[00:00:02] Speaker 05:
The first argued case this morning is number 19, 1046, against the Department of Justice.

[00:00:10] Speaker 05:
Ms.

[00:00:10] Speaker 05:
Classy.

[00:00:15] Speaker 00:
Good morning, Your Honors.

[00:00:16] Speaker 00:
May it please the Court?

[00:00:17] Speaker 00:
My name is Susan Paul Classy.

[00:00:19] Speaker 00:
I'm counsel on behalf of the petitioner, Karen Lee.

[00:00:22] Speaker 00:
The agency erred in this case in denying Ms.

[00:00:26] Speaker 00:
Lee's claim.

[00:00:27] Speaker 00:
because the agency, number one, failed to acknowledge the constructive designation of Ms.

[00:00:32] Speaker 00:
Lee as a beneficiary under the life insurance policy.

[00:00:35] Speaker 00:
And number two, the agency improperly read additional requirements into the statute.

[00:00:43] Speaker 00:
So as a result, the agency's denial of the claim must be found to be arbitrary and capricious and should be reversed by this court.

[00:00:50] Speaker 06:
Did a court find that Ms.

[00:00:52] Speaker 06:
Lee was, in fact, a beneficiary under the life insurance policy?

[00:00:55] Speaker 00:
Your Honor, it's even better than a court finding.

[00:00:58] Speaker 00:
The insurance company and the other potential claimant to the policy agreed in a settlement agreement that Ms.

[00:01:07] Speaker 00:
Lee had.

[00:01:08] Speaker 06:
Well, that's a settlement agreement.

[00:01:10] Speaker 06:
That doesn't mean that she's a beneficiary.

[00:01:12] Speaker 06:
That just means they settled and she got a portion of the money.

[00:01:15] Speaker 06:
No court held that she was a designated beneficiary, as the benefits statute requires for purposes of giving her this particular death benefit.

[00:01:23] Speaker 00:
Number one, Your Honor, there was no need to have a court hearing, and Ms.

[00:01:28] Speaker 00:
Glee should not be penalized because her claim was so strong that the other claimant chose not to litigate it.

[00:01:36] Speaker 06:
And number two... Or perhaps the other claimant was just really nice and no longer had any contact with the guy.

[00:01:41] Speaker 06:
I mean, I got to tell you, if some random ex-boyfriend from 20 years ago left my name on a life insurance, and then it turns out he's got a wife and three kids down the road,

[00:01:49] Speaker 06:
I'd turn the money over to them, too.

[00:01:50] Speaker 06:
It's just the only right thing to do under the circumstances.

[00:01:53] Speaker 06:
I mean, you've got to sleep at night and be a good person.

[00:01:55] Speaker 06:
So it doesn't mean that she had a legal right, but maybe the other gal was sufficiently morally motivated to do the right thing.

[00:02:04] Speaker 00:
The insurance company acknowledged that Ms.

[00:02:08] Speaker 00:
Lee had a colorable claim to the proceeds.

[00:02:11] Speaker 00:
And in fact, the Bureau admitted

[00:02:19] Speaker 00:
excuse me, that Karen was a constructive life insurance beneficiary, but that it would refuse to acknowledge constructive life insurance beneficiaries because it was not provided for under the Act, which is just false.

[00:02:40] Speaker 00:
PSOB determination letter from 2012 states

[00:02:45] Speaker 00:
the agency stated that the insurance company, quote, chose to deem her as an eligible beneficiary for its policy.

[00:02:53] Speaker 00:
By making that choice and deeming her a beneficiary under the policy, they recognized Sheriff Collier's 2008 video will in which, in his own voice and his own face, telling the people most important to him what he wanted to happen to all of his benefits

[00:03:14] Speaker 00:
upon if he was to die in the line of duty.

[00:03:16] Speaker 00:
He designated that everything should go to Karen Lee.

[00:03:20] Speaker 06:
Yes, but that isn't the method of actually designating, according to the statute, this death benefit.

[00:03:26] Speaker 00:
Well, under the statute, Your Honor, there are two provisions under which a designee can be found to be an intended payee.

[00:03:34] Speaker 00:
So under Section A4A, it requires that the executed designation

[00:03:42] Speaker 00:
of a beneficiary for the public safety officer benefit be on file with the employer.

[00:03:48] Speaker 05:
However, under section... Isn't the real question, how much legal weight is to be given to the video?

[00:03:57] Speaker 00:
That is an appropriate question, Your Honor, but there's also legal weight to be given to the PSOB, I'm sorry, the San Diego County

[00:04:06] Speaker 00:
which also determined that she was the proper PSOB claimant.

[00:04:10] Speaker 05:
Well, the written record doesn't change the beneficiary.

[00:04:13] Speaker 05:
Isn't that right?

[00:04:14] Speaker 05:
The only record was this video of saying, these are my intentions.

[00:04:22] Speaker 00:
and the sworn testimony of various witnesses at the hearing who said that he believed he had taken care of everything.

[00:04:30] Speaker 06:
Well, just to be clear, that isn't the only record, right?

[00:04:33] Speaker 06:
The record also includes a written designation of the other lady as the beneficiary, correct?

[00:04:39] Speaker 05:
Correct.

[00:04:40] Speaker 06:
So there is an oral

[00:04:42] Speaker 06:
video recording of him or oral, I don't know if it's auditory or video, what is it?

[00:04:45] Speaker 06:
It's a video recording.

[00:04:46] Speaker 06:
Okay, there's a video recording of him saying what he wanted, but there's also a written document saying something that contradicts that, correct?

[00:04:53] Speaker 00:
The written document, that's correct, Your Honor, the written document was designated as a primary beneficiary, Sheriff Collier's mother,

[00:05:02] Speaker 00:
And then as a secondary beneficiary, yes, Ms.

[00:05:05] Speaker 00:
Stamp, his ex-girlfriend.

[00:05:08] Speaker 01:
That was the 1997 policy.

[00:05:11] Speaker 00:
Yes, Your Honor.

[00:05:11] Speaker 01:
And then he signed these reaffirmation documents as to what he had tested to in 1997.

[00:05:19] Speaker 01:
He did that in 2003, 2006, 2007.

[00:05:25] Speaker 01:
And so he kept on reaffirming it.

[00:05:28] Speaker 01:
There were opportunities, clearly, to change the beneficiary's name on his insurance policy.

[00:05:33] Speaker 01:
And he kept on just reaffirming the original designees in the 1997 document.

[00:05:41] Speaker 00:
Your Honor, that is correct.

[00:05:44] Speaker 00:
In 2006, he reaffirmed that same form.

[00:05:46] Speaker 00:
In 2007, as you know, the forms changed and the form no longer listed.

[00:05:51] Speaker 00:
the beneficiaries' needs.

[00:05:54] Speaker 01:
So on 2007... I guess our challenge here is that we're somewhat constrained as a court of law to follow the law.

[00:06:02] Speaker 01:
And the best we can do in terms of trying to break through what the policy actually says as the designee is to look at these pimental factors.

[00:06:16] Speaker 01:
And those, you know, the exception number three is did Mr. Collier do take the best efforts possible in order to actually make efforts leading up to actually changing the beneficiary name on his insurance policy

[00:06:38] Speaker 01:
before he passed away and there's nothing in this record that shows that he actually specifically took an action towards changing that insurance policy in some of the ways that we see in a couple decisions where there were efforts being made up until the time of death to change that name on the insurance policy and then it just wasn't able to be done in time.

[00:07:05] Speaker 00:
Your Honor, the important part about the Pimentel and Saunders cases is that California recognizes that a designation can be made constructively.

[00:07:16] Speaker 00:
And so the important thing is, and of course, any constructive designation is fact-specific.

[00:07:20] Speaker 00:
It must be.

[00:07:21] Speaker 00:
Here, the policy actually, the governing policy at Appendix 202 actually provides that the names of the beneficiary may be changed in writing, including

[00:07:36] Speaker 00:
either the form signed by the insured or a verification by the policyholder or employer of an electronic or telephonic designation made by the policyholder.

[00:07:45] Speaker 00:
Here, as you know, Sheriff Collier made the video will in 2008.

[00:07:51] Speaker 00:
The video will was made following his mother's death, who was the primary beneficiary.

[00:07:57] Speaker 00:
And just before, he proposed to his future fiancee, Ms.

[00:08:02] Speaker 00:
Lee.

[00:08:03] Speaker 00:
The timing of that video will is compelling.

[00:08:05] Speaker 00:
And it was so compelling that the insurance company found that they refused to pay the claim to the name that was just listed on this beneficiary form, the name that the agency hangs its hat on, this individual designation form.

[00:08:19] Speaker 00:
Going back to the statute, and you're right, we're constrained by the statute.

[00:08:24] Speaker 00:
And so looking at the statute again, comparing 4A to 4B of the PSOB Act, 4A requires there to be an executed designation on file.

[00:08:36] Speaker 00:
But that's for the PSOB designation.

[00:08:39] Speaker 00:
Looking at 4B, which talks about the life insurance designee,

[00:08:43] Speaker 00:
All that is required to be on file is a legal and valid policy, the life insurance policy.

[00:08:50] Speaker 00:
It does not talk about having to have a designation form on file.

[00:08:55] Speaker 00:
And if Congress had intended that to be the narrow read, it certainly could have put that into the statute because it did so immediately prior in Section 4A.

[00:09:05] Speaker 06:
Well, in 4B it says, to the surviving individual designated by the public safety officer to receive benefits under the most recent executed life insurance policy.

[00:09:16] Speaker 06:
So has Ms.

[00:09:17] Speaker 06:
Lee been designated by the public safety officer to receive benefits under the most recently executed life insurance policy?

[00:09:23] Speaker 00:
She has, Your Honor.

[00:09:24] Speaker 00:
She was designated, she was constructively designated by Sheriff Collier's video will of 2008.

[00:09:31] Speaker 06:
No, but just, oh, okay, so.

[00:09:34] Speaker 00:
Again, and to your point, which is a good one, is that the designation does not have to be this specific form that lists out the names.

[00:09:44] Speaker 00:
The designation and the bureau is required to look at California law to determine what the insurance law requires.

[00:09:53] Speaker 00:
And under California law, a constructive designation is legal and binding.

[00:09:58] Speaker 00:
And the cases are fact-specific.

[00:10:00] Speaker 00:
As you know, there was a video, Will, in 2008, where Sheriff Collier, in his own words, said that he wanted everything to go to Karen Lee and his death.

[00:10:10] Speaker 06:
So you think we should read A, as being limited to the executed designation of beneficiary form that goes along with the policy, but B, as broader and allowing for other forms of designation to be included?

[00:10:25] Speaker 00:
Yes, Your Honor, and because that is how insurance law is interpreted in California, which is what governs here.

[00:10:32] Speaker 01:
So what's the best case that you have that maybe a written statement or oral statement that's recorded where a person declares that they want their

[00:10:48] Speaker 01:
affairs to be handled a particular way and says they want this person to be designated in their life insurance policy, that that trumps what's actually written in the life insurance policy and the person makes no attempt to actually contact the life insurance company, that that's good enough to now cross out what's actually written on the life insurance policy.

[00:11:15] Speaker 00:
Your Honor, I would say a couple of Pimentel and Saunders are the two cases discussing this constructive designation in California.

[00:11:24] Speaker 00:
In Saunders, the insured wrote a letter stating that she wanted to change the beneficiary.

[00:11:31] Speaker 00:
However, when she received the forms from the insurance company that were required to change it, she never completed them and never turned them in.

[00:11:39] Speaker 00:
She received those forms twice, and she twice failed to turn them into the insurance company.

[00:11:46] Speaker 00:
The insurance company honored that as a constructive designation.

[00:11:49] Speaker 00:
And as I said, the cases are fact-specific.

[00:11:51] Speaker 00:
Those cases, the difference in those cases, and one of the problems with this analysis is that the cases are when there's a dispute and no one can agree on who is the designee.

[00:12:05] Speaker 00:
Here, Ms.

[00:12:06] Speaker 00:
Lee had such a strong case that the insurance company and the other person that had

[00:12:13] Speaker 00:
you know, several hundred thousand dollars at stake and walked away from it for just 4% of that settlement agreement.

[00:12:21] Speaker 00:
She walked away for essentially the cost of her time, walked away from this potential payout for her.

[00:12:28] Speaker 00:
Now, maybe she was just a good person.

[00:12:31] Speaker 00:
Maybe she recognized that Ms.

[00:12:33] Speaker 00:
Lee has, as the insurance company recognized, a colorable claim.

[00:12:37] Speaker 00:
And I'd like to...

[00:12:44] Speaker 00:
point out that the insurance company and the insurance company has now deemed Ms.

[00:12:51] Speaker 00:
Lee to be the constructive beneficiary.

[00:12:54] Speaker 00:
The other potential claimant with hundreds of thousands of dollars at stake walked away from it for just 4%.

[00:13:02] Speaker 00:
And our burden in this case is merely to show that it's more likely than not that Ms.

[00:13:09] Speaker 00:
Lee was a

[00:13:11] Speaker 00:
Designated beneficiary under the life insurance policy and that's a as you know a fifty percent plus one chance you have a Declaration under California law of some sort that would resolve this question of inheritance I Think the most important point about the California law is that it does allow for constructive

[00:13:36] Speaker 05:
Well, you keep saying California law is on her side.

[00:13:38] Speaker 05:
Then isn't there some mechanism for avoiding this big federal case?

[00:13:47] Speaker 00:
Well, the reason that we have the federal case is because the only agency, the only benefit that has been withheld from Ms.

[00:13:55] Speaker 00:
Lee is the public safety officer benefit.

[00:13:57] Speaker 05:
But you're saying they're not bound to follow California law of inheritance?

[00:14:04] Speaker 00:
I'm saying that the agency was bound to follow the California law of insurance destination.

[00:14:12] Speaker 00:
So there's the insurance policy provides for other methods to.

[00:14:20] Speaker 05:
Well, of course, this is a mess.

[00:14:22] Speaker 05:
The question is how to straighten it out.

[00:14:24] Speaker 05:
Let's hear from the other side.

[00:14:26] Speaker 05:
And you can work the system to turn the timer on.

[00:14:32] Speaker 05:
OK.

[00:14:32] Speaker 00:
Thank you, Your Honor.

[00:14:43] Speaker 05:
Okay, Mr. O. Good morning, your honor.

[00:14:46] Speaker 04:
May it please the court?

[00:14:48] Speaker 04:
In a lot of ways, this was a tough case for the BJA.

[00:14:53] Speaker 04:
To their credit, they get a lot of tough cases.

[00:14:56] Speaker 04:
And when you do get tough cases, you have to lean on the law, because the law is fair.

[00:15:00] Speaker 04:
The law is plain, it's consistent, it's applied equally to everybody.

[00:15:04] Speaker 04:
And so with that as the backdrop, I'd like to just kind of walk through exactly what the BJA did.

[00:15:09] Speaker 04:
Now, the way the statute works, section 10281, is that there's a descending order of distribution.

[00:15:16] Speaker 05:
Well, it's a simple statute.

[00:15:17] Speaker 05:
It doesn't contemplate the complexities that have here arisen of a premature death and all of the other things that, had he lived longer, might have been straightened out.

[00:15:28] Speaker 04:
Right, and so ultimately, we get to step four, which is the proxy for the designation of the PSOE benefit, where you can go to the designations under the life insurance policy on file, meaning who did the officer designate under that policy on file with his employer.

[00:15:45] Speaker 04:
So that's the question before the court here today.

[00:15:47] Speaker 04:
Now, we do have thrice of them.

[00:15:49] Speaker 06:
What benefits did she receive?

[00:15:51] Speaker 04:
She got the workers comp fund.

[00:15:56] Speaker 04:
Because she was listed as a dependent, she got the life insurance policy, I think, which was about $560,000, $70,000.

[00:16:02] Speaker 04:
She got his retirement benefits because she was expressly designated as a beneficiary of those benefits.

[00:16:09] Speaker 02:
To clarify, when you say she got the life insurance policy, that was through a settlement.

[00:16:13] Speaker 02:
That was through a settlement, correct.

[00:16:15] Speaker 02:
It wasn't directly from the life insurance policy proclaiming her to be a constructive benefit share.

[00:16:22] Speaker 02:
Correct.

[00:16:22] Speaker 04:
There was no legal pronouncement from a court.

[00:16:24] Speaker 04:
What might be helpful is 28 CFR 32.5, it's entitled Evidence, and it kind of provides the framework for how the BJA should assess evidentiary issues and include within that a sub-part that actually discusses determinations of state public agencies and

[00:16:42] Speaker 04:
I understand like a court, if through an interpreter action, might not be a state public agency.

[00:16:46] Speaker 04:
But even there, in that subpart, it says that determinations of state agencies are not binding on the BJA because the BJA is not absolved of its independent responsibility to implement its regulations and its statute to determine how the federal benefit should be distributed.

[00:17:02] Speaker 04:
So that's kind of the framework under which I think the BJA was functioning.

[00:17:06] Speaker 04:
They went down to subpart four.

[00:17:07] Speaker 04:
And they said, OK, so we have thrice-affirmed life insurance policy designations on file, 2003, 2006, 2007.

[00:17:15] Speaker 04:
They're pretty clear.

[00:17:17] Speaker 04:
The next question is through the regulation, 28 CFR 32.13.

[00:17:21] Speaker 04:
Is it legal?

[00:17:22] Speaker 04:
Is it valid?

[00:17:23] Speaker 04:
Is it revoked?

[00:17:24] Speaker 04:
Is it terminated in any way?

[00:17:26] Speaker 04:
That prescribes, that circumscribes the extent of what the BJA can do when they're analyzing life insurance.

[00:17:32] Speaker 06:
Well, you said, is it valid, the insurance company, through settlement?

[00:17:35] Speaker 06:
It has been deemed not to be valid.

[00:17:38] Speaker 06:
Because if it were valid, the insurance company couldn't pay the money out to someone else.

[00:17:42] Speaker 04:
And this is where I think the letter is important, because I don't think the insurance company ever made any legal pronouncement.

[00:17:46] Speaker 04:
What they said is, you have 14 days to negotiate a settlement.

[00:17:50] Speaker 04:
Whatever you agree upon, and I'm paraphrasing here.

[00:17:52] Speaker 04:
It's in the record.

[00:17:54] Speaker 04:
But whatever you agree upon, we'll approve as long as we're not subject to double liability.

[00:17:59] Speaker 06:
Where is that letter?

[00:18:00] Speaker 06:
She said it's in the record.

[00:18:01] Speaker 06:
Where is it?

[00:18:03] Speaker 06:
And just to be clear, did you finish your list of benefits that she got, or were there other things that I'm not aware of?

[00:18:09] Speaker 04:
I think that's it, Judge.

[00:18:10] Speaker 06:
And how much is at stake in this benefit?

[00:18:13] Speaker 04:
Approximately $300,000.

[00:18:14] Speaker 04:
So it's statutorily set at $250,000.

[00:18:17] Speaker 04:
There's a subpart that allows for a CPI adjustment cost of consumer price index adjustment.

[00:18:23] Speaker 06:
OK, so where is that insurance letter?

[00:18:25] Speaker 06:
Do you know?

[00:18:26] Speaker 04:
Not off the top of my head, unfortunately, Judge.

[00:18:30] Speaker 06:
I think it might be on page 212.

[00:18:35] Speaker 04:
I believe that's right.

[00:18:56] Speaker 03:
I don't think that's it.

[00:18:58] Speaker 06:
That's just the notification to her to file a claim.

[00:19:01] Speaker 03:
I apologize.

[00:19:03] Speaker 03:
I don't know where it is off the top of my head.

[00:19:04] Speaker 06:
Might be 224.

[00:19:14] Speaker 04:
Yes, it is 224.

[00:19:22] Speaker 06:
So I think the part that I was referring to is the fourth paragraph on 224 Well it says it appears the estate and or you may have a colorable claim to the life proceeds So that's why they didn't pay out

[00:19:40] Speaker 04:
Right, and that's what they acknowledge.

[00:19:43] Speaker 04:
There are two people who are making a claim.

[00:19:45] Speaker 04:
We're not going to make a determination.

[00:19:47] Speaker 06:
No, that's not correct.

[00:19:48] Speaker 06:
They didn't say we're not going to make a determination.

[00:19:50] Speaker 06:
It says you may have a colorable claim.

[00:19:52] Speaker 06:
I assure you, not all claims are colorable.

[00:19:54] Speaker 04:
Oh, well, on the sixth paragraph, they actually say, the standard is an innocent stakeholder and is unable to make a determination of who is entitled to these life insurance proceeds.

[00:20:03] Speaker 06:
Yes, but it decided it was at least a colorable claim.

[00:20:06] Speaker 04:
Correct.

[00:20:07] Speaker 06:
They couldn't ultimately resolve it.

[00:20:08] Speaker 06:
But I'm sure they get a lot of claims that have no basis.

[00:20:13] Speaker 04:
No, and I'm sure that's right, precisely.

[00:20:15] Speaker 04:
But I think this is where the BJA actually did consider the video.

[00:20:18] Speaker 04:
And they did consider the way that the policy was distributed.

[00:20:21] Speaker 04:
And that's where it becomes a substantial evidence-type determination, because they relied on the thrice-affirmed designations on file with Deputy Collier's employer.

[00:20:30] Speaker 04:
And that's what they found compelling in this case.

[00:20:32] Speaker 06:
So do you agree that there's a statutory difference between A and B, that A attend 281, A keys in on the executed designation in the life insurance, executed designation, and then B doesn't?

[00:20:50] Speaker 06:
She's distinguishing language between A and B for 10281 of the statute and saying under B, it isn't required

[00:20:58] Speaker 06:
that this be on the executed form.

[00:21:01] Speaker 06:
It's a holistic approach, looking at all the evidence.

[00:21:06] Speaker 04:
Both subpart A and subpart B use the same language.

[00:21:10] Speaker 04:
Most recently executed life insurance policy.

[00:21:14] Speaker 04:
And then the other one, subpart A, uses most recently executed designation of the beneficiary.

[00:21:18] Speaker 04:
And both use the phrasing on file at the time of death.

[00:21:23] Speaker 06:
So do you think in both cases it's the document and only the document?

[00:21:27] Speaker 04:
I think the extent of the BJA's inquiry beyond the document is to determine whether there's any reason to question whether the designations themselves are invalid, illegal, revoked, or terminated in some way.

[00:21:45] Speaker 04:
That's what would prescribe their analysis, and that's in 28 CFRs.

[00:21:47] Speaker 06:
So is it your belief that the BJA actually has no discretion whatsoever to make an assessment beyond simply

[00:21:58] Speaker 06:
whether or not this document was sort of legally entered.

[00:22:00] Speaker 06:
And by valid, I assume you mean, you know, was it signed by him?

[00:22:02] Speaker 06:
Was it witnessed by whoever needed to witness it?

[00:22:04] Speaker 06:
Things like that, like these formal formalities, as opposed to, you know, did he intend to change the designation?

[00:22:12] Speaker 06:
I mean, what if this were Saunders?

[00:22:14] Speaker 06:
What if this were, or the other case, I can't remember the name of it, but where they were in the process of attempting to change the form, had actually filled out the change, just hadn't submitted it yet?

[00:22:24] Speaker 06:
Does the BJA have discretion

[00:22:28] Speaker 06:
in cases to deviate from the statutory language and say, we're not going to use the on file executed beneficiary because there's this other one who was in the process of changing.

[00:22:40] Speaker 06:
And while it's technically not on file, we're nonetheless going to recognize it.

[00:22:45] Speaker 04:
They can actually look beyond the instrument itself.

[00:22:48] Speaker 04:
But again, that's prescribed by regulation.

[00:22:50] Speaker 04:
So for example, let's use this case, because this is precisely what the BJA did.

[00:22:54] Speaker 04:
They got the video.

[00:22:55] Speaker 04:
They assessed the video.

[00:22:56] Speaker 04:
And they said, well, is there anything about this video that would undermine the legality, validity, or suggest that the written, the thrice-affirmed designations on file are revoked or terminated in some way?

[00:23:07] Speaker 04:
They weighed the evidence.

[00:23:08] Speaker 06:
And they ultimately- How could they conclude in light of the video that this wasn't a video revocation?

[00:23:14] Speaker 06:
I can imagine they could say the revocation has to be in writing.

[00:23:19] Speaker 06:
But the video seems pretty clear that all benefits are supposed to go to Ms.

[00:23:24] Speaker 06:
Lee.

[00:23:24] Speaker 04:
Um, it's a pretty generalized statement.

[00:23:27] Speaker 04:
It was, um, my entire estate and everything like that.

[00:23:31] Speaker 04:
Um, and so again, it's a generalized utterance regarding, you know, the distribution of some part of his estate at some perspective point in the future.

[00:23:38] Speaker 04:
And it doesn't even offer designation language per se.

[00:23:42] Speaker 04:
And I think even under California, if you go there, requires something much stronger than that.

[00:23:46] Speaker 05:
Are you saying they have the absolute right to say, I'm going to ignore the video?

[00:23:51] Speaker 04:
I don't think so, Your Honor.

[00:23:52] Speaker 05:
And they didn't do that.

[00:23:54] Speaker 05:
Well, they ignored it.

[00:23:56] Speaker 05:
They didn't apply it.

[00:23:58] Speaker 05:
They said, no, we're going to stick with the earlier designation.

[00:24:02] Speaker 04:
They did.

[00:24:02] Speaker 04:
And that was a wait issue, right?

[00:24:04] Speaker 04:
I mean, they acknowledged that the video existed.

[00:24:07] Speaker 04:
They analyzed the video.

[00:24:08] Speaker 04:
And if you look at the director's determination, you see what the director did.

[00:24:11] Speaker 04:
The director

[00:24:12] Speaker 04:
mentioned the statute, referred to the regulation, and said, is there anything about this video that undermines the thrice-affirmed designations on file with the employer, the most recent coming executed within the benefits period just a couple years before Deputy Collier's death?

[00:24:25] Speaker 05:
This isn't a matter of federal law.

[00:24:27] Speaker 05:
Isn't this where the law of inheritance needs to be applied as to whether a subsequent, more recent statement, the existence of which is not challenged,

[00:24:42] Speaker 05:
can override the prior designation.

[00:24:45] Speaker 04:
I think it's first a question of federal law.

[00:24:47] Speaker 05:
And you can go into- What federal law applies this rule of inheritance?

[00:24:52] Speaker 04:
It's not a rule of inheritance, Your Honor.

[00:24:54] Speaker 04:
It's a rule regarding the life insurance beneficiary designations.

[00:24:58] Speaker 04:
And it's prescribed by statute.

[00:24:59] Speaker 05:
Why isn't it a law of inheritance?

[00:25:00] Speaker 05:
We're talking about inheritance.

[00:25:02] Speaker 05:
We know that there are strange laws of inheritance that

[00:25:09] Speaker 05:
override how one might say, this is the law of contracts if you go to the corpus juris on contracts.

[00:25:17] Speaker 04:
And I'll concede I'm not a trusted estates lawyer.

[00:25:19] Speaker 04:
But what I do understand is that the life insurance benefits are actually distributed outside the estate.

[00:25:24] Speaker 04:
They're actually, it's a matter of contract.

[00:25:27] Speaker 05:
So normally in an estate you'd- But how do you resolve the dispute?

[00:25:30] Speaker 05:
Nothing has been paid.

[00:25:31] Speaker 05:
It's not right.

[00:25:32] Speaker 05:
It was intended.

[00:25:34] Speaker 05:
that in circumstances such as this, those aggrieved would be compensated.

[00:25:40] Speaker 05:
Instead, you're saying because they argue, nobody gets compensated?

[00:25:44] Speaker 04:
I don't think nobody gets compensated.

[00:25:45] Speaker 04:
You have to be eligible.

[00:25:46] Speaker 04:
I mean, that's what the statute requires, is that you have to be a statutorily designated beneficiary under 10.

[00:25:51] Speaker 04:
But not under this statute?

[00:25:53] Speaker 04:
Section 1020.

[00:25:54] Speaker 04:
Under this statute?

[00:25:55] Speaker 04:
Under this statute, correct.

[00:25:57] Speaker 04:
And that's what governs in this case, because it has a- What would they do?

[00:25:59] Speaker 05:
They split it into thirds?

[00:26:03] Speaker 04:
I'm sorry, Your Honor.

[00:26:04] Speaker 04:
I'm not sure I heard the question.

[00:26:07] Speaker 05:
Well, they said in this document we're looking at that there are three claimants.

[00:26:12] Speaker 04:
Isn't that right?

[00:26:15] Speaker 04:
There are the two listed designees under the most recently executed life insurance policy on file.

[00:26:20] Speaker 04:
That would be his mother and the girlfriend.

[00:26:24] Speaker 01:
The decision we're reviewing, the

[00:26:27] Speaker 01:
The fact finder went through Pimentel and analyzed that.

[00:26:32] Speaker 01:
It did.

[00:26:32] Speaker 01:
Correct.

[00:26:33] Speaker 01:
So it actually did some weighing of the evidence under California state law and trying to understand whether mislead could be classified under one of the Pimentel exceptions.

[00:26:45] Speaker 04:
Correct.

[00:26:45] Speaker 04:
Correct, Judge Chen.

[00:26:47] Speaker 01:
So state law was being analyzed in this case?

[00:26:50] Speaker 04:
It was.

[00:26:50] Speaker 04:
It was, Your Honor.

[00:26:51] Speaker 04:
And I think that's what the BJA did.

[00:26:53] Speaker 04:
It did analyze the question under state law regarding whether, number one, because it's a multi-step process.

[00:26:59] Speaker 04:
If there's no question under the statute and the statute is clear in its face, then you don't have to kind of do this whole analysis.

[00:27:05] Speaker 04:
You can go to the next part of the statute.

[00:27:06] Speaker 04:
The next order of distribution would be the parents.

[00:27:08] Speaker 04:
But if there is a question, how far you can go into state law is prescribed by regulation.

[00:27:13] Speaker 04:
That's 28 CFR 32.13.

[00:27:15] Speaker 04:
And what that says is check the validity, check the legality, check whether it's been revoked or terminated in any way.

[00:27:21] Speaker 04:
So if you give Ms.

[00:27:23] Speaker 04:
Lee her best argument, which is that this 2008 video, and that would be an evidentiary weight issue,

[00:27:27] Speaker 04:
that the director determined didn't weigh in her favor.

[00:27:31] Speaker 04:
But if you give her the benefit of the doubt and say, OK, that 2008 video qualifies as revocation, then the only question then is, OK, if the policy on file, the designations on file are revoked, you should go to the next order of distribution under the statute, which would be the parents.

[00:27:47] Speaker 04:
Because you could conceivably think of a situation where you get multiple claimants.

[00:27:51] Speaker 04:
And the BJA has to deal with these issues all the time, where there are competing claimants.

[00:27:54] Speaker 04:
And there could be a beneficiary waiting at the next step.

[00:27:58] Speaker 06:
In the video transcript, it seems to me, I will say, at a minimum, it lacked the indicia of formality that you would normally expect for a revocation, because it says,

[00:28:10] Speaker 06:
It's clearly a jokey exchange between friends.

[00:28:14] Speaker 06:
I'll characterize it that way.

[00:28:16] Speaker 06:
But in any event, what he says precisely that I think is what's being relied on here is what he says, can you explain to them what you understand you've done here with your own separate property?

[00:28:28] Speaker 06:
Now, is his death benefit part of his separate property?

[00:28:33] Speaker 06:
Is that part of his property, do you think?

[00:28:36] Speaker 04:
And Ms.

[00:28:37] Speaker 04:
Lee does make that argument.

[00:28:38] Speaker 04:
I don't think it's specific enough.

[00:28:40] Speaker 06:
Okay, so then he goes on to say, okay, my understanding is that one third interest I have in the house upon my death or incapacitation reverts back.

[00:28:47] Speaker 06:
Control back to those two.

[00:28:49] Speaker 06:
So that's not mislead, right?

[00:28:50] Speaker 03:
Right.

[00:28:51] Speaker 06:
OK.

[00:28:51] Speaker 06:
Then he says, but all other assets, savings, everything like that will be separate and go to Karen.

[00:28:57] Speaker 06:
So I guess the BJA said this.

[00:29:01] Speaker 06:
Did they say this isn't really an asset or savings or something like that?

[00:29:04] Speaker 06:
This amounts to him giving her his real property, but doesn't amount to a revocation of his designation.

[00:29:11] Speaker 06:
the BJA's conclusion?

[00:29:13] Speaker 04:
I think the BJA's conclusion was, number one, it seems to pronounce an understanding of a state of affairs rather than bequesting anything.

[00:29:25] Speaker 04:
It doesn't have the formal markers of something where you are making a legal determination as to where things like this would go.

[00:29:32] Speaker 04:
But to the second point, their second point was, I think, your point, Judge Moore, which is,

[00:29:37] Speaker 04:
You know, what does asset savings, everything like that mean?

[00:29:40] Speaker 04:
That's pretty generalized.

[00:29:41] Speaker 04:
So it's kind of uncertainly implied within that statement.

[00:29:44] Speaker 04:
I think the third part was the context of when this statement was made.

[00:29:47] Speaker 04:
Deputy Collier had just inherited property from his deceased mother.

[00:29:52] Speaker 04:
They were making a video regarding how that property should be distributed upon Deputy Collier's death.

[00:29:57] Speaker 04:
And this was kind of an add-on statement in addition to how the property that he had just inherited should be distributed.

[00:30:03] Speaker 04:
So it didn't really have the markers of what would qualify as a formal designation under the most recently executed life insurance policy on file.

[00:30:11] Speaker 04:
I think the extra point to add to that, and this is again something that the BJ recognized, was this was then shelved away somewhere in a personal file and no attempt was made to deliver it to the insurance company, to the employer.

[00:30:24] Speaker 04:
It was never dropped in the mail.

[00:30:25] Speaker 04:
And even under California law, if you get to that part of the analysis, under California law, there's no case, and both parties acknowledge there is no case that would suggest that would be enough.

[00:30:34] Speaker 04:
We cited a number of cases where, even under California law, if you get there, that California courts have

[00:30:40] Speaker 04:
sometimes been a little bit more equitable, I think, and tried to stretch the law a little bit.

[00:30:46] Speaker 04:
But even there, you see that there are limits on how far that law could stretch.

[00:30:49] Speaker 05:
So you're saying more likely than not that this sheriff intended that his friend of 20 years ago would be the beneficiary rather than his current fiancee?

[00:31:03] Speaker 04:
Based upon, right.

[00:31:04] Speaker 05:
You're saying more likely than not that was his intention?

[00:31:07] Speaker 05:
I didn't see a review, a declaration that that was his intention.

[00:31:12] Speaker 05:
What I did see was the concern about all the messy documentation.

[00:31:18] Speaker 04:
Regarding the county's files, Your Honor?

[00:31:19] Speaker 05:
Well, not having changed the...

[00:31:21] Speaker 05:
his written designation.

[00:31:22] Speaker 04:
Yeah, and I think that's where it does get tricky, Your Honor, because you have thrice-affirmed designations the most recent.

[00:31:27] Speaker 05:
But he did change it.

[00:31:28] Speaker 05:
He did change it orally and by video.

[00:31:31] Speaker 05:
And my concern is who is the decision-maker, who is the finder of fact as to the decedent's intention

[00:31:42] Speaker 05:
assuming that state law, at least, gives some kind of controlling view to what the actual intention was?

[00:31:53] Speaker 04:
Again, I think this is where 28 CFR 32.5 would govern the director's determination, because that's what indicates what type of weight and what type of analysis the director must do before coming to fact findings or conclusions of law.

[00:32:08] Speaker 04:
And here, the director did weigh the evidence and considered all the facts.

[00:32:10] Speaker 04:
Now here, we don't have a legal pronouncement.

[00:32:12] Speaker 04:
But he did analyze the evidence.

[00:32:14] Speaker 04:
He did consider all the evidence that was before him.

[00:32:17] Speaker 04:
He expressly mentions the video.

[00:32:19] Speaker 04:
He expressly mentions the testimony.

[00:32:20] Speaker 04:
And ultimately, he finds that these thrice-affirmed designations on file with his employer repeatedly reaffirming the designations.

[00:32:28] Speaker 04:
It's unequivocal.

[00:32:29] Speaker 04:
It's valid.

[00:32:30] Speaker 04:
It's legal.

[00:32:30] Speaker 04:
It's unrevoked.

[00:32:31] Speaker 04:
It's unterminated.

[00:32:32] Speaker 04:
pursuant to the regulation and pursuant to the law, the director had to reach the outcome that he did.

[00:32:37] Speaker 04:
And he wasn't unsympathetic to what the result would be, because on the other side of this, there is a real person that this will affect.

[00:32:42] Speaker 04:
So he acknowledged, you know, we value Deputy Collier's sacrifice.

[00:32:47] Speaker 04:
It looks like you had a close and committed relationship, but the law prescribes what we can do.

[00:32:51] Speaker 04:
That's what Congress

[00:32:52] Speaker 04:
That's how Congress circumscribed our authority.

[00:32:55] Speaker 04:
And we have to do this under the prevailing law.

[00:32:57] Speaker 04:
We can't do this, make it a free-for-all, to reach an outcome that we think is right when it's not tethered to the law.

[00:33:03] Speaker 04:
The law anchors the decisions.

[00:33:05] Speaker 04:
And when the law anchors the decision, it's fair.

[00:33:07] Speaker 04:
For these reasons, we respectfully request the court affirm the judgment of the BJA.

[00:33:10] Speaker 05:
Thank you.

[00:33:13] Speaker 05:
May I have five minutes of rebuttal?

[00:33:21] Speaker 00:
Your Honors, what the BJA is trying to do here is to, unsupported by the act, elevate form over substance.

[00:33:31] Speaker 00:
And when I say it's unsupported by the act, again, let's go back to the act, which has two different prescriptions of what's to happen under 4A versus 4B.

[00:33:42] Speaker 00:
And to the extent that there is some equivocation that an executed designation form is somehow the same as an executed insurance policy, that's simply not the case.

[00:33:53] Speaker 00:
And how do we know that?

[00:33:54] Speaker 00:
If we go to the implementing regulations.

[00:33:56] Speaker 00:
In the implementing regulations under Section 3213, the definition

[00:34:03] Speaker 00:
of a designated beneficiary is provided.

[00:34:07] Speaker 00:
So a beneficiary of a life insurance policy is designated as a beneficiary of such officer as of such date only if the designation is, as of that date, legal and valid.

[00:34:20] Speaker 00:
Now turning to the other definition of a designation on file.

[00:34:25] Speaker 00:
So under 4B, there's a separate definition in the regulations.

[00:34:30] Speaker 00:
that talks about what it means to be a designation on file, which is required for 4A.

[00:34:36] Speaker 00:
Under 4A, a designation on file is defined as a designation of a beneficiary under the Act 34 USC 10228

[00:34:45] Speaker 00:
A4A is on file.

[00:34:48] Speaker 00:
If Congress had intended for the designation of the life insurance policy to also be on file with the valid policy, it would have clearly said so, and the implementing regulations could have made that definition clear.

[00:35:04] Speaker 00:
It did not.

[00:35:05] Speaker 00:
What is clear is that it simply must go to the designated beneficiary.

[00:35:12] Speaker 00:
And here, the designated beneficiary was agreed by the insurance company, the other claimant who walked away for just 4% of the life insurance policy, and who made no claim for the PSOB benefits.

[00:35:25] Speaker 00:
This is not a free-for-all.

[00:35:27] Speaker 00:
There are not multiple competing claimants here.

[00:35:29] Speaker 00:
There is one claimant because everyone, except for the BJA, determined that it is Ms.

[00:35:36] Speaker 00:
Lee who is the constructive designee of the policy.

[00:35:40] Speaker 00:
And to the extent that there is some confusion that maybe Ms.

[00:35:46] Speaker 00:
Stamp, this ex-girlfriend from years and years ago, who was the second beneficiary on an old stale designation form,

[00:35:54] Speaker 00:
to the extent that there is concern that she is somehow now, nine years later, going to come out of the woodworks and seek some additional payment from the Bureau, there is even a provision in Section 4B that provides for the benefit to be split in equal shares to the extent there are more than one individual designated in the policy.

[00:36:20] Speaker 00:
At the very least, Ms.

[00:36:22] Speaker 00:
Lee is designated as a beneficiary through the video will, through the other information that we have and that was presented both to the insurance company and to the BJA.

[00:36:33] Speaker 00:
She was not just some random person.

[00:36:35] Speaker 00:
This was his fiance.

[00:36:37] Speaker 00:
They were scheduled to be married in three months.

[00:36:40] Speaker 00:
They had the wedding planned.

[00:36:42] Speaker 00:
Everything was planned.

[00:36:44] Speaker 00:
They had only waited for that date because it was Sheriff Collier's 40th birthday.

[00:36:49] Speaker 00:
And he didn't make it because he was serving the citizens and died in line of duty.

[00:36:56] Speaker 00:
They should not be penalized because everyone agreed.

[00:36:59] Speaker 00:
Under the Bureau's reading, under the Bureau's interpretation that this form is the only thing that governs, consider whether

[00:37:09] Speaker 00:
The parties had not agreed.

[00:37:10] Speaker 00:
And the parties had gone to court and taken up extended court resources and gone to an interpleader.

[00:37:15] Speaker 00:
I'm sorry, Your Honor.

[00:37:16] Speaker 06:
I'm trying to understand.

[00:37:17] Speaker 06:
Are you saying that if they had actually gotten married, it would have made a difference?

[00:37:20] Speaker 06:
Because under the statute, it looks like it goes to these designated beneficiaries.

[00:37:25] Speaker 06:
And then if not a designated beneficiary, to a parent.

[00:37:28] Speaker 06:
It's funny.

[00:37:29] Speaker 06:
It doesn't say to a spouse.

[00:37:30] Speaker 00:
The spouse is higher up on the waterfront, Your Honor.

[00:37:32] Speaker 06:
Oh, is it?

[00:37:32] Speaker 06:
OK.

[00:37:32] Speaker 06:
Yes.

[00:37:32] Speaker 06:
That's what I was trying to figure out.

[00:37:34] Speaker 06:
Yes.

[00:37:34] Speaker ?:
OK.

[00:37:35] Speaker 00:
And there are no parents that survived him either.

[00:37:38] Speaker 00:
So this claim would go unpaid.

[00:37:43] Speaker 06:
So then it would go to the spouse, even if there was a designated beneficiary and a life insurance that was someone else, if they had been married?

[00:37:53] Speaker 00:
The spouse is first, yes, Your Honor.

[00:37:55] Speaker 06:
And how come you didn't argue that they, under California law, were common law married?

[00:38:01] Speaker 00:
The common law marriage was inapplicable in this case.

[00:38:05] Speaker 00:
But even assuming that the parties had not agreed and everyone had not recognized Ms.

[00:38:11] Speaker 00:
Lee's claim, if they had gone to an interpleader and expended court resources and waited for a judgment, this requirement that, you know, you can only give it to the person on this form, who knows if the Bureau would even have honored the interpleader judgment?

[00:38:27] Speaker 00:
They're saying that the only thing that matters is this form.

[00:38:30] Speaker 00:
And that's simply not supported by the act, the regulations, or the record in this case.

[00:38:36] Speaker 00:
We ask that you reverse the denial of the claim.

[00:38:39] Speaker 05:
OK.

[00:38:40] Speaker 05:
Thank you.

[00:38:40] Speaker 05:
And thank you both.

[00:38:41] Speaker 05:
The case is taken under submission.

[00:38:43] Speaker 05:
Thank you.