BVA9501620 DOCKET NO. 93-00 842 ) DATE ) ) On appeal from the decision of the Department of Veterans Affairs Regional Office (VARO) and Insurance Center in Philadelphia, Pennsylvania. Transferred from the VARO in Cleveland, Ohio. THE ISSUE Entitlement to the proceeds of the veteran's National Service Life Insurance policy. REPRESENTATION Appellant represented by: Larry A. Zink, Attorney at Law WITNESS AT HEARING ON APPEAL Larry A. Zink ATTORNEY FOR THE BOARD Milo H. Hawley, Counsel INTRODUCTION The record reflects that the veteran had active service during World War II and died on December [redacted] 1991. This matter comes before the Board of Veterans' Appeals (Board) on appeal from a decision by the Department of Veterans Affairs (VA) Philadelphia, Pennsylvania, Regional Office and Insurance Center (RO), which found that [redacted], and not the appellant, was entitled to the proceeds of the veteran's National Service Life Insurance. This is a contested claim. CONTENTIONS ON APPEAL The appellant contends that, since the veteran and [redacted] were divorced in 1981, any right that [redacted] had in the veteran's life insurance was terminated under Ohio State law and the terms of the decree for dissolution of the marriage of the veteran and [redacted]. It is, therefore, contended that the proceeds of the life insurance policy should be paid into the veteran's estate. The appellee maintains, in essence, that she was the last designated beneficiary on the veteran's National Service Life Insurance policy, and, therefore, is legally entitled to the proceeds therefrom. DECISION OF THE BOARD The Board, in accordance with the provisions of 38 U.S.C.A. § 7104 (West 1991), has reviewed and considered all of the evidence and material of record in the veteran's insurance file. Based on its review of the relevant evidence in this matter, and for the following reasons and bases, it is the decision of the Board that the appellee was the last-named beneficiary of the veteran's National Service Life Insurance policy and the person entitled to the proceeds of this policy. FINDINGS OF FACT 1. All relevant evidence necessary for an equitable disposition of the appellant's appeal has been obtained by the originating agency. 2. In August 1948, the veteran designated the appellee, [redacted], his spouse at the time, as the sole principal beneficiary of his National Service Life Insurance policy; in November 1954 he again named her as his beneficiary. 3. [redacted] was the last beneficiary designation received from the veteran during his lifetime. 4. The record does not demonstrate that the veteran took affirmative action which would evidence an intent to change the beneficiary of his National Service Life Insurance policy to the appellant after 1954. CONCLUSION OF LAW The appellant is not the last-named beneficiary of the veteran's National Service Life Insurance policy. 38 U.S.C.A. § 1917 (West 1991); 38 C.F.R. § 8.47 (1993). REASONS AND BASES FOR FINDINGS AND CONCLUSION The appellant's claim is "well-grounded" within the meaning of 38 U.S.C.A. § 5107(a) (West 1991). That is, she has presented a claim that is plausible. The Board is also satisfied that all relevant facts have been properly developed and no further assistance to the appellant is required to comply with the duty to assist mandated by 38 U.S.C.A. § 5107(a). The underlying factual situation that existed at the time of the veteran's death on December [redacted] 1991, with respect to his National Service Life Insurance policy is not in dispute and is as follows: In August 1948 the veteran applied for reinstatement of his National Service Life Insurance policy, originally issued in 1942. In 1948 he also filed an application to convert the National Service Life Insurance policy from a five-year level premium term to a 20-pay life policy. On that application he indicated that his wife, [redacted], was to be the sole beneficiary. The 20-pay life policy was issued in the veteran's name. In a November 1954 letter to the VA, the veteran indicated that, in reviewing his insurance policy, he had found a note stating that he had never named any beneficiary. He stated that he would like to have his wife, [redacted], named as his beneficiary. In March 1981, a decree for the dissolution of the marriage of the veteran and [redacted] was entered in the State of Ohio. That decree approved a separation agreement entered into between the veteran and [redacted] which states that the agreement was a "full settlement and satisfaction and release of all claims, demands, rights, claims of alimony, dower, attorney's fees, inheritance and distribution of property of each other" that could exist at any time or be asserted thereafter. All rights and claims were waived by each in the estates of the other as well. The veteran subsequently married the appellant and remained married to her until his death on December [redacted] 1991. The appellant has been appointed as the administrator of the veteran's estate. The argument, as presented by the appellant's representative at hearing before a Member of the Board in November 1992, is, in substance, that the State of Ohio passed a law, OHIO REV. CODE ANN. § 1339.63 (B)(1) (Anderson 1993), in May 1990 which provides that, if a spouse has designated their spouse as a beneficiary on a life insurance policy, and their marriage is subsequently dissolved, such designated spouse shall be deemed to have predeceased the spouse who made the designation. The effect of the application of this statute on the appeal currently before the Board would be that [redacted] had predeceased the veteran. With no other beneficiary designated the insurance would then be paid to the appellant as the administrator of the veteran's estate to pass in accordance with laws governing its administration. Therefore, the appellant's argument is that Federal law does not, in this case, preempt the State law which would permit payment of the National Service Life Insurance policy proceeds to the veteran's estate. Also, Western & Southern Life Insurance Co. v. Hague, 140 N.E.2d 89 (Ohio Law Abs. 1956), has been cited as authority for the point that a separation agreement , properly worded, terminates the right of a wife to the proceeds of an insurance policy even though she was never removed as beneficiary of the policy. In support of the argument that Federal law does not preempt State law in the regulation of National Service Life Insurance policies, various United States Supreme Court cases have been cited. None of the cited cases involved the issue of National Service Life Insurance policies. In Jones v. Rath Packing Co., 430 U.S. 519 (1977), it was held that in fields traditionally occupied by States it will be assumed that the historic police powers of the States were not to be superseded by the Federal act unless that was the clear and manifest purpose of Congress. That case recognizes that Federal law as well as implementing regulations are preemptive and regulations have the force of law. Jones involved the regulation of commerce and food labeling. Erie Railroad Company v. Tompkins, 304 U.S. 64 (1938), is cited for the principle that the substantive law is to be applied in any case is state law unless the matter before the court is governed by the U.S. Constitution. Congress' intent in enacting the Federal statute must be ascertained in order to determine if the statute preempts State law. Preemption may be either expressed or implied, and is compelled when explicitly stated or implicitly contained in its structure and purpose. A State law requiring minimum mental health care benefits be provided to a State resident is not preempted by the National Labor Relations Act. Metropolitan Life Insurance Co. v. Massachusetts, 471 U.S. 724 (1985). F. M. C. Corp. v. Holliday, 498 U.S. 52, (1990), applied this same analysis in holding that the Employee Retirement Income Security Act preempted State law since its language clearly expressed this intent. What the above cases reflect is the analysis that courts have applied in determining whether or not State law is preempted by Federal law. They do not, however, address the specific issue of National Service Life Insurance. In the case of Stone v. United States, 272 F.2d 746 (1959), it was held that the beneficiary of a National Service Life Insurance policy, under certain circumstances, could effectively release his or her expectant interests in the proceeds through a property settlement agreement. It was held that a property settlement agreement could be sufficient to constitute an affirmative act to terminate the beneficiary's interest where substantial other evidence tended to demonstrate that the veteran believed that the agreement had terminated his former spouse's beneficiary status and the proceeds were payable to his estate, e.g., statements made by the veteran thereafter that his insurance was payable to his estate and a suicide note which was consistent with such a belief. There is considerable other authority that general provisions in a property settlement agreement are not sufficient to effect a National Service Life Insurance beneficiary change. See, for example, United States v. Donall, 466 F.2d 1246 (1972). These courts reasoned from the well-established rule that Federal law, not the divorce law of the various States or State court divorce decrees, control the resolution of contests involving National Service Life Insurance policies. The leading authority in the field is Wissner v. Wissner, 338 U.S. 655 (1950), which decided a contest for the proceeds of a National Service Life Insurance policy between the deceased soldier's parents, who had been named as beneficiaries, and the widow who claimed half the proceeds under the California Community Property Laws. The United States Supreme Court held that the Congress had spoken with force and clarity in directing that the proceeds belong to the named beneficiary and to no others. Although the Wissner case involved a State with community property laws, the principle of the supremacy of Federal law in National Service Life Insurance cases cannot reasonably be limited only to community property States. Donall. Federal regulation requires that a change of beneficiary, to be effective, must be made by notice in writing, signed by the insured and forwarded to the VA by the insured or his agent. Such requirements have not been strictly enforced by the courts, however. The courts have stated that such technicalities will be brushed aside in an effort to effectuate the manifest intent of the insured. However, the courts have decided that, in order to establish a change of beneficiary, there must be proof that the ensured intended to change the beneficiary and that the insured took some affirmative action to effectuate that intent. Collins v. United States, 161 F.2d 64 (1947). In the case at hand, it is not contended that the veteran took any active steps to change beneficiaries of his National Service Life Insurance policy after the judgment of divorce. Although courts have been quite liberal in recognizing that literal compliance with the requirements for written notice to the VA is not always necessary, the veteran in this case did nothing to accomplish a change of beneficiary under his National Service Life Insurance policy. In addition, the evidence does not demonstrate that he even believed that he had changed the beneficiary from his former spouse to someone, or to his estate. The property settlement agreement itself was nonspecific as to the National Service Life Insurance policy and is not a clear expression of the veteran's intent with respect to that policy. "There must be some overt act done to effectuate" the intent of the veteran to change the beneficiary. Young v. Derwinski, 2 Vet.App. 59, 61 (1992). Under the circumstances, the property settlement agreement and judgment of divorce are insufficient to remove [redacted] as the designated beneficiary and she is entitled to the proceeds of the veteran's National Service Life Insurance policy as Federal law preempts State law in this matter. ORDER As the appellant is not the last-named beneficiary of the veteran's National Service Life Insurance policy, she is not entitled to any of the proceeds of the policy. Accordingly, the appeal is denied. This decision constitutes the final administrative denial of the appellant's claim. WAYNE M. BRAEUER Member, Board of Veterans' Appeals The Board of Veterans' Appeals Administrative Procedures Improvement Act, Pub. L. No. 103-271, § 6, 108 Stat. 740, ___ (1994), permits a proceeding instituted before the Board to be assigned to an individual member of the Board for a determination. This proceeding has been assigned to an individual member of the Board. NOTICE OF APPELLATE RIGHTS: Under 38 U.S.C.A. § 7266 (West 1991), a decision of the Board of Veterans' Appeals granting less than the complete benefit, or benefits, sought on appeal is appealable to the United States Court of Veterans Appeals within 120 days from the date of mailing of notice of the decision, provided that a Notice of Disagreement concerning an issue which was before the Board was filed with the agency of original jurisdiction on or after November 18, 1988. Veterans' Judicial Review Act, Pub. L. No. 100-687, § 402 (1988). The date which appears on the face of this decision constitutes the date of mailing and the copy of this decision which you have received is your notice of the action taken on your appeal by the Board of Veterans' Appeals.