Opinion ID: 852072
Heading Depth: 3
Heading Rank: 3

Heading: Ridgway

Text: Mary Jo argues that the United States Supreme Court decision of Ridgway v. Ridgway, 454 U.S. 46, 102 S.Ct. 49, 70 L.Ed.2d 39 (1981), supports her preemption argument. Federal decisions have often cited this case in support of a conclusion that FEGLIA preempts equitable state law claims. E.g., Christ, 979 F.2d at 580-82. On the other hand, several state court decisions have found Ridgway inapplicable to the FEGLIA preemption issue. E.g., Fagan, 179 S.W.3d at 44-45. Importantly, Ridgway does not directly address FEGLIA but rather the Servicemen's Group Life Insurance Act of 1965 (SGLIA). [8] Ridgway's facts, however, are similar to the present case. In Ridgway, the United States Supreme Court considered whether SGLIA precluded the imposition of a constructive trust. 454 U.S. at 47, 102 S.Ct. 49. Ridgway involved a divorce decree that ordered the insured to maintain life insurance policies, including a SGLIA policy, for the benefit of the three children from the first marriage. Id. at 48, 102 S.Ct. 49. After the divorce, the insured remarried and essentially designated his second wife as the beneficiary of his SGLIA policy. Id. at 48-49, 102 S.Ct. 49. After the insured died, both the first and second wives filed claims for the SGLIA proceeds. Id. at 49, 102 S.Ct. 49. Subsequently, the first wife, on behalf of the three minor children, filed suit, seeking to enjoin the payment of the SGLIA proceeds to the second wife. Id. Ultimately, the United States Supreme Court decided that SGLIA preempted equitable state law claims. Id. at 60, 62, 102 S.Ct. 49. The Court found that the beneficiary designation controlled, and thus the second wife was entitled to the proceeds. Id. at 62, 102 S.Ct. 49. Although FEGLIA and SGLIA share similarities, there is one significant difference between the two Acts. Ridgway's language on this difference is instructive. In Ridgway, the Court determined that SGLIA's order of precedence conferred a right on an insured to designate his policy beneficiary. Id. at 55-57, 102 S.Ct. 49. As discussed above, section 8705 of FEGLIA also confers this right on an insured. But Ridgway also extensively discussed SGLIA's anti-attachment provision, which provided that SGLIA policy proceeds were exempt from creditors and any `attachment, levy, or seizure by or under any legal or equitable process whatever,' whether accomplished `either before or after receipt by the beneficiary.' Id. at 61, 102 S.Ct. 49. The Court found that a constructive trust on the SGLIA proceeds would operate as a prohibited seizure of the SGLIA proceeds, in contravention of the anti-attachment provision. Id. at 60, 102 S.Ct. 49. Furthermore,  Ridgway expressly stated that if Congress chose to avoid the result in that case, it could do so by enacting legislation which did not include an anti-attachment provision. Kidd, 821 S.W.2d at 571 (citing Ridgway, 454 U.S. at 63, 102 S.Ct. 49). Mary Jo argues that although Ridgway discussed the anti-attachment provision, it was one of two separate bases for preemption. Mary Jo asserts that because SGLIA's order of precedence alone was sufficient to find that SGLIA preempted equitable state law claims, it is of no import that FEGLIA lacks an anti-attachment provision. The Court of Appeals agreed with Mary Jo's contention, citing numerous federal decisions, including Christ in support. Hardy, 942 N.E.2d at 846-47. In response, Phyllis and the grandchildren note that Ridgway (and Christ ) were decided before 1998. In 1998, subsection (e) was added to section 8705 to provide, as discussed above, that dissolution decrees could alter FEGLIA's order of precedence where the decree was forwarded to the appropriate office prior to the insured's death. Phyllis and the grandchildren argue that [t]his provision is further evidence that the FEGLIA order of precedence is not about who ultimately receives the proceeds after they are paid ... but rather is about a concern for administrative efficiency in the payment of claims. We first note that SGLIA does not contain a method, like section 8705(e) of FEGLIA, by which a decedent's designation of beneficiary can be overridden. We also note that the purpose behind SGLIA is quite different than FEGLIA. As explained above, FEGLIA's primary purpose revolves around administrative efficiency. On the other hand, when enacting SGLIA, Congress `spoke[ ] with force and clarity in directing that the proceeds belong to the named beneficiary and no other.' 454 U.S. at 56, 102 S.Ct. 49 (quoting Wissner v. Wissner, 338 U.S. 655, 658, 70 S.Ct. 398, 94 L.Ed. 424 (1950)). 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. The order of preference in FEGLIA is an administrative tool to allow for the efficient payment of FEGLI proceeds. We realize that some decisions have interpreted Ridgway differently, but we respectfully disagree. Accordingly, we hold that FEGLIA does not preempt equitable state law claims to recover FEGLI 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. As the Pennsylvania Superior Court fittingly recognized, [W]e are confident that Congress did not intend that the vast number of federal employees in this country be permitted to enter into voluntary, state court-sanctioned agreements ... and then shirk completely the duties imposed by those agreements. The federal interest in doing so is far too minimal and the damaging impact to state domestic relations law far too grave. Eonda v. Affinito, 427 Pa.Super. 317, 629 A.2d 119, 123 (1993).