947 F.3d 804 (Fed. Cir. 2020), 2019-1046, Li v. Department of Justice

Docket Nº:2019-1046
Citation:947 F.3d 804
Opinion Judge:Chen, Circuit Judge
Party Name:Karen LI, Petitioner v. DEPARTMENT OF JUSTICE, Respondent
Attorney:Susan Poll Klaessy, Foley & Lardner LLP, Chicago, IL, argued for petitioner. Also represented by Jill Nicholson; Jack Gabriel Haake, Washington, DC. Meen Geu Oh, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, argued for respondent. Also represen...
Judge Panel:Before Newman, Moore, and Chen, Circuit Judges.
Case Date:January 16, 2020
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit
 
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947 F.3d 804 (Fed. Cir. 2020)

Karen LI, Petitioner

v.

DEPARTMENT OF JUSTICE, Respondent

No. 2019-1046

United States Court of Appeals, Federal Circuit

January 16, 2020

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Petition for review of a decision of the Bureau of Justice Assistance in PSOB Claim No. 2011-016.

Susan Poll Klaessy, Foley & Lardner LLP, Chicago, IL, argued for petitioner. Also represented by Jill Nicholson; Jack Gabriel Haake, Washington, DC.

Meen Geu Oh, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, argued for respondent. Also represented by Joseph H. Hunt, Tara K. Hogan, Robert Edward Kirschman, Jr.; Rafael Alberto Madan, Matthew T. Scodellaro, Office of Justice Programs, Office of General Counsel, United States Department of Justice, Washington, DC.

Before Newman, Moore, and Chen, Circuit Judges.

OPINION

Chen, Circuit Judge

Karen Li brought a claim for death benefits under the Public Safety Officers’ Benefits Act (PSOBA) of 1976, Pub. L. No. 94-430 (codified as amended at 34 U.S.C. § § 10281-10288). Ms. Li appeals a June 28, 2018, decision by the Bureau of Justice Assistance (BJA) holding that she was not entitled to the death benefits for her fiancé, San Diego Sheriff’s Deputy Kenneth Collier. The BJA determined that Ms. Li was not a designated beneficiary under Deputy Collier’s life insurance policy in accordance with 34 U.S.C. § 10281(a)(4)(B). Because the BJA’s decision is supported

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by substantial evidence and properly applies the statute and the BJA’s implementing regulation, 28 C.F.R. § 32.13, we affirm the BJA’s denial of benefits.

BACKGROUND

In February 2010, Sherriff’s Deputy Kenneth Collier was patrolling Route 52 in San Diego County, California, where he observed a car driving the wrong way. Deputy Collier pursued the driver by driving down the middle lane of the highway, but the middle lane suddenly ended, and Deputy Collier lost control of the car as he attempted to exit the middle lane. Deputy Collier’s car fell down the embankment on the side of the highway. After his rescue, Deputy Collier was flown to the hospital where he died.

Deputy Collier was survived by his fiancée, Karen Li. Deputy Collier and Ms. Li started dating in 2003 and owned a house together. The couple planned to get married three months after Deputy Collier’s accident, choosing that date to combine the wedding celebration with Deputy Collier’s 40th birthday. Deputy Collier told Ms. Li and their friends on multiple occasions that he had made arrangements for Ms. Li to be taken care of if anything ever happened to him, including through a video he recorded after his mother died in 2008. In that video, Deputy Collier explained that: "My understanding is that the one-third interest that I have [in Deputy Collier’s mother’s] house upon my death or incapacitation reverts back— control back to [Deputy Collier’s siblings], but all other assets, savings, everything like that, will be separate and go to Karen." J.A. 405-06.

Deputy Collier’s job benefits included workers’ compensation, retirement benefits, and life insurance. In re Li, No. 2011-016, at 6-7 (BJA June 28, 2018). Deputy Collier designated Ms. Li as a partial dependent in his workers’ compensation program and as his beneficiary for his retirement benefits. Id. However, since 1997, Deputy Collier’s designation form for his life insurance designated his mother as the primary beneficiary and his ex-girlfriend, Monique Stamp, as his contingent beneficiary. Deputy Collier signed forms in 2003, 2006, and 2007 reaffirming these beneficiary designations. While the forms in 1997-2006 explicitly listed the beneficiary designations above the signature line (identifying Deputy Collier’s mother and Ms. Stamp by name on Deputy Collier’s signed forms), the County of San Diego (the County) changed its policy in 2007 and stopped including this explicit listing on its form.

The life insurance policy stated that to change the beneficiary designation, "[y]ou must name or change Beneficiaries in writing. Writing includes a form signed by you or a verification from the Policyholder or Employer of an electronic or telephonic designation made by you. Your designation ... [m]ust be delivered to the Policyholder or Employer during your lifetime." J.A. 202-03. There is no evidence that Deputy Collier ever provided any such written designation change, or otherwise made any effort to contact the County or the insurance company to make a beneficiary designation change.

At the time of Deputy Collier’s death, Deputy Collier’s mother had passed away, leaving Ms. Stamp as the designated beneficiary for his life insurance policy. Ms. Li contested to the insurance company that she should be the beneficiary for Deputy Collier’s life insurance policy. The insurance company determined that Ms. Li had a colorable claim to Deputy Collier’s life insurance. But rather than determine whether Ms. Li had the stronger claim, the insurance company told Ms. Li that she could either settle the claim with Ms. Stamp or the insurance company would file

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an interpleader to have a court determine who had the better claim. Ms. Li and Ms. Stamp arrived at a settlement in which Ms. Li received $560,920 and Ms. Stamp received $25,000. The insurance company honored this settlement agreement.

Ms. Li then filed for PSOB death benefits. However, the BJA determined that Ms. Li had failed to show she was the designated beneficiary of Deputy Collier’s life insurance policy. Li, No. 2011-016, at 19. In accordance with 34 U.S.C. § 10281(a) and 28 C.F.R. § 32.13, the BJA analyzed whether Ms. Li was the designee of a "legal and valid" life insurance policy. Id. at 9-11. To make this determination, the BJA analyzed California insurance law, determining that, with three limited exceptions, the law requires strict compliance with the terms of the insurance policy. Id. at 11-12. Those exceptions include (1) the insurance company waives strict compliance, (2) it is beyond the power of the policyholder to comply, or (3) the policyholder "pursued the course pointed out by the laws of the association [i.e. the insurance company], and has done all in his power to change the beneficiary" but failed to properly make the change. Pimentel v. Conselho Supremo de Uniao Portugueza do Estado da Cal., 6 Cal.2d 182, 57 P.2d 131, 133 (1936). The BJA determined that Ms. Li failed to show any of those exceptions were met and denied Ms. Li’s claim. Li, No. 2011-016, at 18-19.

Ms. Li now appeals. We have jurisdiction under 34 U.S.C. § 10287.

DISCUSSION

Ms. Li argues that the BJA erred by failing to properly apply the statute and implementing regulations, failing to correctly apply California law, and failing to support its decision with substantial evidence.

The PSOBA directs the BJA to pay a death benefit to the proper claimant when a public safety officer is killed in the line of duty. 34 U.S.C. § 10281(a). The PSOBA provides a hierarchy of potential claimants for determining the proper claimant, eventually reaching 34 U.S.C. § 10281(a)(4)(B), which dictates that "if there is no surviving spouse of the public safety officer and no surviving child," the proper claimant is "the surviving individual ... designated by the public safety officer to receive benefits under the most recently executed life insurance policy of the public safety officer on file at the time of death." Id. § 10281(a)(4)(B). The BJA promulgated 28 C.F.R. § 32.13 to determine when a claimant is the beneficiary of the public safety officer’s life insurance policy. In relevant part, the regulation provides that "[a]n individual ... is designated as beneficiary of a life insurance policy of such officer as of such date, only if the designation is, as of such date, legal and valid (as a designation of beneficiary of a life insurance policy) and unrevoked (by such officer or by operation of law) or otherwise unterminated." 28 C.F.R. § 32.13.

We review the BJA’s application of its own regulations to determine "(1) whether there has been substantial compliance with statutory requirements and provisions of implementing regulations; (2) whether there has been any arbitrary or capricious action on the part of the government officials involved; and (3) whether substantial evidence supports the decision denying the claim." Amber-Messick v. United States, 483 F.3d 1316, 1321 (Fed. Cir. 2007). In this case, we review the BJA Director’s determination that Ms. Li was not a designated beneficiary under Deputy Collier’s life insurance policy.

A

We first turn to whether the BJA correctly applied the...

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