Coventry Health Care of Missouri, Inc. v. Nevils

(1) Whether the Federal Employees Health Benefits Act pre-empts state laws that prevent carriers from seeking subrogation or reimbursement pursuant to their FEHBA contracts; and (2) whether FEHBA's express-pre-emption provision, 5 U.S.C. § 8902(m)(1), violates the supremacy clause.

The Federal Employee Health Benefits Act, (“FEHBA”) provides health insurance to federal workers. FEHBA authorizes the Office of Personnel Management (“OPM”) to issue regulations and contract with private insurance companies. FEHBA establishes “[t]he terms of any contract under this chapter which relate to the nature, provision, or extent of coverage. . . shall supersede and preempt any State or local law. . . .” 5 U.S. Code § 8902(m)(1).  Respondent, a federal employee was injured in a car accident. Petitioner, pursuant to a FEHBA plan, paid for all medical care. When Respondent settled with the other driver, Petitioner placed a lien on the settlement. Respondent satisfied the lien, but sued Petitioner in state court, alleging “notwithstanding [Petitioner’s] OPM contract, [Petitioner’s] pursuit of subrogation or reimbursement violated Missouri’s common-law antisubrogation doctrine.” In 2014, the Missouri Supreme Court held FEHBA does not preempt Missouri's anti-subrogation law, thus barring FEHBA carriers from seeking subrogation or reimbursement even when they are required to do so through their contracts. Therefore, Petitioner is not entitled to reimbursement.  This holding conflicted with other state and federal court decisions.  The United States Supreme Court reversed this decision, remanding for “further consideration in light of new regulations promulgated by [OPM].” On remand the Missouri Supreme Court did not address the OPM regulation, or its previous holding; instead it held FEHBA’s preemption provision unconstitutional. Petitioner argues the Missouri Supreme Court’s holding “solidifies an existing conflict regarding the interpretation of a federal statute that affects millions of federal workers, and creates a second split concerning the constitutionality of the statute.” Further, Petitioner emphasizes the Missouri Supreme Court’s holding contradicts the United States Supreme Court’s precedent.