ILNews

Justices rule for first time on FEGLIA preemption issue

Back to TopCommentsE-mailPrintBookmark and Share

In a dispute between two ex-wives over the life insurance policy of their deceased husband, the Indiana Supreme Court has ordered the trial court determine how much money each woman is entitled to.

Carlos Hardy was married to Phyllis Hardy when he held a life insurance policy issued as part of a federal employee benefit plan. When they divorced in 1998, the divorce decree and property settlement required Carlos Hardy to maintain the life insurance policy and designated Phyllis Hardy and their two grandchildren as equal beneficiaries. Carlos Hardy later married Mary Jo Hardy and changed his beneficiary to her and increased his coverage. They divorced after several years of marriage.

When Carlos Hardy died, a dispute arose over who was entitled to the life insurance proceeds. The trial court determined that the Federal Employees’ Group Life Insurance Act preempted Phyllis Hardy’s equitable state law claims and the proceeds belonged to Mary Jo Hardy. The Indiana Court of Appeals affirmed.

The high court had never addressed whether FEGLIA preempts equitable state law claims; other jurisdictions have split over the decision. But the Indiana justices decided that FEGLIA doesn’t preempt equitable state law claims to recover FEGLIA proceeds that have been paid in accordance with FEGLIA’s provisions and the regulations promulgated under it. A different conclusion would run afoul of the strong presumption against preemption in this traditional area of state regulation, wrote Justice Steven David in Phyllis Hardy, Alax Keith Furnish and Megan Jessica Furnish, by next friend Phyllis Hardy v. Mary Jo Hardy, No. 51S01-1106-PL-366.

“We agree that FEGLIA and the regulations promulgated under it control who holds legal title to the proceeds. But we see nothing in the preemption clause that precludes equitable state law claims. To interpret the preemption clause as preventing the imposition of a constructive trust extends the clause’s scope beyond its plain language,” he wrote.

The justices also decided that Ridgway v. Ridgway, 454 U.S. 46 (1981), did not support the conclusion that FEGLIA precludes a court from imposing a constructive trust on life insurance proceeds, as Mary Jo Hardy argued.

“Ultimately, the lack of an anti-attachment provision within FEGLIA, the divergent purposes underscoring FEGLIA and SGLIA, and the 1998 amendment to section 8705 of FEGLIA compel us to conclude that Ridgway is not controlling here,” David wrote.

The justices held the divorce decree and property settlement agreement undoubtedly entitle Phyllis and the grandchildren to whatever the death benefit under Option A would have been at the date of Carlos’ death, as Carlos had to “maintain” his policy for the benefit of Phyllis and the grandchildren. Mary Jo Hardy argued that she should be entitled to whatever amount accrued once she married Carlos Hardy. They remanded the issue to the trial court.

 

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. @BryanJBrown, You are totally correct. I have no words, you nailed it.....

  2. You have not overstated the reality of the present situation. The government inquisitor in my case, who demanded that I, on the record, to choose between obedience to God's law or man's law, remains on the BLE, even an officer of the BLE, and was recently renewed in her contract for another four years. She has a long history in advancing LGBQT rights. http://www.realjock.com/article/1071 THINK WITH ME: What if a currently serving BLE officer or analogous court official (ie discplinary officer) asked an atheist to affirm the Existence, or demanded a transsexual to undergo a mental evaluation to probe his/her alleged mindcrime? That would end a career. The double standard is glaring, see the troubling question used to ban me for life from the Ind bar right here: https://www.scribd.com/doc/312841269/Thomas-More-Society-Amicus-Brown-v-Ind-Bd-of-Law-Examiners (see page 8 of 21) Again, what if I had been a homosexual rights activist before law school rather than a prolife activist? A gay rights activist after law school admitted to the SCOTUS and Kansas since 1996, without discipline? A homosexual rights activist who had argued before half the federal appellate courts in the country? I am pretty certain that had I been that LGBQT activist, and not a pro-life activist, my passing of the Indiana bar exam would have rendered me an Indiana attorney .... rather than forever banished. So yes, there is a glaring double standard. And some are even beyond the reach of constitutional and statutory protections. I was.

  3. Historically speaking pagans devalue children and worship animals. How close are we? Consider the ruling above plus today's tidbit from the politically correct high Court: http://indianacourts.us/times/2016/12/are-you-asking-the-right-questions-intimate-partner-violence-and-pet-abuse/

  4. The father is a convicted of spousal abuse. 2 restaining orders been put on him, never made any difference the whole time she was there. The time he choked the mother she dropped the baby the police were called. That was the only time he was taken away. The mother was suppose to have been notified when he was released no call was ever made. He made his way back, kicked the door open and terrified the mother. She ran down the hallway and locked herself and the baby in the bathroom called 911. The police came and said there was nothing they could do (the policeman was a old friend from highschool, good ole boy thing).They told her he could burn the place down as long as she wasn't in it.The mother got another resataining order, the judge told her if you were my daughter I would tell you to leave. So she did. He told her "If you ever leave me I will make your life hell, you don't know who your f!@#$%^ with". The fathers other 2 grown children from his 1st exwife havent spoke 1 word to him in almost 15yrs not 1 word.This is what will be a forsure nightmare for this little girl who is in the hands of pillar of the community. Totally corrupt system. Where I come from I would be in jail not only for that but non payment of child support. Unbelievably pitiful...

  5. dsm 5 indicates that a lot of kids with gender dysphoria grow out of it. so is it really a good idea to encourage gender reassignment? Perhaps that should wait for the age of majority. I don't question the compassionate motives of many of the trans-advocates, but I do question their wisdom. Likewise, they should not question the compassion of those whose potty policies differ. too often, any opposition to the official GLBT agenda is instantly denounced as "homophobia" etc.

ADVERTISEMENT