Hillman v. Maretta

Background

A federal employee named his then-wife as the beneficiary of his federal employees' group life insurance. He later divorced, remarried, and died without changing the designation. The ex-wife filed with the federal agency and received $124,558.03. The surviving wife sued under a Virginia law that can make a former spouse repay death benefits when state family law would have redirected them after divorce.

Reasoning

The Court examined whether the Virginia repayment rule conflicts with the federal law that governs federal employees' life insurance. Federal law sets a clear order for who gets benefits and protects an employee's right to name or change a beneficiary by filing the proper form. The Court relied on earlier decisions with similar federal insurance schemes and concluded that state rules that end up taking money from the person the employee named interfere with Congress' plan. The majority held that a state cause of action that effectively reallocates proceeds to someone other than the named beneficiary stands as an obstacle to that federal scheme and is therefore pre-empted. Several Justices wrote separately to stress different reasoning, but they agreed on the outcome.

Real world impact

The decision means that when a federal employee properly names a beneficiary under the federal plan and the federal agency pays that person, state laws cannot turn around and require that beneficiary to give the money to someone else because of divorce rules. Federal employees and their families should update beneficiary forms if they want a different outcome. The ruling resolves conflicting court decisions and maintains federal control over distribution of these benefits.

Dissents or concurrances

Concurring opinions agreed the Virginia rule must yield but differed on whether the Court should rely on Congress' purposes or on a direct text-based conflict analysis.