Bell v. Blue Cross & Blue Shield of Okla.

• Decision Date: 26 May 2016
• Docket Number: No. 14-3731,14-3731
• Citation: 823 F.3d 1198
• Parties: Teresa Bell, Plaintiff–Appellant, v. Blue Cross and Blue Shield of Oklahoma, a Division of Health Care Service Corporation, a Mutual Legal Reserve Company agent of Health Care Service Corporation; Blue Cross and Blue Shield of Texas, a Division of Health Care Service Corporation, a Mutual Legal Reserve Company agent of Health Care Service Corporation, Defendants–Appellees, Association of Federal Health Organizations; United States, Amici on Behalf of Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

823 F.3d 1198

Teresa Bell, Plaintiff–Appellant

v. Blue Cross and Blue Shield of Oklahoma, a Division of Health Care Service Corporation, a Mutual Legal Reserve Company agent of Health Care Service Corporation; Blue Cross and Blue Shield of Texas, a Division of Health Care Service Corporation, a Mutual Legal Reserve Company agent of Health Care Service Corporation, Defendants–AppelleesAssociation of Federal Health Organizations; United States, Amici on Behalf of Appellees.

No. 14-3731

United States Court of Appeals, Eighth Circuit.

Submitted: September 23, 2015

Filed: May 26, 2016

Counsel who presented argument on behalf of the appellant was Matthew W.H. Wessler, of Washington, DC. In addition to Mr. Wessler, the following attorney(s) appeared on the appellant's brief; Richard Andrew Bright, of Arkadelphia, AR, and Gabriel S.H. Hopkins, of Washington, DC.

Counsel who presented argument on behalf of the appellees was Adam P Feinberg, of Washington, DC. In addition to Mr. Feinberg, the following attorney(s) appeared on the appellees' brief; Anthony F. Shelley, of Washington, DC.

Counsel who presented argument on behalf of amicus—United States—in support of appellees was Henry Charles Whitaker of Washington, DC. In addition to Mr. Whitaker, the following attorney(s) appeared on the amicus brief; Alisa B. Klein of Washington, DC.

The following attorney(s) appeared on the amicus brief of Association of Federal Health Organizations; David M. Ermer, of Washington, DC.

Before WOLLMAN, COLLOTON, and KELLY, Circuit Judges.

COLLOTON, Circuit Judge.

This appeal concerns a dispute between Teresa Bell and two Blue Cross and Blue Shield insurance carriers that administer Bell's government-sponsored benefit plan (“the Plan”). Bell was injured in a motor vehicle accident in Arkansas, and the Plan paid medical benefits on Bell's behalf. Bell then received a payment from a different carrier that insured the party who was allegedly responsible for Bell's injury.

The Blue Cross carriers contend that under the terms of Bell's benefit plan, she must use any monies obtained from the alleged tortfeasor's insurer to reimburse the Plan for medical benefits paid by Blue Cross. Bell responds that under Arkansas law, she is not required to reimburse the Plan unless she has been wholly compensated for her injuries, and that she was not “made whole” by the payments from Blue Cross and the alleged tortfeasor's insurer. Blue Cross's position is that a provision of the Federal Employees Health Benefits Act, 5 U.S.C. § 8902(m)(1), expressly preempts Bell's state-law defense, and that the Plan governs the question of reimbursement. We conclude that federal law preempts the Arkansas state-law defense, and that Bell must reimburse the Plan. We therefore affirm the decision of the district court.^*

I.

The Federal Employees Health Benefits Act of 1959 (“FEHBA”), 5 U.S.C. §§ 8901 -14, creates a “comprehensive program of health insurance for federal employees.” Empire HealthChoice Assur., Inc. v. McVeigh , 547 U.S. 677, 682, 126 S.Ct. 2121, 165 L.Ed.2d 131 (2006). Under the Act, the Office of Personnel Management, commonly known as OPM, contracts with private carriers to offer federal employees a variety of health-care plans. 5 U.S.C. § 8902(a). One of these plans is the Blue Cross and Blue Shield Service Benefit Plan, a government-wide plan that is established between OPM and the Blue Cross and Blue Shield Association. See 5 U.S.C. § 8903(1) ; McVeigh , 547 U.S. at 682, 126 S.Ct. 2121. Blue Cross and Blue Shield companies in their respective localities administer this plan.

Each contract between OPM and a carrier like Blue Cross must include “a detailed statement of benefits offered.”

5 U.S.C. § 8902(d). OPM issues official descriptions of plan terms through a “statement of benefits” or “brochure.” See id. §§ 8902(a), (d), 8907. The Statement of Benefits for the contract at issue here includes a section discussing the rights of the parties when others are responsible for injuries to an employee. It provides, among other things, that if another person causes an employee to suffer an injury, and the Plan pays benefits for that injury, the employee must agree that the Plan is entitled to be reimbursed for its benefit payments even if the employee is not “made whole” for all of her damages in the recoveries that she receives.

Teresa Bell, an employee of the Department of Veterans Affairs, received health-care benefits through a government-sponsored plan that was administered by Blue Cross and Blue Shield of Oklahoma and Blue Cross and Blue Shield of Texas (collectively, “Blue Cross”). In October 2010, she sustained personal injuries and medical expenses from a motor vehicle accident that occurred in Arkansas. Bell's benefit plan paid $33,014.01 in medical benefits on her behalf. Bell also pursued a third party who allegedly caused her injury, and she received an undisclosed payment from Progressive Insurance Company, the alleged tortfeasor's insurer, pursuant to a settlement.

Bell and Blue Cross disputed whether Bell was required to use the funds received from Progressive Insurance to reimburse the Plan. Bell contends that under Arkansas law, the Plan cannot require reimbursement unless Bell has been wholly compensated for her injuries. See Shelter Mut. Ins. Co. v. Kennedy , 347 Ark. 184, 60 S.W.3d 458, 461 (2001). She represents that the payments from Blue Cross and Progressive did not wholly compensate her. Bell brought suit against Blue Cross in Arkansas state court, seeking a declaration that she is not required to reimburse the Plan.

Blue Cross removed the action to federal court on the theory that Blue Cross was a “person acting under” a federal officer. See 28 U.S.C § 1442(a)(1). The district court, relying on Jacks v. Meridian Res. Co. , 701 F.3d 1224 (8th Cir. 2012), denied Bell's motion to remand the case to state court.

Blue Cross moved for judgment on the pleadings. According to Blue Cross, the Plan terms described above require Bell to use monies that she obtained from Progressive Insurance to reimburse the Plan for benefit payments made, even if Bell has not been “made whole.” Blue Cross asserts that federal law, 5 U.S.C. § 8902(m)(1), provides that the terms of the Plan preempt Arkansas law on the question of the carriers' right to reimbursement, and that Bell must reimburse the Plan.

The district court granted Blue Cross's motion, concluding that § 8902(m)(1) expressly preempts Arkansas law. Bell appeals, and we review the district court's decision de novo .

II.

Section 8902(m)(1) provides that “[t]he 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 ... which relates to health insurance or plans.” 5 U.S.C. § 8902(m)(1) (emphases added). The Supreme Court has observed that § 8902(m)(1) “is a puzzling measure, open to more than one construction.” McVeigh , 547 U.S. at 697, 126 S.Ct. 2121. On one view, the subrogation and reimbursement clauses in the contract between OPM and Blue Cross function “as a condition or limitation on ‘benefits' received by a federal employee.” Id. Under that approach, the contractual terms “relate to ... benefits” within the meaning of § 8902(m)(1), and thus preempt state law. Id. An alternative reading, however, posits that § 8902(m)(1) refers to “contract terms relating to the beneficiary's entitlement (or lack thereof) to Plan payment for certain health-care services he or she has received, and not to terms relating to the carrier's postpayments right to reimbursement.” Id. Under that interpretation, the contractual clauses would not conflict with or preempt Arkansas law.

Because the Supreme Court in McVeigh deemed both constructions of the statute “plausible,” id. at 698, 126 S.Ct. 2121, the parties invoke rules of construction that favor their desired outcome. Bell cites a presumption against preemption that applies when a federal preemption clause is ambiguous. Blue Cross counters with OPM's rule, promulgated in 2015, stating that § 8902(m)(1) has preemptive effect. The carriers argue that the court should defer to the agency's reasonable construction of an ambiguous statute under the doctrine of Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc. , 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984).

Bell cites the Supreme Court's guidance that “when the text of a pre-emption clause is susceptible of more than one plausible reading, courts ordinarily ‘accept the reading that disfavors pre-emption.’ ” Altria Grp., Inc. v. Good , 555 U.S. 70, 77, 129 S.Ct. 538, 172 L.Ed.2d 398 (2008) (quoting Bates v. Dow Agrosciences LLC, 544 U.S. 431, 449, 125 S.Ct. 1788, 161 L.Ed.2d 687 (2005) ). “That assumption applies with particular force when Congress has legislated in a field traditionally occupied by the States.” Id. at 77, 129 S.Ct. 538. The vitality of this presumption against preemption, however, has been a subject of debate within the Supreme Court. A dissenting opinion in Altria Group suggested that application of the presumption has been sporadic, id. at 99, 129 S.Ct. 538 (Thomas, J., dissenting), and the most recent decision in this area was splintered. See CTS Corp. v. Waldburger , ––– U.S. ––––, 134 S.Ct. 2175, 2189, 189 L.Ed.2d 62 (2014) (plurality opinion) (applying presumption); id. at 2189 (Scalia, J., concurring in part and concurring in the judgment) (rejecting presumption and applying ordinary principles of statutory construction).

Whatever the force of the presumption against preemption as an interpretive tool, the Court has recognized that the presumption should not apply where “considerable federal interests” are at stake. United States v. Locke , 529 U.S. 89, 94, 108, 120 S.Ct. 1135, 146 L.Ed.2d 69 (2000). In Locke, a case involving regulations that affected maritime commerce, the Court opined that despite “the historic role of the States to...