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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. Indianapolis employers harassment among minorities AFRICAN Americans needs to be discussed the metro Indianapolis area is horrible when it comes to harassing African American employees especially in the local healthcare facilities. Racially profiling in the workplace is an major issue. Please make it better because I'm many civil rights leaders would come here and justify that Indiana is a state the WORKS only applies to Caucasian Americans especially in Hamilton county. Indiana targets African Americans in the workplace so when governor pence is trying to convince people to vote for him this would be awesome publicity for the Presidency Elections.

  2. Wishing Mary Willis only God's best, and superhuman strength, as she attempts to right a ship that too often strays far off course. May she never suffer this personal affect, as some do who attempt to change a broken system: https://www.youtube.com/watch?v=QojajMsd2nE

  3. Indiana's seatbelt law is not punishable as a crime. It is an infraction. Apparently some of our Circuit judges have deemed settled law inapplicable if it fails to fit their litmus test of political correctness. Extrapolating to redefine terms of behavior in a violation of immigration law to the entire body of criminal law leaves a smorgasbord of opportunity for judicial mischief.

  4. I wonder if $10 diversions for failure to wear seat belts are considered moral turpitude in federal immigration law like they are under Indiana law? Anyone know?

  5. What a fine article, thank you! I can testify firsthand and by detailed legal reports (at end of this note) as to the dire consequences of rejecting this truth from the fine article above: "The inclusion and expansion of this right [to jury] in Indiana’s Constitution is a clear reflection of our state’s intention to emphasize the importance of every Hoosier’s right to make their case in front of a jury of their peers." Over $20? Every Hoosier? Well then how about when your very vocation is on the line? How about instead of a jury of peers, one faces a bevy of political appointees, mini-czars, who care less about due process of the law than the real czars did? Instead of trial by jury, trial by ideological ordeal run by Orwellian agents? Well that is built into more than a few administrative law committees of the Ind S.Ct., and it is now being weaponized, as is revealed in articles posted at this ezine, to root out post moderns heresies like refusal to stand and pledge allegiance to all things politically correct. My career was burned at the stake for not so saluting, but I think I was just one of the early logs. Due, at least in part, to the removal of the jury from bar admission and bar discipline cases, many more fires will soon be lit. Perhaps one awaits you, dear heretic? Oh, at that Ind. article 12 plank about a remedy at law for every damage done ... ah, well, the founders evidently meant only for those damages done not by the government itself, rabid statists that they were. (Yes, that was sarcasm.) My written reports available here: Denied petition for cert (this time around): http://tinyurl.com/zdmawmw Denied petition for cert (from the 2009 denial and five year banishment): http://tinyurl.com/zcypybh Related, not written by me: Amicus brief: http://tinyurl.com/hvh7qgp

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