  United States Court of Appeals
      for the Federal Circuit
                  ______________________

                        KAREN LI,
                         Petitioner

                             v.

             DEPARTMENT OF JUSTICE,
                      Respondent
                ______________________

                        2019-1046
                  ______________________

   Petition for review of a decision of the Bureau of Justice
Assistance in PSOB Claim No. 2011-016.
                  ______________________

                Decided: January 16, 2020
                 ______________________

    SUSAN POLL KLAESSY, Foley & Lardner LLP, Chicago,
IL, argued for petitioner. Also represented by JILL
NICHOLSON; JACK GABRIEL HAAKE, Washington, DC.

    MEEN GEU OH, Commercial Litigation Branch, Civil Di-
vision, United States Department of Justice, Washington,
DC, argued for respondent. Also represented by JOSEPH H.
HUNT, TARA K. HOGAN, ROBERT EDWARD KIRSCHMAN, JR.;
RAFAEL ALBERTO MADAN, MATTHEW T. SCODELLARO, Office
of Justice Programs, Office of General Counsel, United
States Department of Justice, Washington, DC.
                 ______________________
2



    Before NEWMAN, MOORE, and CHEN, Circuit Judges.
CHEN, Circuit Judge
    Karen Li brought a claim for death benefits under the
Public Safety Officers’ Benefits Act (PSOBA) of 1976, Pub.
L. No. 94-430 (codified as amended at 34 U.S.C. §§ 10281–
10288). Ms. Li appeals a June 28, 2018, decision by the
Bureau of Justice Assistance (BJA) holding that she was
not entitled to the death benefits for her fiancé, San Diego
Sheriff’s Deputy Kenneth Collier. The BJA determined
that Ms. Li was not a designated beneficiary under Deputy
Collier’s life insurance policy in accordance with 34 U.S.C.
§ 10281(a)(4)(B). Because the BJA’s decision is supported
by substantial evidence and properly applies the statute
and the BJA’s implementing regulation, 28 C.F.R. § 32.13,
we affirm the BJA’s denial of benefits.
                       BACKGROUND
    In February 2010, Sherriff’s Deputy Kenneth Collier
was patrolling Route 52 in San Diego County, California,
where he observed a car driving the wrong way. Deputy
Collier pursued the driver by driving down the middle lane
of the highway, but the middle lane suddenly ended, and
Deputy Collier lost control of the car as he attempted to
exit the middle lane. Deputy Collier’s car fell down the em-
bankment on the side of the highway. After his rescue,
Deputy Collier was flown to the hospital where he died.
     Deputy Collier was survived by his fiancée, Karen Li.
Deputy Collier and Ms. Li started dating in 2003 and
owned a house together. The couple planned to get married
three months after Deputy Collier’s accident, choosing that
date to combine the wedding celebration with Deputy Col-
lier’s 40th birthday. Deputy Collier told Ms. Li and their
friends on multiple occasions that he had made arrange-
ments for Ms. Li to be taken care of if anything ever hap-
pened to him, including through a video he recorded after
his mother died in 2008. In that video, Deputy Collier
LI v. DOJ                                                   3



explained that: “My understanding is that the one-third in-
terest that I have [in Deputy Collier’s mother’s] house upon
my death or incapacitation reverts back—control back to
[Deputy Collier’s siblings], but all other assets, savings,
everything like that, will be separate and go to Karen.”
J.A. 405–06.
     Deputy Collier’s job benefits included workers’ compen-
sation, retirement benefits, and life insurance. In re Li, No.
2011-016, at 6–7 (BJA June 28, 2018). Deputy Collier des-
ignated Ms. Li as a partial dependent in his workers’ com-
pensation program and as his beneficiary for his
retirement benefits. Id. However, since 1997, Deputy Col-
lier’s designation form for his life insurance designated his
mother as the primary beneficiary and his ex-girlfriend,
Monique Stamp, as his contingent beneficiary. Deputy Col-
lier signed forms in 2003, 2006, and 2007 reaffirming these
beneficiary designations. While the forms in 1997–2006
explicitly listed the beneficiary designations above the sig-
nature line (identifying Deputy Collier’s mother and Ms.
Stamp by name on Deputy Collier’s signed forms), the
County of San Diego (the County) changed its policy in
2007 and stopped including this explicit listing on its form.
     The life insurance policy stated that to change the ben-
eficiary designation, “[y]ou must name or change Benefi-
ciaries in writing. Writing includes a form signed by you
or a verification from the Policyholder or Employer of an
electronic or telephonic designation made by you. Your
designation . . . [m]ust be delivered to the Policyholder or
Employer during your lifetime.” J.A. 202–03. There is no
evidence that Deputy Collier ever provided any such writ-
ten designation change, or otherwise made any effort to
contact the County or the insurance company to make a
beneficiary designation change.
   At the time of Deputy Collier’s death, Deputy Collier’s
mother had passed away, leaving Ms. Stamp as the desig-
nated beneficiary for his life insurance policy. Ms. Li
4



contested to the insurance company that she should be the
beneficiary for Deputy Collier’s life insurance policy. The
insurance company determined that Ms. Li had a colorable
claim to Deputy Collier’s life insurance. But rather than
determine whether Ms. Li had the stronger claim, the in-
surance company told Ms. Li that she could either settle
the claim with Ms. Stamp or the insurance company would
file an interpleader to have a court determine who had the
better claim. Ms. Li and Ms. Stamp arrived at a settlement
in which Ms. Li received $560,920 and Ms. Stamp received
$25,000. The insurance company honored this settlement
agreement.
    Ms. Li then filed for PSOB death benefits. However,
the BJA determined that Ms. Li had failed to show she was
the designated beneficiary of Deputy Collier’s life insur-
ance policy. Li, No. 2011-016, at 19. In accordance with 34
U.S.C. § 10281(a) and 28 C.F.R. § 32.13, the BJA analyzed
whether Ms. Li was the designee of a “legal and valid” life
insurance policy. Id. at 9–11. To make this determination,
the BJA analyzed California insurance law, determining
that, with three limited exceptions, the law requires strict
compliance with the terms of the insurance policy. Id. at
11–12. Those exceptions include (1) the insurance com-
pany waives strict compliance, (2) it is beyond the power of
the policyholder to comply, or (3) the policyholder “pursued
the course pointed out by the laws of the association [i.e.
the insurance company], and has done all in his power to
change the beneficiary” but failed to properly make the
change. Pimentel v. Conselho Supremo de Uniao Portu-
gueza do Estado da Cal., 57 P.2d 131, 133 (Cal. 1936). The
BJA determined that Ms. Li failed to show any of those ex-
ceptions were met and denied Ms. Li’s claim. Li, No. 2011-
016, at 18–19.
   Ms. Li now appeals. We have jurisdiction under 34
U.S.C. § 10287.
LI v. DOJ                                                    5



                         DISCUSSION
     Ms. Li argues that the BJA erred by failing to properly
apply the statute and implementing regulations, failing to
correctly apply California law, and failing to support its de-
cision with substantial evidence.
     The PSOBA directs the BJA to pay a death benefit to
the proper claimant when a public safety officer is killed in
the line of duty. 34 U.S.C. § 10281(a). The PSOBA pro-
vides a hierarchy of potential claimants for determining
the proper claimant, eventually reaching 34 U.S.C.
§ 10281(a)(4)(B), which dictates that “if there is no surviv-
ing spouse of the public safety officer and no surviving
child,” the proper claimant is “the surviving individual . . .
designated by the public safety officer to receive benefits
under the most recently executed life insurance policy of
the public safety officer on file at the time of death.” Id.
§ 10281(a)(4)(B). The BJA promulgated 28 C.F.R. § 32.13
to determine when a claimant is the beneficiary of the pub-
lic safety officer’s life insurance policy. In relevant part,
the regulation provides that “[a]n individual . . . is desig-
nated as beneficiary of a life insurance policy of such officer
as of such date, only if the designation is, as of such date,
legal and valid (as a designation of beneficiary of a life in-
surance policy) and unrevoked (by such officer or by opera-
tion of law) or otherwise unterminated.” 28 C.F.R. § 32.13.
     We review the BJA’s application of its own regulations
to determine “(1) whether there has been substantial com-
pliance with statutory requirements and provisions of im-
plementing regulations; (2) whether there has been any
arbitrary or capricious action on the part of the government
officials involved; and (3) whether substantial evidence
supports the decision denying the claim.” Amber-Messick
v. United States, 483 F.3d 1316, 1321 (Fed. Cir. 2007). In
this case, we review the BJA Director’s determination that
Ms. Li was not a designated beneficiary under Deputy Col-
lier’s life insurance policy.
6



                              A
     We first turn to whether the BJA correctly applied the
statute and the implementing regulation. We review an
agency’s interpretation of a statute under the Chevron
framework. Chevron U.S.A. Inc. v. Nat. Res. Def. Council,
Inc., 467 U.S. 837 (1984). We first determine “whether
Congress has directly spoken to the precise question at is-
sue.” Chevron, 467 U.S. at 842. If “Congress either had no
intent on the matter, or [] Congress’s purpose and intent is
unclear,” we consider whether the agency’s interpretation
is based on a permissible construction of the statutory lan-
guage at issue. Delverde, SrL v. United States, 202 F.3d
1360, 1363 (Fed. Cir. 2000); see also Chevron, 467 U.S. at
843. For the second step, “the court need not conclude that
the agency construction was the only one it permissibly
could have adopted to uphold the construction.” Chevron,
467 U.S. at 843 n.11. So long as the agency’s construction
of the term in the statute is reasonable, Chevron “requires
a federal court to accept the agency’s construction . . . even
if the agency’s reading differs from what the court believes
is the best statutory interpretation.” Nat’l Cable & Tele-
comms. Ass’n v. Brand X Internet Servs., 545 U.S. 967, 980
(2005).
     When an officer dies without a surviving spouse or chil-
dren, the statute provides a hierarchy to determine the
proper beneficiary. Toward the bottom of this statutorily-
defined hierarchy, the PSOBA allows a person “designated
by the public safety officer to receive benefits under the
most recently executed life insurance policy of the public
safety officer on file at the time of death” to recover the
benefits. 34 U.S.C. § 10281(a)(4)(B). At this step in the
hierarchy, Congress’s intent is clear that the public safety
officer’s life insurance designation determines the proper
beneficiary for PSOB benefits. The BJA’s implementing
regulation, 28 C.F.R. § 32.13, is entirely consistent with
this intent and clarifies that an individual “is designated
as beneficiary of a life insurance policy of such officer” if
LI v. DOJ                                                  7



the designation is “legal and valid (as a designation of ben-
eficiary of a life insurance policy) and unrevoked (by such
officer or by operation of law) or otherwise unterminated.”
28 C.F.R. § 32.13. The BJA evaluated whether Deputy Col-
lier’s insurance policy and designations were “legal and
valid” under California state contract law. Li, No. 2011-
016, at 9–12.
     Ms. Li does not contest the BJA’s reliance on California
state contract law; she instead argues that the BJA’s anal-
ysis in determining that she was not the designated bene-
ficiary did not properly consider the totality of the
circumstances. Specifically, Ms. Li argues the BJA should
have found determinative Deputy Collier’s 2008 video and
the testimony that Deputy Collier intended for Ms. Li to
receive all of his benefits. We find Ms. Li’s approach to be
inconsistent with the text of § 10281(a)(4)(B). Congress in-
tended for the life insurance policy to determine the proper
beneficiary for PSOB benefits, which required the BJA to
analyze the beneficiary designation as set out in the insur-
ance policy. The BJA properly followed this analysis,
which leaves no room for Ms. Li’s proposed totality of the
circumstances test. Ms. Li was therefore required to show
she was the designated beneficiary under the life insurance
policy.
                             B
    Having determined that the BJA correctly applied
§ 10281(a)(4)(B), we next turn to whether the BJA’s deci-
sion was arbitrary and capricious and supported by sub-
stantial evidence. We determine whether a decision is
arbitrary and capricious based on “whether the decision
was based on a consideration of relevant factors and
whether there has been a clear error of judgment.” In re
Gartside, 203 F.3d 1305, 1312 (Fed. Cir. 2000) (quoting Cit-
izens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402,
416 (1971)). This includes whether the BJA misapplied
California law when determining if the life insurance
8



policy and beneficiary change were legal and valid. Glob.
NAPs Cal., Inc. v. Pub. Utils. Comm’n, 624 F.3d 1225, 1231
(9th Cir. 2010).
     California law requires strict compliance with the
terms of a life insurance policy unless any one of three ex-
ceptions is met. Pimentel, 57 P.2d at 133. Those exceptions
are (1) the insurance company waives strict compliance, (2)
it is beyond the power of the policyholder to comply, or (3)
the policyholder “pursued the course pointed out by the
laws of the association [i.e. the insurance company], and
has done all in his power to change the beneficiary” but
failed to properly make the change. Id. Ms. Li argues that
the first and third exceptions apply in this case, relying
heavily on the insurance company’s letter that Ms. Li could
either settle her claim with Ms. Stamp or the insurance
company would interplead the claim for the courts to deter-
mine the proper beneficiary.
     As to the first exception, California law is clear that in-
terpleader by an insurance company, much less the threat
of interpleader, does not constitute waiver of strict compli-
ance. Id. at 132–33. Yet, Ms. Li points out that Saunders
v. Stevers, 221 Cal. App. 2d 539, 540 (Cal. Dist. Ct. App.
1963), appears to contravene Pimentel. In that case, the
insured sent an informal letter to the insurance company
expressing her desire to change her beneficiary designa-
tion. But the insurance company did not find this letter
sufficient to change the prior designation and sent the in-
sured the appropriate forms. After receiving these forms,
the insured did not immediately complete the forms or re-
turn them to the insurance company, and she died before
returning the forms. The California District Court of Ap-
peals determined that the designation had been changed,
stating that the insured’s “acts were sufficient” to change
the beneficiary designation because she exercised her
“broad right to change beneficiary by notice in writing
given to the company.” Saunders, 221 Cal. App. 2d at 541.
In its decision, the court stated that “[w]here, as here, the
LI v. DOJ                                                    9



company makes no contest but interpleads the contesting
beneficiaries and pays the proceeds of the policy into court,
a liberal rule obtains and courts of equity seek to do that
which the insured intended.” Id. at 542.
    The Saunders opinion is unclear regarding the role in-
terpleader played in the analysis. But the Ninth Circuit in
Manhattan Life Insurance v. Barnes determined that
Saunders did not conflict with the governing standard in
Pimentel because Saunders merely discussed the effect of
an interpleader in the context of the third Pimentel excep-
tion rather than the first. 462 F.2d 629, 632 (9th Cir. 1972).
We agree with the Ninth Circuit’s reasoning. As such, the
BJA correctly interpreted and applied California law when
determining that the insurance company did not waive
strict compliance.
    This leaves Ms. Li’s arguments regarding the third ex-
ception. Under the third exception, a claimant must show
that the insured “pursued the course pointed out by the [in-
surance company], and has done all in his power to change
the beneficiary.” Pimentel, 57 P.2d at 133. California law
has since interpreted this to mean that the insured must
make “every reasonable effort under the circumstances” to
properly change the beneficiary designation. See Manhat-
tan Life Ins., 462 F.2d at 633; West Coast Life Ins. v. Clarke,
24 F. Supp. 3d 933, 939–40 (C.D. Cal. 2014). We are una-
ware of any case that has granted the claimant a change of
designation under this exception where the insured never
contacted (or attempted to contact) someone at the in-
sured’s place of work or at the insurance company to indi-
cate a desire to change the insurance policy’s designated
beneficiary. Interpleader or a threat of interpleader may
indeed lower the threshold for whether a particular action
constitutes “every reasonable effort under the circum-
stances” to change a beneficiary designation. See Manhat-
tan Life Ins., 462 F.2d at 633. But it was reasonable under
the circumstances here for the BJA to find that the insured
must first make some attempt to change the beneficiary
10



designation, or there is nothing that can qualify as “every
reasonable effort under the circumstances” to make that
change.
    Substantial evidence supports the BJA’s determination
that Deputy Collier never attempted to contact anyone at
the insurance company or the County about changing the
designation for his life insurance. Li, No. 2011-016, at 18
n.57. During the proceeding, the BJA asked the County if
“there [was] any email correspondence with Sheriff Collier
regarding beneficiary designations?” J.A. 2072.           The
County responded “No, we have no email correspondence
on file regarding Sheriff Collier’s beneficiary designations.”
Id. Ms. Li contends that these responses were deficient,
and that she is therefore entitled to further discovery. But
Ms. Li has not identified any evidence or basis that sug-
gests the County’s response was somehow deficient. It was
therefore proper for the BJA to weigh this evidence to de-
termine that Deputy Collier had not contacted the County
about changing his beneficiary designation.
    Ms. Li also asserts that Deputy Collier attempted to
change his life insurance beneficiary designation when he
changed his retirement benefits and worker’s compensa-
tion. She argues that the testimonies of Deputy Collier’s
family and friends show that Deputy Collier believed he
had changed his beneficiary designation. The BJA found
to the contrary, however, based at least in part on Deputy
Collier’s continual ratification of the designations in his life
insurance policy, thereby indicating his intent to not
change the life insurance designation. Our appellate func-
tion is to review BJA findings deferentially under the sub-
stantial evidence standard. A decision is supported by
substantial evidence when it is based on “such relevant ev-
idence as a reasonable mind might accept as adequate to
support a conclusion.” Consol. Edison Co. v. NLRB, 305
U.S. 197, 229 (1938). Here, there is enough evidence for a
reasonable mind to reach the BJA’s conclusion that Deputy
Collier’s actions did not rise to “every reasonable effort” to
LI v. DOJ                                                11



properly change his beneficiary designation. Consolo v.
Fed. Mar. Comm’n, 383 U.S. 607, 620 (1966); Viet I-Mei
Frozen Foods Co. v. United States, 839 F.3d 1099, 1106
(Fed. Cir. 2016). Because the BJA reasonably found that
the third exception was not met, the BJA was therefore re-
quired to adhere strictly to the terms of the life insurance
policy.
    The terms of the insurance policy state that “You must
name or change Beneficiaries in writing. Writing includes
a form signed by you or a verification from the Policyholder
or Employer of an electronic or telephonic designation
made by you. Your designation . . . [m]ust be delivered to
the Policyholder or Employer during your lifetime.” J.A.
202–03. The only writings of record are the 1997, 2003,
2006, and 2007 beneficiary designations. These writings
clearly indicate that Deputy Collier’s mother was his pri-
mary beneficiary and that Ms. Stamp was his contingent
beneficiary. See J.A. 1451. As a result, the BJA’s determi-
nation that Ms. Li was not designated as a beneficiary in
Deputy Collier’s life insurance policy under 35 U.S.C.
§ 10281(a) and 28 C.F.R. § 32.13 was not arbitrary or ca-
pricious and was supported by substantial evidence.
                       CONCLUSION
    For the foregoing reasons, the BJA’s denial of benefits
to Ms. Li under the PSOBA is
                       AFFIRMED
    No costs.
