[Federal Register Volume 76, Number 239 (Tuesday, December 13, 2011)]
[Proposed Rules]
[Pages 77455-77457]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-31870]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 9

RIN 2900-AN40


Servicemembers' Group Life Insurance and Veterans' Group Life 
Insurance--Slayer's Rule Exclusion

AGENCY: Department of Veterans Affairs.

ACTION: Proposed rule.

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SUMMARY: The Department of Veterans Affairs (``VA'') proposes to amend 
its regulations governing Servicemembers' Group Life Insurance 
(``SGLI'') and Veterans' Group Life Insurance (``VGLI'') to prohibit 
payment of insurance proceeds payable because of the death of a person 
whose life was insured under SGLI or VGLI (``decedent'') or payment of 
a SGLI Traumatic Injury Protection (``TSGLI'') benefit to a person who 
is convicted of intentionally killing the decedent or determined in a 
civil proceeding to have intentionally killed the decedent 
(``slayer''); a member of the slayer's family who is not related to the 
decedent by blood, legal adoption, or marriage; and a member of the 
slayer's family who is related to the decedent by blood, legal 
adoption, or marriage and who is convicted of a crime involving the 
intentional killing of the decedent or found in a civil proceeding to 
have been involved in the intentional killing of the decedent.

DATES: Comments must be received by VA on or before February 13, 2012.

ADDRESSES: Written comments may be submitted through http://www.Regulations.gov; by mail or hand delivery to Director, Regulations 
Management (02REG), Department of Veterans Affairs, 810 Vermont Ave. 
NW., Room 1068, Washington, DC 20420; or by fax to (202) 273-9026. 
Comments should indicate that they are submitted in response to ``RIN 
2900-AN40--Servicemembers' Group Life Insurance and Veterans' Group 
Life Insurance--Slayer's Rule Exclusion.'' Copies of comments received 
will be available for public inspection in the Office of Regulation 
Policy and Management, Room 1063B, between the hours of 8 a.m. and 4:30 
p.m., Monday through Friday (except holidays). Please call (202) 461-
4902 for an appointment. (This is not a toll-free number.) In addition, 
during the comment period, comments may be viewed online through the 
Federal Docket Management System (FDMS) at http://www.Regulations.gov.

FOR FURTHER INFORMATION CONTACT: Monica Keitt, Attorney/Advisor, 
Department of Veterans Affairs Regional Office and Insurance Center 
(310/290B), 5000 Wissahickon Avenue, P.O. Box 8079, Philadelphia, PA 
19101, (215) 842-2000, ext. 2905. (This is not a toll-free number.)

SUPPLEMENTARY INFORMATION: VA proposes to amend 38 CFR 9.5 to prohibit 
payment of the proceeds of SGLI or VGLI or a TSGLI benefit to: (1) A 
person who is convicted of intentionally killing the decedent or 
determined in a civil proceeding to have intentionally killed the 
decedent; (2) a member of the slayer's family who is not related to the 
decedent by blood, legal adoption, or marriage; and (3) a member of the 
slayer's family who is related to the decedent by blood, legal 
adoption, or marriage and is convicted of a crime involving the 
intentional killing of the decedent or determined in a civil proceeding 
to have been involved in the intentional killing of the decedent.
    A Servicemember insured under SGLI or a Veteran insured under VGLI 
has the right to designate the beneficiary or beneficiaries of the 
policy. See 38 U.S.C. 1970(a). Although proceeds of SGLI in force on an 
insurable dependent of a Servicemember on the date of the dependent's 
death are paid to the Servicemember, if the Servicemember dies before 
payment can be made, the proceeds are payable to the person or persons 
entitled to receive the proceeds of the insurance on the 
Servicemember's life. 38 U.S.C. 1970(i). If a Servicemember or Veteran 
does not designate a beneficiary, no designated beneficiary survives 
the decedent, or payments are to be made by law, SGLI and VGLI proceeds 
are paid in the following order: (1) To the decedent's surviving 
spouse; (2) to the decedent's children and their descendants in equal 
shares; (3) to the decedent's parents in equal shares or to the 
survivor of them; (4) to the duly appointed executor or administrator 
of the decedent's estate; or (5) to other next of kin of the decedent. 
38 U.S.C. 1970(a). Proceeds of TSGLI are also paid in accordance with 
this order of precedence if an insured Servicemember entitled to a 
TSGLI payment dies before payment is made. 38 U.S.C. 1980A(g)(2).
    The statutes governing SGLI, VGLI, and TSGLI are silent with regard 
to whether a beneficiary who killed the decedent or a family member of 
such a beneficiary may receive the proceeds of SGLI or VGLI or the 
TSGLI payment. The Federal common-law slayer's rule is a public policy 
that generally precludes killers from benefitting from their victims' 
deaths. Courts have applied the slayer's rule in resolving disputes 
over entitlement to SGLI proceeds. See Prudential Ins. Co. of Am. v. 
Athmer, 178 F.3d 473, 476 (7th Cir. 1999) (slayer's rule ``is 
undoubtedly an implicit provision of the Servicemen's Group Life 
Insurance Act of 1965'') (that Act created what is now known as SGLI); 
Prudential Ins. Co. of Am. v. Tolbert, 320 F. Supp. 2d 1378, 1380-81 
(S.D. Ga. 2004). VA proposes to fill the gap in the statutes governing 
SGLI, VGLI, and TSGLI by adding paragraph (e) to 38 CFR 9.5 to codify 
the applicability of the slayer's rule to these VA insurance programs. 
See 38 CFR 3.11 (barring person who ``has intentionally and wrongfully 
caused the death of another person'' from entitlement to VA pension, 
compensation, or dependency and indemnity compensation by reason of 
such death); Lofton v. West, 198 F.3d 846, 850 (Fed. Cir. 1999) 
(finding Sec.  3.11 to be ``an entirely reasonable gap-filling 
measure''). New paragraphs (e)(1) and (e)(2)(i) would bar a person who 
is convicted of intentionally killing a decedent or determined in a 
civil proceeding to have intentionally killed the decedent entitlement 
to the SGLI or

[[Page 77456]]

VGLI proceeds or a TSGLI payment. Rather than deal with different types 
of unlawful homicide and the unavoidable variance among different 
jurisdictions, we have chosen to generally designate the unlawful 
homicide that triggers the slayer's rule as ``intentionally killing'' 
the decedent. Jones v. Prudential Life Ins. Co., 814 F. Supp. 500, 501 
(W.D. Va. 1993) (`` `The true test [of whether the slayer's rule 
applies] is whether the beneficiary intentionally took the life of the 
insured.' '') (quoting Jackson v. Prudential Ins. Co. of Am., 254 A.2d 
141, 147 (N.J. 1969)).
    Some jurisdictions also disqualify members of a slayer's family, 
other than individuals also related to the victim, from receiving the 
proceeds of an insurance policy. This is known as the extended slayer's 
rule and has been applied to SGLI by a Federal court. Tolbert, 320 F. 
Supp. 2d at 1380, 1381-82. VA proposes to incorporate the extended 
slayer's rule in new Sec.  9.5(e)(1) and (2)(ii) and (iii) ``to prevent 
killers from receiving even the `indirect benefits' of their 
wrongdoing'' by receiving or inheriting, through relatives, the 
financial benefits of the killing. Id. at 1381 (quoting Beck v. Downey, 
198 F.2d 626, 628 (9th Cir. 1952)); Athmer, 178 F.3d at 476-77. Section 
9.5(e)(2)(ii) would bar a slayer's family member who is not related to 
the decedent by blood, legal adoption, or marriage from receiving SGLI 
or VGLI proceeds. Id. at 1381. Section 9.5(e)(2)(iii) would bar a 
slayer's family member who is related to the decedent by blood, legal 
adoption, or marriage from receiving SGLI or VGLI proceeds or TSGLI 
payment if the family member is convicted of a crime involving the 
intentional killing of the decedent or is determined in a civil 
proceeding to have been involved in the intentional killing of the 
decedent. A new Sec.  9.1(l) would define ``member of the family'' for 
purposes of Sec.  9.5(e)(2)(ii) and (iii) to mean an individual with 
any of the following relationships to a person who is convicted of 
intentionally killing the decedent or determined in a civil proceeding 
to have intentionally killed the decedent: (1) Spouse; (2) biological, 
adopted, or step child; (3) biological, adoptive, or step parent; (4) 
biological, adopted, or step sibling; (5) biological, adoptive, or step 
grandparent or grandchild; or (6) domestic partner.
    Section 9.5(e)(3) would bar entitlement to SGLI or VGLI proceeds or 
a TSGLI payment to a person described in paragraph (2) or a member of 
that person's family described in paragraph (2) even though the 
criminal conviction or civil determination is pending appeal. See Webb 
v. Voirol, 773 F.2d 208, 211 (8th Cir. 1985); United Investors Life 
Ins. Co. v. Severson, 151 P.3d 824, 829-30 (Idaho 2007).
    Section 9.5(e)(4)(i) would provide that, if a person is 
disqualified from receipt of SGLI or VGLI proceeds or a TSGLI payment 
under Sec.  9.5(e)(1) and (2), the insurance proceeds or TSGLI payment 
would be paid in the following order of precedence: (1) To the next 
eligible beneficiary as designated by the servicemember or former 
servicemember; (2) to the decedent's surviving spouse; (3) to the 
decedent's child or children, in equal shares, and descendants of 
deceased children by representation; (4) to the decedent's parents, in 
equal shares, or to the survivor of them; (5) to the duly appointed 
executor or administrator of the decedent's estate; or (6) to the 
decedent's next of kin as determined by the Insurer under the laws of 
the decedent's domicile at the time of the decedent's death. Under 
Sec.  9.5(e)(4)(ii), payment to any person under paragraphs (e)(4)(i) 
would bar recovery by any other person.
    VA proposes that this rule would be applicable to any claim for 
SGLI or VGLI proceeds, including a claim for a payment under Sec.  
9.20, Traumatic injury protection, filed before the effective date of 
the rule that has not been paid as of the effective date of this rule 
and to any claim filed on or after the effective date of the rule.

Unfunded Mandates

    The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 
1532, that agencies prepare an assessment of anticipated costs and 
benefits before issuing any rule that may result in an expenditure by 
State, local, and Tribal governments, in the aggregate, or by the 
private sector, of $100 million or more (adjusted annually for 
inflation) in any year. This proposed rule would have no such effect on 
State, local, and Tribal governments or on the private sector.

Paperwork Reduction Act

    This proposed rule contains no provisions constituting a collection 
of information under the Paperwork Reduction Act (44 U.S.C. 3501-3521).

Executive Orders 12866 and 13563

    Executive Orders 12866 and 13563 direct agencies to assess the 
costs and benefits of available regulatory alternatives and, when 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, and other advantages; distributive impacts; 
and equity). Executive Order 13563 (Improving Regulation and Regulatory 
Review) emphasizes the importance of quantifying both costs and 
benefits, reducing costs, harmonizing rules, and promoting flexibility. 
Executive Order 12866 (Regulatory Planning and Review) defines a 
``significant regulatory action,'' which requires review by the Office 
of Management and Budget (OMB), as ``any regulatory action that is 
likely to result in a rule that may: (1) Have an annual effect on the 
economy of $100 million or more or adversely affect in a material way 
the economy, a sector of the economy, productivity, competition, jobs, 
the environment, public health or safety, or State, local, or Tribal 
governments or communities; (2) Create a serious inconsistency or 
otherwise interfere with an action taken or planned by another agency; 
(3) Materially alter the budgetary impact of entitlements, grants, user 
fees, or loan programs or the rights and obligations of recipients 
thereof; or (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
this Executive Order.''
    The economic, interagency, budgetary, legal, and policy 
implications of this regulatory action have been examined and it has 
been determined not to be a significant regulatory action under 
Executive Order 12866.

Regulatory Flexibility Act

    The Secretary of Veterans Affairs hereby certifies that this 
proposed rule will not have a significant economic impact on a 
substantial number of small entities as they are defined in the 
Regulatory Flexibility Act, 5 U.S.C. 601-612. This proposed rule would 
directly affect only individuals and would not directly affect any 
small entities. Therefore, pursuant to 5 U.S.C. 605(b), this proposed 
rule is exempt from the initial and final regulatory flexibility 
analysis requirements of sections 603 and 604.

Catalog of Federal Domestic Assistance Number and Title

    The Catalog of Federal Domestic Assistance number and title for the 
program affected by this document is 64.103, Life Insurance for 
Veterans.

Signing Authority

    The Secretary of Veterans Affairs, or designee, approved this 
document and authorized the undersigned to sign and submit the document 
to the Office of the Federal Register for publication electronically as 
an official document of the Department of Veterans Affairs. John

[[Page 77457]]

R. Gingrich, Chief of Staff, Department of Veterans Affairs, approved 
this document on November 14, 2011, for publication.

List of Subjects in 38 CFR Part 9

    Life insurance, Military personnel, Veterans.

    Dated: December 8, 2011.
Robert C. McFetridge,
Director of Regulation Policy and Management, Office of the General 
Counsel, Department of Veterans Affairs.

    For the reasons stated in the preamble, VA proposes to amend 38 CFR 
part 9 as set forth below:

PART 9--SERVICEMEMBERS' GROUP LIFE INSURANCE AND VETERANS' GROUP 
LIFE INSURANCE

    1. The authority citation for part 9 continues to read as follows:

    Authority: 38 U.S.C. 501, 1965-1980A, unless otherwise noted.

    2. Amend Sec.  9.1 by adding a new paragraph (l) to read as 
follows:


Sec.  9.1  Definitions.

* * * * *
    (l) The term member of the family as used in Sec.  9.5(e)(2) means 
an individual with any of the following relationships to a person who 
is convicted of intentionally killing the decedent or determined in a 
civil proceeding to have intentionally killed the decedent:
    (1) Spouse;
    (2) Biological, adopted, or step child;
    (3) Biological, adoptive, or step parent;
    (4) Biological, adopted, or step sibling;
    (5) Biological, adoptive, or step grandparent or grandchild; or
    (6) Domestic partner.
    3. Amend Sec.  9.5 by adding paragraph (e) to read as follows:


Sec.  9.5  Payment of proceeds.

* * * * *
    (e)(1) The proceeds payable because of the death of an individual 
insured under Servicemembers' Group Life Insurance or Veterans' Group 
Life Insurance (``decedent'') shall not be payable to any person 
described in paragraph (e)(2) of this section. A Servicemembers' Group 
Life Insurance Traumatic Injury Protection benefit payable under Sec.  
9.20(j)(3) shall not be payable to any person described in paragraph 
(e)(2) of this section.
    (2) The persons described in this paragraph are:
    (i) A person who is convicted of intentionally killing the decedent 
or determined in a civil proceeding to have intentionally killed the 
decedent;
    (ii) A member of the family of a person described in paragraph 
(e)(2)(i) of this section who is not related to the decedent by blood, 
legal adoption, or marriage; and
    (iii) A member of the family of a person described in paragraph 
(e)(2)(i) of this section who is related to the decedent by blood, 
legal adoption, or marriage and who is convicted of a crime involving 
the intentional killing of the decedent or determined in a civil 
proceeding to have been involved in the intentional killing the 
decedent.
    (3) The Servicemembers' Group Life Insurance or Veterans' Group 
Life Insurance proceeds or Servicemembers' Group Life Insurance 
Traumatic Injury Protection benefit not payable under paragraph (e)(1) 
of this section to any person described in paragraph(e)(2) of this 
section is not payable to such persons even though the criminal 
conviction or civil determination is pending appeal.
    (4)(i) Servicemembers' Group Life Insurance or Veterans' Group Life 
Insurance proceeds or a Servicemembers' Group Life Insurance Traumatic 
Injury Protection benefit not payable under paragraphs (e)(1) and 
(e)(2) of this section shall be payable to the first person or persons 
listed in paragraphs (e)(4)(i)(A) through (F) of this section who are 
surviving on the date of the decedent's death in the following order of 
precedence:
    (A) To the next eligible beneficiary designated by the decedent in 
a writing received by the appropriate office of the applicable 
uniformed service before the decedent's death in the uniformed services 
in the case of Servicemembers' Group Life Insurance proceeds or a 
Servicemembers' Group Life Insurance Traumatic Injury Protection 
benefit, or in a writing received by the administrative office defined 
in Sec.  9.1(b) of this part before the decedent's death in the case of 
Veterans' Group Life Insurance proceeds;
    (B) To the decedent's surviving spouse;
    (C) To the decedent's child or children, in equal shares, and 
descendants of deceased children by representation;
    (D) To the decedent's parents, in equal shares, or to the survivor 
of them;
    (E) To the duly appointed executor or administrator of the 
decedent's estate;
    (F) To other next of kin of the decedent as determined by the 
insurer (defined in Sec.  9.1(c) of this part) under the laws of 
domicile of the decedent at the time of the decedent's death.
    (ii) Payment of Servicemembers' Group Life Insurance or Veterans' 
Group Life Insurance proceeds or a Servicemembers' Group Life Insurance 
Traumatic Injury Protection benefit to any person under paragraph 
(e)(4)(i) of this section shall bar recovery of those proceeds or that 
benefit by any other person.
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[FR Doc. 2011-31870 Filed 12-12-11; 8:45 am]
BILLING CODE 8320-01-P