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Court says fed life insurance law pre-empts state law

June 3, 2013 at 12:23 PM

WASHINGTON, June 3 (UPI) -- The U.S. Supreme Court ruled unanimously Monday a federal employee life insurance act pre-empts a Virginia statute limiting benefits following a divorce.

The Federal Employees' Group Life Insurance Act of 1954, or FEGLIA, sets up an insurance program for federal employees. FEGLIA allows an employee to name a beneficiary of life insurance proceeds, and specifies an "order of precedence" providing that an employee's death benefits go first to that beneficiary ahead of other potential recipients.

But 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 marital status.

Warren Hillman named then-spouse Judy Maretta as the beneficiary of his federal life insurance. After their divorce, he married Jacqueline Hillman but never changed his named beneficiary. After Warren's death, Maretta, still the named beneficiary, filed a claim for the life insurance proceeds and collected them.

Jacqueline Hillman sued in Virginia court, but the Virginia Supreme Court eventually ruled the relevant section of the state statute was pre-empted by FEGLIA.

The U.S. Supreme Court agreed in the prevailing opinion written by Justice Sonia Sotomayor.

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