Insurance – FEGLIA – preemption

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Insurance – FEGLIA – preemption

The Federal Employees’ Group Life Insurance Act of 1954 (FEGLIA) preempts state laws governing precedence of life insurance beneficiaries.

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.

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

11-1221 Hillman v. Maretta

Sotomayor, J.; Thomas, J., concurring; Alito, J., concurring.

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