Claire v. Pascavage
| Decision Date | 29 March 2011 |
| Docket Number | Civ. No. 09–276–LPS. |
| Citation | 773 F.Supp.2d 452 |
| Parties | Claire V. PASCAVAGE, on behalf of herself and all others similarly situated, Plaintiff,v.OFFICE OF PERSONNEL MANAGEMENT, Defendant. |
| Court | U.S. District Court — District of Delaware |
OPINION TEXT STARTS HERE
John S. Spadaro, John Sheehan Spadaro, LLC, Hockessin, DE, for Plaintiff.David. C. Weiss, Patricia C. Hannigan, United States Department of Justice, Wilmington, DE, for Defendant.
This proposed class action presents a novel statutory construction issue. Specifically, the Court must interpret 5 U.S.C. § 8705(e), apparently an issue of first impression in the federal courts. The Court must also determine whether the Office of Personnel Management's construction of § 8705(e) comports with guiding principles of administrative law. Pending before the Court are the parties' cross motions for summary judgment. 1 (D.I. 13; D.I. 16) For the reasons that follow, the Court will grant Plaintiff's motion for partial summary judgment and deny the government's motion.
The salient facts are not in dispute. (D.I. 17 at 1; D.I. 19) Claire V. Pascavage (“Plaintiff”) is the former spouse of Louis M. Pascavage (“Mr. Pascavage”). (D.I. 14 at 5) The Pascavages were divorced in 1987, after thirty years of marriage. (D.I. 15 at A3) On August 21, 1995, the Family Court of the State of Delaware in and for New Castle County made determinations with respect to the division of marital property. ( Id. at A1, A3) 2 Pursuant to the Family Court's Order, Mr. Pascavage was directed to name Plaintiff as “sole primary beneficiary of all life insurance presently in existence including employee life insurance.” ( Id. at A1) (hereinafter, “Divorce Decree”)
Mr. Pascavage was an employee of the Panama Canal Commission, an independent agency established by Congress. ( Id. at A3) As a federal employee, Mr. Pascavage elected to carry life insurance known as Federal Employees Group Life Insurance (“FEGLI”).3 Hence, the Divorce Decree required Mr. Pascavage to name Plaintiff as the beneficiary on his FEGLI life insurance policy.
On August 22, 1995, the day after the Family Court issued the Divorce Decree, counsel for Plaintiff provided the Office of Personnel Management (“OPM”) with a copy of it.4 OPM administers the FEGLI insurance program. 5 U.S.C. § 8716 (2006); see also Metro. Life Ins. Co. v. Barber, 2001 WL 1683253, at *1–2, 2001 U.S. Dist. LEXIS 13996, at *6 (N.D.Tex. Sept. 7, 2001). OPM responded directly to Plaintiff and explained the process through which Mr. Pascavage could change the beneficiary designation on his FEGLI life insurance forms. (D.I. 18 at A16)
Plaintiff also forwarded a copy of the Divorce Decree to the Panama Canal Commission. (D.I. 15 at A9) The Panama Canal Commission wrote Mr. Pascavage “request[ing]” that he comply with the Divorce Decree since the “order appears valid on its face.” ( Id. at A11) Plaintiff apparently had no further communication with either OPM or the Panama Canal Commission.
At the time Plaintiff submitted the Divorce Decree to OPM in 1996, the FEGLI statute prescribed the order of preference for the distribution of the insurance proceeds, and the statute did not provide any precedence for state court orders. Thus, at that time, OPM had no authority to honor the terms of state court orders determining FEGLI benefits. (D.I. 17 at 3) Instead, “[p]rior to 1998, court orders for FEGLI purposes were not tracked [by OPM] and were not necessarily filed in an annuitant's retirement file.” (D.I. 18 at A34) OPM's standard operating procedure was to return state court orders related to FEGLI benefits to the person who had supplied the orders. (D.I. 17 at 3)
While Mr. Pascavage was aware of the Divorce Decree, in 1997 he opted to name his second wife and his four children as the beneficiaries on his FEGLI life insurance policy, in direct contravention of the terms of the Divorce Decree. (D.I. 18 at A9–10)
On July 22, 1998, Congress amended 5 U.S.C. § 8705. In particular, Congress amended § 8705 to require that state court orders involving FEGLI benefits take precedence over any contrary designations. (D.I. 17 at 3–4) As amended, § 8705 now provides (with emphasis added):
(a) Except as provided in subsection (e), the amount of group life insurance and group accidental death insurance in force on an employee at the date of his death shall be paid, on the establishment of a valid claim, to the person or persons surviving at the date of his death, in the following order of precedence:
...
(e)(1) Any amount which would otherwise be paid to a person determined under the order of precedence named by subsection (a) shall be paid (in whole or in part) by the Office to another person if and to the extent expressly provided for in the terms of any court decree of divorce, annulment, or legal separation, or the terms of any court order or court-approved property settlement agreement incident to any court decree of divorce, annulment, or legal separation.
(2) For purposes of this subsection, a decree, order, or agreement referred to in paragraph (1) shall not be effective unless it is received, before the date of the covered employee's death, by the employing agency or, if the employee has separated from service, by the Office.
Thus, under the amended statute, so long as court orders are submitted prior to the covered employee's death, OPM is required to comply with state court orders, even if the covered employee had an inconsistent or contrary designation on the FEGLI forms. (D.I. 17 at 3; D.I. 18 at A18; see also id. at A27, A30, A34) OPM does not dispute that Plaintiff's 1995 Divorce Decree involving the distribution of marital property between her and Mr. Pascavage is a “court decree of divorce” for purposes of the statute. 5 U.S.C. § 8705(e) (2006).
The legislative history of the statutory amendment that created § 8705(e) includes the following statement:
Under current law, domestic relations orders such as Divorce Decrees or property settlement agreements do not affect the payment of life insurance proceeds. Instead, distribution of the proceeds is controlled by statute. When the policyholder dies, the proceeds are paid to the beneficiary designated by the policyholder, if there is one, or to other individuals specified by statute.
H.R. 1316 ... amends the law to require that the Office of Personnel Management should pay the proceeds in accordance with certain domestic relations orders or court-approved property settlements. This is similar to the law's treatment of retirement annuities, which the Office of Personnel Management must also allocate in accordance with Divorce Decrees.
143 Cong. Rec. 4232 (1997) (emphasis added); see also D.I. 14 at 10.
In connection with the statutory amendment to § 8705, OPM adopted regulations providing that OPM would only honor court orders that were received after the enactment of the statutory amendment—that is, after July 22, 1998. (D.I. 17 at 4) OPM had provided the required notice of these regulations, along with the required opportunity for public comment. ( Id.; see also 64 F.R. 16601–02 (April 6, 1999); 64 F.R. 54761 (October 8, 1999))
Mr. Pascavage died on July 20, 2007, never having complied with the terms of the Divorce Decree by naming Plaintiff as the beneficiary of his FEGLI life insurance policy. OPM, acting through its private insurance contractor, MetLife, distributed the entirety of Mr. Pascavage's FEGLI life insurance proceeds according to the terms of his FEGLI designation form. Therefore, the proceeds went to Mr. Pascavage's second wife and four children. (D.I. 17 at 4–5) Plaintiff's counsel unsuccessfully petitioned OPM to honor the Divorce Decree and pay the proceeds to Plaintiff. OPM, acting through its private insurance contractor, responded to Plaintiff as follows:
For you [ sic ] information: Public Law 105–205 was enacted by President Clinton on July 22, 1998.... In order for a decree of divorce to be valid, it must be received by the appropriate office ... on or after July 22, 1998, and before the insured individual's death....
Decree of divorces [ sic ] that were filed prior to enactment of Public Law 105–205 was [ sic ] not considered valid. The Office of Personnel Management has certified that the court order was received in 1995 [ sic ] was never re-submitted after 7.22,1998.
Therefore, we are sorry, but no benefits are payable to you based on the decree of divorce.
(D.I. 15 at A13)
Plaintiff initiated this lawsuit on April 22, 2009, on behalf of herself and “all others similarly situated.” 5 (D.I. 1 at 1) The parties filed cross-motions for summary judgment, completing briefing on May 13, 2010. (D.I. 13; D.I. 16) The Court heard oral argument on the motions on January 27, 2011. (D.I. 27) (“Tr.”)
“The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The moving party bears the burden of demonstrating the absence of a genuine issue of material fact. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 n. 10, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). A party asserting that a fact cannot be—or, alternatively, is—genuinely disputed must be supported either by citing to “particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for the purposes of the motions only), admissions, interrogatory answers, or other materials,” or by “showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact.” Fed.R.Civ.P. 56(c)(1)(A) & (B). If the moving party has carried its burden, the nonmovant must then “come forward with specific facts showing that there is a genuine issue for...
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