In Graber v. Metropolitan Life Insurance Company, a lawsuit against the United States and Metropolitan Life Insurance Company to obtain the life insurance benefits of a deceased federal employee, a U.S. District Court in Ohio ruled yesterday that the federal government has sovereign immunity for the improper maintenance of life insurance beneficiary designation forms. The dispute arose when Metropolitan Life Insurance Company denied a life insurance claim filed by the insured’s surviving spouse and subsequently issued payment of the benefits to the insured’s brother. Met Life based its decision on the insured’s incomplete personnel file, which contained a form designating the brother as sole beneficiary in 1996 but lacked any record of the insured’s request in 2008 to change the beneficiary to her husband.
Under the Federal Employees’ Group Life Insurance Act, the United States has waived sovereign immunity for any “breach of legal duty owed.” Although the federal government was responsible for maintaining the insured’s personnel file, the District Court’s holding that no duty exists to properly maintain FEGLI records precludes recovery, as the federal government has not unequivocally consented to be sued for the loss, misfiling, or misplacing of beneficiary designation forms.
Sound like a bunch of nonsensical legal mumbo jumbo? Well, that’s debatable… even federal courts are somewhat split on the issue. Prior to the Graber decision, the Fifth Circuit concluded in Metropolitan Life v. Atkins that the federal government does have the duty to properly maintain beneficiary designation forms in the care of its FEGLI personnel clerks. Yet, other federal courts limit the United States’ duty under the Act to only negotiating and issuing the correct FEGLI life insurance policy.
The lesson to be taken away from this discussion is two-fold. First, if you are a federal employee with group life insurance benefits, follow-up on any beneficiary designations to ensure that your personnel file accurately reflects your intentions. And most importantly, always consult with a life insurance lawyer about your denied life insurance claim or beneficiary dispute. Until the Supreme Court picks a side, every “designated” beneficiary deserves to make their case.