Federal act preempts state law claims

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The Indiana Court of Appeals held that the Federal Employees’ Group Life Insurance Act preempts state law claims brought by a man’s first ex-wife seeking to keep her and her grandchildren as beneficiaries of the man’s life insurance policy.

In Phyllis Hardy, et al. v. Mary Jo Hardy,  No. 51A01-1005-PL-248, Phyllis Hardy filed a complaint, on her behalf and the behalf of her two grandchildren, for declaratory judgment/constructive trust over insurance proceeds. Phyllis was married to Carlos Hardy for 30 years and when they divorced, the decree stated that Phyllis and their two grandchildren shall be designated as equal beneficiaries of his FEGLI policy. Carlos later remarried to Mary Jo and he designated her as the beneficiary on his policy by submitting a designation of beneficiary form. Carlos and Mary Jo divorced seven years later, and when he died a year after their divorce, Mary Jo was named the beneficiary of the $98,000 policy.

The trial court granted summary judgment for Mary Jo and denied Phyllis’ motion for summary judgment. The court ruled that federal law preempted state law and that FEGLIA barred the creation of a constructive trust and seizure of the life insurance proceeds or any portion thereof from Mary Jo.

The Court of Appeals agreed with the lower court that FEGLIA preempts the plaintiffs’ state law claims. Phyllis cited a majority of state courts addressing this issue that have concluded that an equitable claim for constructive trust and some other claims under state law aren’t preempted by FEGLIA.

The FEGLIA contains a preemption clause that says the provisions under any contract of this chapter which related to the coverage or benefits shall supersede and preempt state law or regulation issued thereunder that relates to group life insurance to the extent that the law or regulation is inconsistent with the contractual provisions. The 7th Circuit Court of Appeals in Metropolitan Life Insurance Co. v. Christ, 979 F.2d 575, 578 (7th Cir. 1992), held that this clause broadly preempts any state law that is inconsistent with the FEGLIA master policy.

FEGLIA also states that the beneficiary of the policy would be paid first, but a domestic decree could alter that order. To do so, a certified copy must be sent to the Office of Personnel Management before the policy holder’s death. Carlos didn’t send the divorce decree to the office.

The judges also relied on the Indiana Supreme Court ruling in Ridgway v. Ridgway, 454 U.S. 46, 102 S. Ct. 49 (1981), to affirm the trial court’s ruling. Ridgway dealt with the Servicemen’s Group Life Insurance Act and held that the beneficiary’s designation prevailed over a constructive trust which a state court imposed on the policy proceeds.

“While the Plaintiffs cite opinions from some of our sister states, we find the approach taken by the Seventh Circuit and numerous federal and state courts to be the more compelling approach. Accordingly, we conclude that FEGLIA preempts the Plaintiffs’ state law claims,” wrote Judge Elaine Brown.


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  1. We do not have 10% of our population (which would mean about 32 million) incarcerated. It's closer to 2%.

  2. If a class action suit or other manner of retribution is possible, count me in. I have email and voicemail from the man. He colluded with opposing counsel, I am certain. My case was damaged so severely it nearly lost me everything and I am still paying dearly.

  3. There's probably a lot of blame that can be cast around for Indiana Tech's abysmal bar passage rate this last February. The folks who decided that Indiana, a state with roughly 16,000 to 18,000 attorneys, needs a fifth law school need to question the motives that drove their support of this project. Others, who have been "strong supporters" of the law school, should likewise ask themselves why they believe this institution should be supported. Is it because it fills some real need in the state? Or is it, instead, nothing more than a resume builder for those who teach there part-time? And others who make excuses for the students' poor performance, especially those who offer nothing more than conspiracy theories to back up their claims--who are they helping? What evidence do they have to support their posturing? Ultimately, though, like most everything in life, whether one succeeds or fails is entirely within one's own hands. At least one student from Indiana Tech proved this when he/she took and passed the February bar. A second Indiana Tech student proved this when they took the bar in another state and passed. As for the remaining 9 who took the bar and didn't pass (apparently, one of the students successfully appealed his/her original score), it's now up to them (and nobody else) to ensure that they pass on their second attempt. These folks should feel no shame; many currently successful practicing attorneys failed the bar exam on their first try. These same attorneys picked themselves up, dusted themselves off, and got back to the rigorous study needed to ensure they would pass on their second go 'round. This is what the Indiana Tech students who didn't pass the first time need to do. Of course, none of this answers such questions as whether Indiana Tech should be accredited by the ABA, whether the school should keep its doors open, or, most importantly, whether it should have even opened its doors in the first place. Those who promoted the idea of a fifth law school in Indiana need to do a lot of soul-searching regarding their decisions. These same people should never be allowed, again, to have a say about the future of legal education in this state or anywhere else. Indiana already has four law schools. That's probably one more than it really needs. But it's more than enough.

  4. This man Steve Hubbard goes on any online post or forum he can find and tries to push his company. He said court reporters would be obsolete a few years ago, yet here we are. How does he have time to search out every single post about court reporters and even spy in private court reporting forums if his company is so successful???? Dude, get a life. And back to what this post was about, I agree that some national firms cause a huge problem.

  5. rensselaer imdiana is doing same thing to children from the judge to attorney and dfs staff they need to be investigated as well