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Supreme Court eyes benefits preemption cases

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The U.S. Supreme Court is looking into a case that could affect when and how federal benefits laws trump state insurance laws.

The court today issued orders asking the U.S. solicitor general to weigh in on Coventry Health Care of Missouri Inc. vs. Jodie Nevils (13-1305) and Aetna Life Insurance Company vs. Mattthew Kobold (13-1467).

The Federal Employees Health Benefits Act of 1959 (FEHBA) — the law that governs federal employees’ health benefits — lets health insurers put liens on enrollees’ lawsuit recoveries when enrollees injured by others get money by filing negligence suits. One part of FEHBA, FEHBA Section 8902(m)(1), states that FEHBA preempts state anti-subrogation laws, or laws that prohibit insurers from suing the parties that have hurt their insureds for recoveries.

The U.S. Office of Personnel Management (OPM) — the agency that runs the Patient Protection and Affordable Care Act (PPACA) multi-state plan program — runs the federal health benefits program and is usually responsible for interpreting FEHBA.

Arizona and Missouri both forbid health insurers from seeking reimbursement for benefits paid from health plan members’ lawsuit recovery money. The Missouri Supreme Court argued that Congress can’t use FEHBA to have a contract provision pre-empt state anti-reimbursement laws. Arizona has a similar anti-reimbursement law, and an Arizona state court came to a similar conclusion.

Insurers argue that letting FEHBA preempt state laws is important.

Lawyers for Coventry Health Care of Missouri Inc., for example, argue in a brief filed in connection with the Nevils case that the text of FEHBA is similar to the section of the Employee Retirement Income Security Act (ERISA) that preempts state efforts to shield patients from plan moves to seek reimbursement for benefits paid from lawsuit recoveries.

The federal government itself argued in a pleading filed in connection with the Kobold case that it “‘is exceedingly unlikely that Congress intended a broader role for state law,’ or ‘desired less uniformity,’ ‘in the case of federal employees than for private employees,’” lawyers for Coventry write.

OPM generally has federal health benefits program contracts include provisions requiring enrollees to pay the plans back if the enrollees get recoveries from other parties, Coventry’s lawyers write.

Lawyers for Nevils argue in another brief that FEHBA preempts state anti-subrogation laws, or laws that prohibit insurers from suing the parties who have caused an insured’s injury, but that FEHBA does not let a contract preempt state laws prohibiting an insurer from trying to seek reimbursement directly from the insured’s recoveries. Nevils’ lawyers say the petitioners are trying to blur the distinction between the term “subrogation” and the term “reimbursement.” Nevils’ lawyers contend that the health plan contract provision in the Nevils case does not include a provision that lets the insurer seek reimbursement from the insured.


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