Term: 2012
Docket: 11-1221
Jacqueline Hillman, Petitioner v. Judy A. Maretta
- Pro
11-1221 HILLMAN V. MARETTA DECISION BELOW: 722 S.E.2d 32 CERT. GRANTED 1/11/2013 QUESTION PRESENTED: VA. CODE ANN. § 20-111.1(A) (2011) provides that a life insurance policy's revocable beneficiary designation naming a then spouse is deemed revoked upon the entry of a Final Decree of Divorce. 5 U.S.C. § 8705(a) provides that the proceeds from a Federal Employees Group Life Insurance (FEGLI) policy should be paid to the beneficiaries properly designated by the employee, and if none, then to the widow of the employee. If VA. CODE ANN. § 20-111.1 (A) is preempted by 5 U.S.C. § 8705(a) or any other federal law, VA. CODE ANN. § 20-111.1(D) (2011), gives the widow (or whoever would otherwise be entitled to the insurance proceeds), after FEGLI insurance proceeds have been distributed to an ex-spouse, a domestic relations equitable remedy against the ex-spouse for the amount of the insurance proceeds received. The Supreme Court of Virginia, in agreement with the Supreme Court of Alabama, the First, Seventh and Eleventh Circuits of the United States Court of Appeals and several lower federal courts, but in direct conflict with the Indiana Supreme Court, the Supreme Court of Mississippi, the Court of Appeals of North Carolina, the Appellate Court of Illinois, the Missouri Court of Appeals, the Court of Appeals of Texas, the Superior Court of New Jersey, Appellate Division, the Superior Court of Pennsylvania, and the Court of Appeals of Kentucky, held that 5 U.S.C. § 8705(a) preempts a state domestic relations equitable action against the beneficiary of a FEGLI policy after the insurance proceeds of such policy have been paid to such beneficiary in accordance with the statutory order of precedence in 5 U.S.C. § 8705(a). The question presented is whether 5 U.S.C. § 8705(a), any other provision of the Federal Employees Group Life Insurance Act of 1954 (FEGLIA) or any regulation promulgated thereunder preempts a state domestic relations equitable remedy which creates a cause of action against the recipient of FEGLI insurance proceeds after they have been distributed, like the one contained in VA. CODE ANN. § 20-111.1(D). LOWER COURT CASE NUMBER: 102042
In the case of Jacqueline Hillman v. Judy A. Maretta, 2012, the US Supreme Court ruled in favor of Maretta who was designated by her ex-husband as a beneficiary to his Federal Employees' Group Life Insurance (FEGLI) policy before their divorce and he never changed it after remarrying Hillman. After his death, Maretta received the insurance proceeds which led Hillman to sue under Virginia's "revocation-on-divorce" statute that revokes a divorced spouse's beneficiary designation upon divorce unless expressly stated otherwise in the decree or agreement. The court held that this state law is preempted by federal law governing FEGLI policies which states benefits are payable to named beneficiaries regardless of marital status changes post-designation unless changed by policyholder prior to death. This decision upheld Congress’s intent for FEGLI benefits disbursement process be clear and straightforward without interference from conflicting state laws.
In the dissenting opinion for Hillman v. Maretta, Justice Alito argued that the Federal Employees' Group Life Insurance Act (FEGLIA) does not preempt state laws allowing a person to sue for funds received by another in violation of their rights. He disagreed with the majority's interpretation of FEGLIA as protecting beneficiaries from any and all legal actions related to insurance proceeds. Instead, he believed that Congress intended only to prevent states from interfering with an employee's choice of beneficiary while they are still alive. Once benefits have been paid out, however, he saw no reason why state law should not apply if it can do so without undermining federal objectives. In this case, Virginia’s law did not interfere with federal policy because it allowed Judy Maretta - who was named as Warren Hillman’s beneficiary before his marriage to Jacqueline Hillman - to keep her FEGLI benefits but also permitted Jacqueline Hillman – Warren’s widow at time of death- to recover equivalent value from Judy under state law.
