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Regulation and Compliance > Federal Regulation

High Court Ruling

By Arthur D. Postal

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The U.S. Supreme Court ruled 5-4 that health insurers serving federal employees must seek reimbursement of monies paid to claimants under state law, not federal law.

An official in the Washington office of the Blue Cross and Blue Shield Association expressed disappointment with the ruling.

But Larry Akey, a spokesman for America’s Health Insurance Plans, says the decision was made on technical grounds concerning jurisdiction and does not appear to narrow a May decision that dealt with subrogation, or reimbursement of health insurers by third parties who have helped to pay for insureds’ medical care.

“Subrogation is a big issue,” Akey says. “But this case was decided purely on jurisdictional issues. We are not concerned as much about this case, because it does not deal directly with subrogation, but as to whether state or federal courts have jurisdiction in this narrowly defined set of circumstances.”

In the May decision, Sereboff v. MAMSI, the Supreme Court ruled that health plans can ask for reimbursement for previously provided benefits from a recipient if the recipient receives payment for the services from someone else.

The court’s new ruling, on Empire HealthChoice Assurance Inc., DBA Empire Blue Cross Blue Shield vs. McVeigh, as administratrix of the Estate of McVeigh, deals with the estate of a federal employee who was mortally injured in an auto accident. The employee’s family later collected damages from third parties who were held to be responsible for the death.

Justice Ruth Bader Ginsburg wrote the majority opinion. In the Empire decision, the court interprets the Federal Employees Health Benefits Act of 1959, saying that law contains no provision addressing carriers’ subrogation rights. The court holds that the law’s sole jurisdictional provision vests federal district courts only with “original jurisdiction . . . of a civil action or claim against the United States.”

Although a federal Office of Personnel Management regulation channels disputes over coverage or benefits into federal court by designating OPM the sole defendant, “no law opens federal courts to carriers seeking reimbursement,” Ginsburg writes.

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