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Coventry Health Care of Missouri v. Nevils

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Supreme Court of the United States
Coventry Health Care of Missouri v. Nevils
Reference: 16-149
Issue: Federalism
Term: 2016
Important Dates
Argued: March 1, 2017
Decided: April 18, 2017
Outcome
Missouri Supreme Court reversed and remanded
Vote
8-0 to reverse and remand
Majority
Chief Justice John G. Roberts • Anthony Kennedy • Clarence Thomas • Ruth Bader Ginsburg • Stephen Breyer • Samuel Alito • Sonia Sotomayor • Elena Kagan
Concurring
Thomas


Coventry Health Care of Missouri, Inc. v. Nevils is a case argued during the October 2016 term of the U.S. Supreme Court. Argument in the case was held on March 1, 2017. The case came on a writ of certiorari to the Missouri Supreme Court. On April 18, 2017, in a unanimous opinion by Justice Ruth Bader Ginsburg, the court reversed and remanded the judgment of the Missouri Supreme Court.

In the case, the court held that a Missouri state law unconstitutionally conflicted with a federal law permitting insurance companies under contract with the Office of Personnel Management (OPM) to pursue subrogation. Subrogation is a legal right that lets one party make a payment that is actually owed by another party, later collecting the money from the indebted party after the fact. Missouri's law prohibited any insurer from pursuing subrogation, which was in conflict with a provision of the Federal Employees Health Benefits Act (FEHBA) permitting insurers to pursue subrogation. Justice Clarence Thomas authored a concurring opinion.

HIGHLIGHTS
  • The case: A Missouri law prohibits insurance companies from pursuing subrogation in personal injury claims by barring insurers from obtaining reimbursement from its insured’s third-party personal injury recoveries, which Missouri says goes against public policy. A federal law, the Federal Employees Health Benefits Act (FEHBA), and regulations of the Office of Personnel Management (OPM) permit subrogation by private insurers for its federal health plans. Language in the federal law and in federal regulations issued by OPM indicate that the federal components supersede any components under state or local law. The Missouri Supreme Court, however, held that neither FEHBA nor OPM's regulations preempt its anti-subrogation law.
  • The issue: Did the Missouri Supreme Court err in holding that FEHBA and OPM's regulations do not preempt Missouri's anti-subrogation law?
  • The outcome: On April 18, 2017, the court reversed and remanded the judgment of the Missouri Supreme Court


    • In brief: Federal law gives the Office of Personnel Management (OPM) authority to enter into contracts with private medical insurers to administer health benefits plans for federal employees. The law—the Federal Employees Health Benefits Act (FEHBA)—and regulations issued by OPM both contain language saying that the federal law and regulations under it supersede any countervailing provisions from states or municipalities. Missouri has a state-level law prohibiting insurers from practicing subrogation in the state as a matter of public policy. (Subrogation ) Coventry Health Care of Missouri, Inc., a private insurer under contract with OPM to provide health plans to federal employees, argues that the Missouri law's proscription against subrogation is preempted by federal law. The Missouri Supreme Court upheld the Missouri law on two separate occasions, however. Argument in the case was held on March 1, 2017.

    You can review the Missouri Supreme Court's opinion here.[1]

    Click on the tabs below to learn more about this Supreme Court case.

    Case

    Background

    The Federal Employees Health Benefits Act (FEHBA), codified as 5 U.S.C. §8901 et seq., authorizes the Office of Personnel Management (OPM) to enter into contracts with private insurance carriers to administer benefit plans for federal workers. Under §8902(m)(1) of FEHBA, "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."[2] In a 2014 Missouri Supreme Court decision, Nevils v. Group Health Plan, Inc., the court held that §8902(m)(1) did not preempt a Missouri law prohibiting subrogation of personal injury claims. Subrogation refers to a legal right that lets one party make payments on behalf of another party, then collecting the money from the original indebted party after the fact.[3] According to the state supreme court,[1]

    “

    [T]he FEHBA preemption clause did not preempt Missouri anti-subrogation law because the subrogation of a personal injury claim does not clearly 'relate to the nature, provision, or extent of coverage or benefits.' ... the 'historic police powers of the States” are generally preempted only when the federal statute at issue indicates that preemption is the 'clear and manifest purpose of Congress.' ... The FEHBA preemption clause is ambiguous because it is subject to plausible, alternate interpretations. ... Specifically, the FEHBA preemption clause does not address the subrogation or reimbursement rights of insurance providers ... and 'there is no indication that Congress delegated to the OPM the authority to make binding interpretations of the scope of the FEHBA preemption clause.[4]

    		”

    While Group Health Plans, Inc. (now Coventry Health Care of Missouri) appealed to the U.S. Supreme Court, the OPM issued a new regulation in 2015. In it, OPM stated that "a carrier’s rights and responsibilities pertaining to subrogation and reimbursement under any FEHB contract relate to the nature, provision, and extent of coverage or benefits (including payments with respect to benefits) within the meaning of 5 U.S.C. 8902(m)(1). These rights and responsibilities are therefore effective notwithstanding any state or local law, or any regulation issued thereunder, which relates to health insurance or plans."[5]

    Based on this modified regulation, the U.S. Supreme Court granted certiorari on Coventry's appeal, vacated the Missouri Supreme Court's judgment, and remanded the case to see if the revised OPM regulation under FEHBA preempted Missouri's anti-subrogation law.[1]

    On remand, the Missouri Supreme Court held that the text of FEHBA's preemption clause had not been modified since the 2014 ruling and that the OPM regulation did not overcome the presumption against preemption—nor did the regulation demonstrate Congress’ clear and manifest intent to preempt state law. Based on this interpretation, the state supreme court held that the 2015 OPM regulation did not establish that FEHBA preempted Missouri's law prohibiting subrogation of personal injury claims.[1]

    Petitioner's challenge

    Coventry Health Care of Missouri, the petitioner, challenged the holding of the Missouri Supreme Court that Missouri's anti-subrogation law is not preempted by an OPM regulation issued under FEHBA.

    Certiorari granted

    On August 1, 2016, Coventry Health Care of Missouri, the petitioner, initiated proceedings in the U.S. Supreme Court in filing a petition for a writ of certiorari to the Missouri Supreme Court. The U.S. Supreme Court granted Coventry's certiorari request on November 4, 2016. Argument in the case was held on March 1, 2017.

    Arguments


    Questions presented

    Questions presented:

    "The questions presented are:
    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)(l), violates the Supremacy Clause."[6]


    Audio

    • Audio of oral argument:[7]



    Transcript

    • Transcript of oral argument:[8]

    Outcome

    Decision

    Justice Ruth Bader Ginsburg delivered the opinion for a unanimous court. Justice Clarence Thomas wrote a concurring opinion. The court held that a Missouri state law unconstitutionally conflicted with a federal law permitting insurance companies under contract with the Office of Personnel Management (OPM) to pursue subrogation. Subrogation is a legal right that lets one party make a payment that is actually owed by another party, later collecting the money from the indebted party after the fact. Missouri's law prohibited any insurer from pursuing subrogation, which was in conflict with a provision of the Federal Employees Health Benefits Act (FEHBA) permitting insurers to pursue subrogation.[9]

    Opinion

    After a review of the procedural history of the case, the court held that the statutory text of the FEHBA relating to mechanisms for subrogation and repayment plainly related to payments with respect to benefits and, because of this, Missouri's law barring subrogation and repayment was preempted by FEHBA. The court also rejected Nevils' assertion that the regulatory scheme created by FEHBA violated the Supremacy Clause of the Constitution. In her opinion, Justice Ginsburg wrote,[9]

    “

    Nevils further contends that, if §8902(m)(1) covers subrogation and reimbursement clauses in OPM contracts, then the statute itself would violate the Supremacy Clause by assigning preemptive effect to the terms of a contract, not to the laws of the United States. ... Many other federal statutes preempt state law in this way, leaving the context-specific scope of preemption to contractual terms. ... Nevils instead attempts to distinguish those other statutes by highlighting a particular textual feature of §8902(m)(1): Section 8902(m)(1) states that the terms of any contract between OPM and a carrier 'shall supersede and preempt' certain state or local laws. (Emphasis added.) That formulation, Nevils asserts, violates the Supremacy Clause’s mandate that only the Laws of the United States may reign supreme over state law. U. S. Const., Art. VI, cl. 2 (emphasis added). Nevils’ argument elevates semantics over substance. While Congress’ formulation might differ from the phrasing of other statutes, §8902(m)(1) manifests the same intent to preempt state law. Because we do not require Congress to employ a particular linguistic formulation when preempting state law, Nevils’ Supremacy Clause challenge fails.[4]

    		”

    As a result of the court's opinion, the judgment of the Missouri Supreme Court was reversed and the case was remanded for further proceedings.

    Concurring opinions

    Justice Clarence Thomas authored a one-paragraph opinion in the case. He wrote,[9]

    “

    I join the opinion of the Court with one reservation. A statute that confers on an executive agency the power to enter into contracts that pre-empt state law—such as the Federal Employee Health Benefits Act of 1959, 5 U. S. C. §8902—might unlawfully delegate legislative power to the President insofar as the statute fails sufficiently to constrain the President’s contracting discretion. ... Respondent, however, failed to make that argument. The Court therefore appropriately leaves that issue to be decided, if at all, on remand.[4]

    		”

    Dissenting opinions

    There were no dissenting opinions filed in this case.


    The opinion

    Filings

    The U.S. Supreme Court granted Coventry's certiorari request on November 4, 2016.

    Merits filings

    Parties' briefs

    • Coventry Health Care of Missouri, the petitioner, filed a merits brief on December 19, 2016.
    • Jodie Nevils, the respondent, filed a merits brief on January 18, 2017.

    Amicus curiae briefs

    The following groups filed amicus curiae briefs in support of the petitioner, Coventry Health Care of Missouri, Inc.:

    • Brief of America's Health Insurance Plans et al.
    • Brief of the United States of America

    The following groups filed amicus curiae briefs in support of the respondent, Jodie Nevils:

    • Brief of the American Association for Justice
    • Brief of the Missouri Association of Trial Attorneys
    • Brief of the National Governors' Association et al.
    • Brief of various constitutional and administrative law scholars

    Certiorari filings

    Parties' filings

    • Coventry Health Care of Missouri, the petitioner, filed a petition for certiorari on August 1, 2016.

    See also

    Footnotes

    1. ↑ 1.0 1.1 1.2 1.3 Supreme Court of Missouri, Jodie Nevils v. Group Health Plan, Inc., and ACS Recovery Services, Inc., May 3, 2016
    2. ↑ Cornell University's Legal Information Institute, "5 U.S. Code § 8902 - Contracting authority," accessed February 23, 2017
    3. ↑ DMV.org, "Subrogation," accessed February 23, 2017
    4. ↑ 4.0 4.1 4.2 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
    5. ↑ Cornell University's Legal Information Institute, "5 CFR 890.106 - Carrier entitlement to pursue subrogation and reimbursement recoveries," accessed February 23, 2017
    6. ↑ Supreme Court of the United States, Coventry Health Care of Missouri, Inc. v. Nevils, November 4, 2016
    7. ↑ Supreme Court of the United States, Coventry Health Care of Missouri v. Nevils, argued March 1, 2017
    8. ↑ Supreme Court of the United States, Coventry Health Care of Missouri v. Nevils, argued March 1, 2017
    9. ↑ 9.0 9.1 9.2 Supreme Court of the United States, Coventry Health Care of Missouri, Inc., FKA Group Health Plan, Inc. v. Jodie Nevils, decided April 18, 2017
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