US Supreme Court Refuses Texas Life Insurance Case Appeal

May 24, 2005 ( - The US Supreme Court has refused to review a Texas case which said that federal common law can be used to decide if the beneficiary of a life insurance plan has waived rights to the benefits.

>The decision from the nation’s high court came in the appeal of a US 5 th Circuit Court decision in December that a deceased plan participant’s estate was entitled to the insurance proceeds after his ex-wife gave up claim to the money as part of the couple’s divorce. (See  Life Insurance Waiver Determines Beneficiary Battle). 


>The 5 th Circuit decision upheld a lower court ruling that Eddie Lee Galaway, administrator of Bradford Wayne Galaway’s estate, was due the money from the Guardian Life Insurance Company of America policy offered through Bradford Galaway’s employer.

 Circuit Judge Carolyn Dineen King, writing for the appeals court, said the case should be governed by the agreement reached in the June 2002 divorce between Bradford Galaway and Kimberlye Finch in which Finch gave up any rights to the proceeds of her ex-husband’s life insurance coverage.

>Bradford Galaway died in a plane crash in November 2002, without having changed his named beneficiary from Finch, according to King’s ruling. After the death, both Eddie Lee Galaway and Finch claimed the proceeds and forced Guardian to go into federal court to ask for a judicial determination of the rightful beneficiary. A US magistrate ruled in favor of Galaway and Finch appealed.

>In the appeals court case, Finch argued that the court should apply the Employee Income Retirement Income Security Act (ERISA) and the plan documents’ instructions about making payments to a named beneficiary. However the appeals judges ruled that it was more appropriate to apply federal common law to determine if Finch had legally lost claim to the money in this case.

>The US Supreme Court ruling is Finch v. Galaway, U.S., No. 04-1283, cert. denied 5/23/05. The 5th Circuit opinion can be found  here .