COVENTRY HEALTH CARE OF MISSOURI, INC., FKA GROUP HEALTH PLAN, INC.
OF CERTIORARI TO THE SUPREME COURT OF MISSOURI
March 1, 2017
Federal Employees Health Benefits Act of 1959 (FEHBA)
authorizes the Office of Personnel Management (OPM) to
contract with private carriers for federal employees'
health insurance. 5 U.S.C. §8902(a), (d). FEHBA contains
an express-preemption provision, §8902(m)(1), which
states that the "terms of any contract under this
chapter which relate to the nature, provision, or extent of
coverage or benefits (including payments with respect to
benefits) shall supersede and preempt any State or local law
. . . which relates to health insurance or plans."
contracts have long required private carriers to seek
subrogation and reimbursement. Accordingly, OPM's
regulations make a carrier's "right to pursue and
receive subrogation and reimbursement recoveries ... a
condition of and a limitation on the nature of benefits or
benefit payments and on the provision of benefits under the
plan's coverage." 5 CFR §890.106(b)(1). In
2015, OPM published a new rule confirming that a
carrier's subrogation and reimbursement rights and
responsibilities "relate to the nature, provision, and
extent of coverage or benefits (including payments with
respect to benefits) within the meaning of"
§8902(m)(1), and "are . . . effective
notwithstanding any state or local law, or any regulation
issued thereunder, which relates to health insurance or
Jodie Nevils was insured under a FEHBA plan offered by
petitioner Coventry Health Care of Missouri. When Nevils was
injured in an automobile accident, Coventry paid his medical
expenses. Coventry subsequently asserted a lien against part
of the settlement Nevils recovered from the driver who caused
his injuries. Nevils satisfied the lien, then filed a class
action in Missouri state court, alleging that, under Missouri
law, which does not permit subrogation or reimbursement in
this context, Coventry had unlawfully obtained reimbursement.
Coventry countered that §8902(m)(1) preempted the state
law. The trial court granted summary judgment in
Coventry's favor, and the Missouri Court of Appeals
affirmed. The Missouri Supreme Court reversed. Finding
§8902(m)(1) susceptible to diverse plausible readings,
the court invoked a "presumption against
preemption" to conclude that the federal statute's
preemptive scope excluded subrogation and reimbursement. On
remand from this Court for further consideration in light of
OPM's 2015 rule, the Missouri Supreme Court adhered to
its earlier decision. A majority of the Missouri Supreme
Court also held that §8902(m)(1) violates the Supremacy
1. Because contractual subrogation and reimbursement
prescriptions plainly "relate to . . . payments with
respect to benefits, " §8902(m)(1), they override
state laws barring subrogation and reimbursement. Pp. 6-9.
(a) This reading best comports with §8902(m)(1)'s
text, context, and purpose. Contractual provisions for
subrogation and reimbursement "relate to . . . payments
with respect to benefits" because subrogation and
reimbursement rights yield just such payments. When a carrier
exercises its right to either reimbursement or subrogation,
it receives from either the beneficiary or a third party
"payment" respecting the benefits the carrier had
previously paid. The carrier's very provision of benefits
triggers the right to payment. Congress' use of the
expansive phrase "relate to, " which
"express[es] a broad pre-emptive purpose, "
Morales v. Trans World Airlines, Inc., 504 U.S. 374,
383, weighs against Nevils' effort to narrow the term
"payments" to exclude payments that occur
"long after" a carrier's provision of benefits.
Nevils' argument that Congress intended to preempt only
state coverage requirements, e.g., inclusion of
acupuncture and chiropractic services, also miscarries.
The statutory context and purpose reinforce this conclusion.
FEHBA concerns "benefits from a federal health insurance
plan for federal employees that arise from a federal
law." Bell v. Blue Cross & Blue Shield of
Okla., 823 F.3d 1198, 1202. Strong and "distinctly
federal interests are involved, " Empire
HealthChoice Assurance, Inc. v. McVeigh, 547 U.S. 677,
696, in uniform administration of the program, free from
state interference, particularly in regard to coverage,
benefits, and payments. The Federal Government also has a
significant financial stake in subrogation and reimbursement.
(b) McVeigh's suggestion that §8902(m)(1)
has two "plausible" interpretations, 547 U.S., at
698, Nevils asserts, supports application of the presumption
against preemption here. But the Court never chose between
the two readings set out in McVeigh, because doing
so was not pertinent to the discrete question whether federal
courts have subject-matter jurisdiction over FEHBA
reimbursement actions. Having decided in McVeigh
that §8902(m)(1) is a "choice-of-law prescription,
" not a "jurisdiction-conferring provision, "
id., at 697, the Court had no cause to consider
§8902(m)(1)'s text, context, and purpose, as it does
here. Pp. 8-9.
2. The regime Congress enacted is compatible with the
Supremacy Clause. The statute itself, not a contract, strips
state law of its force. FEHBA contract terms have preemptive
force only if they fall within §8902(m)(1)'s
preemptive scope. Many other federal statutes found to
preempt state law, including the Employee Retirement Income
Security Act of 1974 and the Federal Arbitration Act, leave
the context-specific scope of preemption to contractual
terms. While §8902(m)(1)'s phrasing may differ from
those other statutes', FEHBAs express-preemption
provision manifests the same intent to preempt state law. Pp.
492 S.W.3d 918, reversed and remanded.
GINSBURG, J., delivered the opinion of the Court, in which
all other Members joined, except GORSUCH, J., who took no
part in the consideration or decision of the case. THOMAS,
J., filed a concurring opinion.
Federal Employees Health Benefits Act of 1959 (FEHBA), 5
U.S.C. §8901 et seq., Congress authorized the
Office of Personnel Management (OPM) to contract with private
carriers for federal employees' health insurance.
§8902(a), (d). FEHBA contains a provision expressly
preempting state law. §8902(m)(1). That provision reads:
"The terms of any contract under this chapter which
relate to the nature, provision, or extent of coverage or
benefits (including payments with respect to benefits) shall
supersede and preempt any State or local law, or any
regulation issued thereunder, which relates to health
insurance or plans."
OPM negotiates with private carriers provide for
reimbursement and subrogation. Reimbursement requires an
insured employee who receives payment from another source
(e.g., the proceeds yielded by a tort claim) to
return healthcare costs earlier paid out by the carrier.
Subrogation involves transfer of the right to a third-party
payment from the insured employee to the carrier, who can
then pursue the claim against the third party. Several
States, however, Missouri among them, bar enforcement of
contractual subrogation and reimbursement provisions.
questions here presented: Does FEHBA's express-preemption
prescription, §8902(m)(1), override state law
prohibiting subrogation and reimbursement; and if
§8902(m)(1) has that effect, is the statutory
prescription consistent with the Supremacy Clause, U.S.
Const., Art. VI, cl. 2? We hold, contrary to the decision of
the Missouri Supreme Court, that contractual subrogation and
reimbursement prescriptions plainly "relate to . . .
payments with respect to benefits, " §8902(m)(1);
therefore, by statutory instruction, they override state law
barring subrogation and reimbursement. We further hold, again
contrary to the Missouri Supreme Court, that the regime
Congress enacted is compatible with the Supremacy Clause.
Section 8902(m)(1) itself, not the contracts OPM negotiates,
triggers the federal preemption. As Congress directed, where
FEHBA contract terms "relate to the ...