Coventry Health Care of Mo., Inc. v. Nevils

• Citation: 197 L.Ed.2d 572,137 S.Ct. 1190
• Decision Date: 18 April 2017
• Docket Number: No. 16–149.,16–149.
• Parties: COVENTRY HEALTH CARE OF MISSOURI, INC., fka Group Health Plan, Inc., Petitioner v. Jodie NEVILS.
• Court: United States Supreme Court

137 S.Ct. 1190

197 L.Ed.2d 572

COVENTRY HEALTH CARE OF MISSOURI, INC., fka Group Health Plan, Inc., Petitioner

v.Jodie NEVILS.

No. 16–149.

Supreme Court of the United States

Argued March 1, 2017.

Decided April 18, 2017.

Miguel A. Estrada, Washington, DC, for petitioner.

Zachary D. Tripp for the United States as amicus curiae, by special leave of the Court, supporting the petitioner.

Matthew W.H. Wessler, Washington, DC, for respondent.

Ralph K. Phalen, Phalen Law, Mitchell L. Burgess, Burgess Law Firm, Kansas City, MO, John Campbell, Campbell Law, LLC, St. Louis, MO, Matthew Wessler, Deepak Gupta, Matthew Spurlock, Rachel S. Bloomekatz, Gupta Wessler PLLC, Washington, DC, Brian Wolfman, Washington, DC, for respondent.

Thomas N. Sterchi, David M. Eisenberg, Baker Sterchi Cowden & Rice, LLC, Kansas City, MO, Miguel A. Estrada, Jonathan C. Bond, Ryan N. Watzel, Gibson, Dunn & Crutcher LLP, Washington, DC, for petitioner.

Justice GINSBURG delivered the opinion of the Court.

In the Federal Employees Health Benefits Act of 1959 (FEHBA), 5 U.S.C. § 8901 et seq., Congress authorized the Office of Personnel Management (OPM) to contract with private carriers for federal employees' health insurance. § 8902(a), (d). FEHBA contains a provision expressly preempting state law. § 8902(m)(1). That provision reads:

"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."

Contracts OPM negotiates with private carriers provide for reimbursement and subrogation. Reimbursement requires an insured employee who receives payment from another source (e.g., the proceeds yielded by a tort claim) to return healthcare costs earlier paid out by the carrier. Subrogation involves transfer of the right to a third-party payment from the insured employee to the carrier, who can then pursue the claim against the third party. Several States, however, Missouri among them, bar enforcement of contractual subrogation and reimbursement provisions.

The questions here presented: Does FEHBA's express-preemption prescription, § 8902(m)(1), override state law prohibiting subrogation and reimbursement; and if § 8902(m)(1) has that effect, is the statutory prescription consistent with the Supremacy Clause, U.S. Const. Art. VI, cl. 2 ? We hold, contrary to the decision of the Missouri Supreme Court, that contractual subrogation and reimbursement prescriptions plainly "relate to ... payments with respect to benefits," § 8902(m)(1) ; therefore, by statutory instruction, they override state law barring subrogation and reimbursement. We further hold, again contrary to the Missouri Supreme Court, that the regime Congress enacted is compatible with the Supremacy Clause. Section 8902(m)(1) itself, not the contracts OPM negotiates, triggers the federal preemption. As Congress directed, where FEHBA contract terms "relate to the nature, provision, or extent of coverage or benefits (including payments with respect to benefits)," § 8902(m)(1) ensures that those terms will be uniformly enforceable nationwide, free from state interference.

I

A

FEHBA "establishes a comprehensive program of health insurance for federal employees." Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677, 682, 126 S.Ct. 2121, 165 L.Ed.2d 131 (2006). As just noted, supra, at 1194, FEHBA contains an express-preemption provision, § 8902(m)(1). FEHBA assigns to OPM broad administrative and rulemaking authority over the program. See §§ 8901 – 8913. OPM contracts with private insurance carriers to offer a range of healthcare plans. §§ 8902, 8903.

OPM's contracts with private carriers have long included provisions requiring those carriers to seek subrogation and reimbursement. Accordingly, OPM has issued detailed regulations governing subrogation and reimbursement clauses in FEHBA contracts. See 5 C.F.R. § 890.106 (2016). Under those regulations, a carrier's "right to pursue and receive subrogation and reimbursement recoveries constitutes a condition of and a limitation on the nature of benefits or benefit payments and on the provision of benefits under the plan's coverage." § 890.106(b)(1).

In 2015, after notice and comment, OPM published a rule confirming that "[a] carrier's rights and responsibilities pertaining to subrogation and reimbursement under any [FEHBA] contract relate to the nature, provision, and extent of coverage or benefits (including payments with respect to benefits) within the meaning of" § 8902(m)(1). § 890.106(h). Such "rights and responsibilities," OPM's rule provides, "are ... effective notwithstanding any state or local law, or any regulation issued thereunder, which relates to health insurance or plans." Ibid. Its rule, OPM explained, "comports with longstanding Federal policy and furthers Congres[s'] goals of reducing health care costs and enabling uniform, nationwide application of [FEHBA] contracts." 80 Fed.Reg. 29203 (2015) (final rule).

B

Respondent Jodie Nevils is a former federal employee who enrolled in and was insured under a FEHBA plan offered by petitioner Coventry Health Care of Missouri.¹ Nevils v. Group Health Plan, Inc., 418 S.W.3d 451, 453 (Mo.2014) (Nevils I ). When Nevils was injured in an automobile accident, Coventry paid his medical expenses. Ibid. Nevils sued the driver who caused his injuries and recovered a settlement award. Ibid. Based on its contract with OPM, see App. to Pet. for Cert. 129a–130a, Coventry asserted a lien for $6,592.24 against part of the settlement proceeds to cover medical bills it had paid. Nevils I, 418 S.W.3d, at 453. Nevils repaid that amount, thereby satisfying the lien. Ibid.

Nevils then filed this class action against Coventry in Missouri state court, alleging that Coventry had unlawfully obtained reimbursement. Ibid. Nevils premised his claim on Missouri law, which does not permit subrogation or reimbursement in this context, see, e.g., Benton House, LLC v. Cook & Younts Ins., Inc., 249 S.W.3d 878, 881–882 (Mo.App.2008). Coventry countered that § 8902(m)(1) makes subrogation and reimbursement clauses in FEHBA contracts enforceable notwithstanding state law. The trial court granted summary judgment in Coventry's favor, Nevils v. Group Health Plan, Inc., No. 11SL–CC00535 (Cir. Ct., St. Louis Cty., Mo., May 21, 2012), App. to Pet. for Cert. 28a, 32a, and the Missouri Court of Appeals affirmed, Nevils v. Group Health Plan, Inc., 2012 WL 6689542, *5 (Dec. 26, 2012).

The Missouri Supreme Court reversed. Nevils I, 418 S.W.3d, at 457. That court began with "the assumption that the historic police powers of the States [are] not to be superseded by ... Federal Act unless that [is] the clear and manifest purpose of Congress." Id., at 454 (quoting Cipollone v. Liggett Group, Inc., 505 U.S. 504, 516, 112 S.Ct. 2608, 120 L.Ed.2d 407 (1992) ) (alterations in original). Finding § 8902(m)(1) susceptible to diverse "plausible readings," the court invoked a "presumption against preemption" to conclude that the federal statute's preemptive scope excluded subrogation and reimbursement. 418 S.W.3d, at 455.

Judge Wilson, joined by Judge Breckenridge, concurred in the judgment. Id., at 457. Observing that "it defies logic to insist that benefit repayment terms do not relate to the nature or extent of Nevils' benefits," id., at 460 (emphasis deleted), Judge Wilson concluded that "Congress plainly intended for § 8902(m)(1) to apply to the benefit repayment terms in [Coventry's] contract," id., at 462. He nevertheless concurred, reasoning that the Supremacy Clause did not authorize preemption based on the terms of FEHBA contracts. Id., at 462–465.

Coventry sought our review, and we invited the Solicitor General to file a brief expressing the views of the United States. Coventry Health Care of Mo., Inc. v. Nevils, 574 U.S. ––––, 135 S.Ct. 323, 190 L.Ed.2d 19 (2014). While Coventry's petition was pending, OPM finalized its rule governing subrogation and reimbursement. See supra, at 1195. This Court granted certiorari, vacated the Missouri Supreme Court's judgment, and remanded for further consideration in light of OPM's recently adopted rule. Coventry Health Care of Mo., Inc. v. Nevils, 576 U.S. ––––, 135 S.Ct. 2886, 192 L.Ed.2d 918 (2015).

On remand, the Missouri Supreme Court adhered to its earlier decision. Nevils v. Group Health Plan, Inc., 492 S.W.3d 918, 920, 925 (2016). OPM's rule, the court maintained, "does not overcome the presumption against preemption and demonstrate Congress' clear and manifest intent to preempt state law." Id., at 920.

Judge Wilson again concurred, this time joined by a majority of the judges of the Missouri Supreme Court. Id., at 925.² In their view, Congress' "attempt to give preemptive effect to the provisions of a contract between the federal government and a private party is not a valid application of the Supremacy Clause" and, "therefore, does not displace Missouri law here." Ibid.

We granted certiorari to resolve conflicting interpretations of § 8902(m)(1). 580 U.S. ––––, 137 S.Ct. 446, 196 L.Ed.2d 326 (2016). Compare 492 S.W.2d, at 925 (majority opinion), with Bell v. Blue Cross & Blue Shield of Okla., 823 F.3d 1198, 1199 (C.A.8 2016) ( § 8902(m)(1) preempts state antisubrogation law); Helfrich v. Blue Cross & Blue Shield Assn., 804 F.3d 1090, 1092 (C.A.10 2015) (same).

II

Section 8902(m)(1) places two preconditions on federal preemption. See supra, at 1194. The parties agree that Missouri's law prohibiting subrogation and reimbursement meets one of the two limitations, i.e., the State's law "relates to health insurance or plans." § 8902(m)(1). They dispute only whether the subrogation and reimbursement requirements in OPM's contract with Coventry "relate to the nature, provision, or extent of coverage or benefits," "including payments with respect to benefits." Ibid.

Coventry contends that §...