UPDATE: This case has been decided. See FEHBA health plan carriers can ignore state anti-subrogation statutesFEHBA health plan carriers can ignore state anti-subrogation statutes
Coventry Health Care of Missouri v. Nevils (Cert granted 11/04/2016) [Supreme Court briefs] brings us this pile of issues: a question of whether the Supremacy Clause applies to a contract between the federal government and a private party, statutory construction (a preemption clause), and the application of Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984) to preemption clauses.
Jodie Nevils was injured in a car wreck. He's a federal employee who was insured by Coventry Health Care under a Federal Employee Health Benefits Act (FEHBA) plan. Coventry paid his medical bills, and then Nevils recovered a settlement from a third party. Coventry asserted a subrogation lien on the recovery; Nevils satisfied the lien and then sued Coventry in Missouri court and ultimately won. The US Supreme Court granted certiorari to review the Missouri judgment. Coventry Health Care of Missouri v. Nevils. [Supreme Court briefs]
Missouri law prohibits the subrogation of personal injury claims. The FEHBA authorizes the Office of Personnel Management (OPM) to enter into contracts with private insurance carriers to administer benefit plans, and OPM's contracts require carriers to seek subrogation or reimbursement.
Meanwhile, FEHBA has an express preemption clause, 5 U.S.C. § 8902(m)(1):
The terms of any contract under this chapter which relate to the nature, provision, or extent of coverage or benefits (including 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.
The Supreme Court of Missouri held that "the FEHBA preemption clause does not express Congress’ clear and manifest intent to preempt Missouri’s antisubrogation law." Nevils v. Group Health Plan (Missouri 2016) [Opinion text]
The "questions presented" in the US Supreme Court:
1. Whether FEHBA preempts state laws that prevent carriers from seeking subrogation or reimbursement pursuant to their FEHBA contracts.
2. Whether FEHBA’s express-preemption provision, 5 U.S.C. § 8902(m)(1), violates the Supremacy Clause.
Did you notice the Supremacy Clause issue? In a concurring opinion, signed by a majority of the Supreme Court of Missouri, the judges had this to say:
[5 U.S.C. § 8902(m)(1)'s] attempt to give preemptive effect to the provisions of a contract between the federal government and a private party is not a valid application of the Supremacy Clause in article VI of the United States Constitution.
I can't help wondering whether the current Court will defer to OPM (via Chevron deference) to decide whether a federal statute is preemptive. If so, then preemption - and the application of the Supremacy Clause itself - can shift back and forth depending on who wins a presidential election.
We expect to see oral argument scheduled for February, with a decision by June.
[For recent decisions and pending employment law cases, see US Supreme Court Watch.]