Lesson for today: Update your insurance forms, and when you do, follow the rules to the letter.
Switzer v. Vaughan
Dallas Court of Appeals, No. 05-14-00811-CV (July 27, 2016)
Justices Francis, Lang-Miers (Opinion), and Myers
Eric Switzer worked for the Post Office. He didn’t want his ex-wife to benefit from his life insurance policy through the Federal Employees’Group Life Insurance (“FEGLI”) program. So, in 2008 he changed the designated beneficiary on that policy to Kay Vaughan, a co-employee he was then dating. Alas, his relationship with Kay withered and, about a year later, Eric married Patricia. Eric then completed a form to change the beneficiary on his FEGLI policy again, to his new wife, Patricia. Mostly. Unfortunately, he failed to check one required box. The Post Office apparently returned the form to him to be completed or corrected, but he never did so. We know this because Patricia later found the original form among Eric’s papers. When Eric died, both women—the widow and the ex-girlfriend—laid claim to the policy proceeds. On cross-motions for summary judgment, the trial court awarded the policy proceeds to (drum roll) … the ex-girlfriend Kay. The Dallas Court of Appeals affirmed.
Patricia produced evidence that two witnesses had seen Eric fill out the form changing the beneficiary to her and had co-signed that form, that Eric later tripled the amount of insurance so she would have funds to pay off their mortgage if he died, and that Eric apparently had sent the mostly-complete beneficiary-change form to the Post Office because it was stamped “received.” She argued substantial compliance with the requirements for effecting a beneficiary change. Unfortunately for Patricia, FEGLI policies are governed by statute and a host of federal regulations that demand strict compliance with their requirements and that preempt any state law to the contrary. Because Eric’s beneficiary-change form was incomplete and had not been filed with his federal employer before his death as required, the attempted change in beneficiary was ineffective. So, the ex-girlfriend Kay, the last validly-named beneficiary, was entitled to the policy proceeds. Probably not what Eric had in mind.