to an insured’s designated beneficiary and underscores that the employee’s “right” of designation “cannot be waived or restricted.” Section D interferes with this 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. FEGLIA establishes a clear and predictable procedure for an employee to indicate who the intended beneficiary shall be and evinces Congress’ decision to accord federal employees an unfettered freedom of choice in selecting a beneficiary and to ensure the proceeds actually belong to that beneficiary.

NOTE: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion is issued. The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader. See United States v. Detroit Timber & Lumber Co., 200 U. S. 321 .

SUPREME COURT OF THE UNITED STATES

Syllabus

HILLMAN v. MARETTA

certiorari to the supreme court of virginia

No. 11–1221. Argued April 22, 2013—Decided June 3, 2013

The Federal Employees’ Group Life Insurance Act of 1954 (FEGLIA) establishes an insurance program for federal employees. FEGLIA permits an employee to name a beneficiary of life insurance proceeds, and specifies an “order of precedence” providing that an employee’s death benefits accrue first to that beneficiary ahead of other potential recipients. 5 U. S. C. §8705(a). 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. Va. Code Ann. §20–111.1(A) (Section A). In the event that this provision is pre-empted by federal law, a separate provision of Virginia law, Section D, provides a cause of action rendering the former spouse liable for the principal amount of the proceeds to the party who would have received them were Section A not pre-empted. §20–111.1(D).

          Warren Hillman named then-spouse, respondent Judy Maretta, as the beneficiary of his Federal Employees’ Group Life Insurance (FEGLI) policy. After their divorce, he married petitioner Jacqueline Hillman but never changed his named FEGLI beneficiary. After Warren’s death, Maretta, still the named beneficiary, filed a claim for the FEGLI proceeds and collected them. Hillman sued in Virginia court, seeking recovery of the proceeds under Section D. Maretta argued in response that Section D is pre-empted by federal law. The parties agreed that Section A is pre-empted. The Virginia Circuit Court found Maretta liable to Hillman under Section D for the FEGLI policy proceeds. The State Supreme Court reversed, concluding that Section D is pre-empted by FEGLIA because it conflicts with the purposes and objectives of Congress.

Held: Section D of the Virginia statute is pre-empted by FEGLIA. Pp. 6–15.

     (a)  State law is pre-empted “to the extent of any conflict with a federal statute.” Crosby v. National Foreign Trade Council, 530 U. S. 363 . This case raises the question whether Virginia law “stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.” Hines v. Davidowitz, 312 U. S. 52 . Pp. 6–13.

          (1) To determine whether a state law conflicts with Congress’ purposes and objectives, the nature of the federal interest must first be ascertained. Crosby, 530 U. S., at 372–373. Two previous cases govern the analysis of the relationship between Section D and FEGLIA here. In Wissner v. Wissner, 338 U. S. 655 , a California court granted a decedent’s widow, who was not the named beneficiary of a policy under the federal National Service Life Insurance Act of 1940 (NSLIA), an interest in the insurance proceeds as community property under state law. This Court reversed. Because NSLIA provided that the insured had a right to designate a beneficiary and could change that designation at any time, the Court reasoned that Congress had “spoken with force and clarity in directing that the proceeds belong to the named beneficiary and no other.” Id., at 658. The Court addressed a similar question regarding the federal Servicemen’s Group Life Insurance Act of 1965 (SGLIA) in Ridgway v. Ridgway, 454 U. S. 46 . There, a Maine court imposed a constructive trust on insurance proceeds paid to a servicemember’s widow, the named beneficiary, and ordered that they be paid to the decedent’s first wife as required by a divorce decree. Holding the constructive trust pre-empted, the Ridgway Court explained that Wissner controlled and that SGLIA made clear that “the insured service member possesses the right freely to designate the beneficiary and to alter that choice at any time by communicating the decision in writing to the proper office.” Id., at 56. Pp. 7–9.

          (2) The reasoning in Wissner and Ridgway applies with equal force here. NSLIA and SGLIA are strikingly similar to FEGLIA, which creates a scheme that gives highest priority to an insured’s designated beneficiary, §8705(a), and which underscores that the employee’s “right” of designation “cannot be waived or restricted,” 5 CFR §843.205(e). Section D interferes with this 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. FEGLIA establishes a clear and predictable procedure for an employee to indicate who the intended beneficiary shall be and evinces Congress’ decision to accord federal employees an unfettered freedom of choice in selecting a beneficiary and to ensure the proceeds actually belong to that beneficiary. This conclusion is confirmed by another provision of FEGLIA, §8705(e), which creates a limited exception to the order of precedence by allowing proceeds to be paid to someone other than the named beneficiary, if, and only if, the requisite documentation is filed with the Government before the employee’s death, so that any departure from the beneficiary designation is managed within, not outside, the federal system. If States could make alternative distributions outside the clear procedure Congress established, §8705(e)’s narrow exception would be transformed into a general license for state law to override FEGLIA. Pp. 9–13.

     (b) Hillman’s additional arguments in support of a different result are unpersuasive. Pp. 13–15.

283 Va. 34, 722 S. E. 2d 32, affirmed.

     Sotomayor, J., delivered the opinion of the Court, in which Roberts, C. J., and Kennedy, Ginsburg, Breyer, and Kagan, JJ., joined, and in which Scalia, J., joined as to all but footnote 4. Thomas, J., and Alito, J., filed opinions concurring in the judgment.

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