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Ex-wife, as beneficiary, should get FEGLI benefits, high court rules

Jun. 7, 2013 - 05:47PM   |  
By STEPHEN LOSEY   |   Comments

The Supreme Court on June 3 ruled that a deceased federal employee’s life insurance policy should go to his ex-wife, and not his widow, because the fed never changed his beneficiary designation after his divorce.

Federal employee Warren Hillman named his former wife, Judy Maretta, as the beneficiary of his Federal Employees’ Group Life Insurance, or FEGLI, policy in 1996, two years before the two divorced. Warren Hillman married Jacqueline Hillman in 2002, but never changed his FEGLI policy to name his new wife the beneficiary. When Warren Hillman died unexpectedly in 2008, Jacqueline Hillman tried to collect the $124,558 life insurance policy, but was told the proceeds would go to Maretta instead because she was still on the policy.

Jacqueline Hillman sued Maretta in Virginia Circuit Court, citing a state law that said Maretta had to pay her the life insurance proceeds. Maretta argued that the 1954 federal law creating FEGLI supersedes state laws that have different rules about beneficiary designations, and said she should keep the money. The circuit court rejected Maretta’s argument and granted a summary judgment for Hillman, but the Virginia Supreme Court in 2012 reversed that decision and ruled in favor of Maretta.

The Supreme Court ruled unanimously for Maretta, and said the Virginia law interferes with Congress’ intention on how FEGLI beneficiaries should be determined.

The justices acknowledged that employees may sometimes neglect to update their beneficiary designations after a change in marital status, even though they intend for their benefits to go to someone else. But they said Congress chose to establish a clear and predictable procedure for employees to indicate who should receive their life insurance payments, rather than try to infer what those employees probable intentions were by looking at other sources.

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