Empire Healthchoice v. McVeigh, 126 S. Ct. 2121 (2006), No. 05-200

CourtUnited States Supreme Court
Writing for the CourtGINSBURG, J.,
Citation126 S.Ct. 2121,165 L.Ed 2d 131
Decision Date15 June 2006
Docket NumberNo. 05-200
PartiesEMPIRE HEALTHCHOICE ASSURANCE, INC., DBA EMPIRE BLUE CROSS BLUE SHIELD, PETITIONER v. DENISE F. MCVEIGH, AS ADMINISTRATRIX OF THE ESTATE OF JOSEPH E. MCVEIGH

126 S. Ct. 2121
165 L. Ed.
2d 131

EMPIRE HEALTHCHOICE ASSURANCE, INC., DBA EMPIRE BLUE CROSS BLUE SHIELD, PETITIONER
v.
DENISE F. MCVEIGH, AS ADMINISTRATRIX OF THE ESTATE OF JOSEPH E. MCVEIGH

No. 05-200

SUPREME COURT OF THE UNITED STATES

126 S. Ct. 2121
165 L. Ed.
2d 131

April 25, 2006, Argued

June 15, 2006, Decided


Affirmed.

GINSBURG, J., delivered the opinion of the Court, in which ROBERTS, C. J., and STEVENS, SCALIA, and THOMAS, JJ., joined. BREYER, J., filed a dissenting opinion, in which KENNEDY, SOUTER, and ALITO, JJ., joined.

GINSBURG

Page 2126

[138] JUSTICE GINSBURG delivered the opinion of the Court.

The Federal Employees Health Benefits Act of 1959 (FEHBA), 5 U.S.C. § 8901 et seq. (2000 ed. and Supp. III), establishes a comprehensive program of health insurance for federal employees. The Act authorizes the Office of Personnel Management (OPM) to contract with private carriers to offer federal employees an array of health-care plans. See § 8902(a) (2000 ed.). Largest of the plans for which OPM has contracted, annually since 1960,

Page 2127

is the Blue Cross Blue Shield Service Benefit Plan (Plan), administered by local Blue Cross Blue Shield companies. This case concerns the proper forum for reimbursement claims when a plan beneficiary, injured in an accident, whose medical bills have been paid by the plan administrator, recovers damages (unaided by the carrier-administrator) in [139] a state-court tort action against a third party alleged to have caused the accident.

FEHBA contains a preemption clause, § 8902(m)(1), displacing state law on issues relating to "coverage or benefits" afforded by health-care plans. The Act contains no provision addressing the subrogation or reimbursement rights of carriers. Successive annual contracts between OPM and the Blue Cross Blue Shield Association (BCBSA) have obligated the carrier to make "a reasonable effort" to recoup amounts paid for medical care. App. 95, 125. The statement of benefits distributed by the carrier alerts enrollees that all recoveries they receive "must be used to reimburse the Plan for benefits paid." Id., at 132; see also id., at 146, 152.

The instant case originated when the administrator of a Plan beneficiary's estate pursued tort litigation in state court against parties alleged to have caused the beneficiary's injuries. The carrier had notice of the state-court action, but took no part in it. When the tort action terminated in a settlement, the carrier filed suit in federal court seeking reimbursement of the full amount it had paid for the beneficiary's medical care. The question presented is whether 28 U.S.C. § 1331 (authorizing jurisdiction over "civil actions arising under the . . . laws . . . of the United States") encompasses the carrier's action. We hold it does not.

FEHBA itself provides for federal-court jurisdiction only in actions against the United States. Congress could decide and provide that reimbursement claims of the kind here involved warrant the exercise of federal-court jurisdiction. But claims of this genre, seeking recovery from the proceeds of state-court litigation, are the sort ordinarily resolved in state courts. Federal courts should await a clear signal from Congress before treating such auxiliary claims as "arising under" the laws of the United States.

I

FEHBA assigns to OPM responsibility for negotiating and regulating health benefits plans for federal employees. See 5 U.S.C. § 8902(a). OPM contracts with carriers, FEHBA instructs, "shall contain a detailed statement of benefits offered and shall include such maximums, limitations, exclusions, and other definitions of benefits as [OPM] considers necessary or desirable." § 8902(d). Pursuant to FEHBA, OPM entered into a contract in 1960 with the BCBSA to establish a nationwide fee-for-service health plan, the terms of which are renegotiated annually. As FEHBA prescribes, the Federal Government pays about 75% of the premiums; the enrollee pays the rest. § 8906(b) (2000 ed.). Premiums thus shared are deposited in a special Treasury Fund, the Federal Employees Health Benefits Fund, § 8909(a). Carriers draw against the Fund to pay for covered health-care benefits. Ibid.; see also 48 CFR § 1632.170(b) (2005).

The contract between OPM and the BCBSA provides: "By enrolling or accepting services under this contract, [enrollees and their eligible dependents] are obligated to all terms, conditions, and provisions of this contract." App. 90. An appended brochure sets out the benefits the carrier shall provide, see id., at 89, and the carrier's subrogation and recovery rights, see

Page 2128

id., at 100. Each enrollee, as FEHBA directs, receives a statement [140] of benefits conveying information about the Plan's coverage and conditions. 5 U.S.C. § 8907(b). Concerning reimbursement and subrogation, matters FEHBA itself does not address, the BCBSA Plan's statement of benefits reads in part:

"If another person or entity . . . causes you to suffer an injury or illness, and if we pay benefits for that injury or illness, you must agree to the following:

"All recoveries you obtain (whether by lawsuit, settlement, or otherwise), no matter how described or designated, must be used to reimburse us in full for benefits we paid. Our share of any recovery extends only to the amount of benefits we have paid or will pay to you or, if applicable, to your heirs, administrators, successors, or assignees."

. . . . .

"If you do not seek damages for your illness or injury, you must permit us to initiate recovery on your behalf (including the right to bring suit in your name). This is called subrogation.

"If we pursue a recovery of the benefits we have paid, you must cooperate in doing what is reasonably necessary to assist us. You must not take any action that may prejudice our rights to recover." App. 165. n1

If the participant does not voluntarily reimburse the Plan, the contract requires the carrier to make a "reasonable effort to seek recovery of amounts . . . it is entitled to recover in cases . . . brought to its attention." Id., at 95, 125. Pursuant to the OPM-BCBSA master contract, reimbursements obtained by the carrier must be returned to the Treasury Fund. See id., at 92, 118-119.

- - - - - - - - - Footnotes - - - - - - - - - - - - - - -

n1 The statement of benefits further provides:

"You must tell us promptly if you have a claim against another party for a condition that we have paid or may pay benefits for, and you must tell us about any recoveries you obtain, whether in or out of court. We may seek a lien on the proceeds of your claim in order to reimburse ourselves to the full amount of benefits we have paid or will pay.

"We may request that you assign to us (1) your right to bring an action or (2) your right to the proceeds of a claim for your illness or injury. We may delay processing of your claims until you provide the assignment.

"Note: We will pay the costs of any covered services you receive that are in excess of any recoveries made." App. 165.

- - - - - - - - End Footnotes- - - - - - - - - - - - -

FEHBA contains a preemption provision, which originally provided:

"The provisions of any contract under this chapter which relate to the nature 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 to the extent that such law or regulation is inconsistent with such contractual provisions." 5 U.S.C. § 8902(m)(1) (1994 ed.).

To assure uniform coverage and benefits under plans OPM negotiates for federal employees, see H. R. Rep. No. 95-282, p. 1 (1977), § 8902(m)(1) preempted "State laws or regulations which specify types of medical care, providers of care, extent of benefits, coverage of family members, age limits for family members, or other matters relating to health benefits or coverage," id., at 4-5 (noting that some States mandated coverage for services [141] not included in federal plans, for example, chiropractic services). In 1998, Congress amended § 8902(m)(1) by deleting the words "to the extent that such law or regulation is inconsistent with such contractual provisions." Thus, under § 8902(m)(1) as it now reads, state law -- whether consistent or inconsistent with federal plan provisions -- is displaced

Page 2129

on matters of "coverage or benefits."

FEHBA contains but one provision addressed to federal-court jurisdiction. That provision vests in federal district courts "original jurisdiction, concurrent with the United States Court of Federal Claims, of a civil action or claim against the United States founded on this chapter." § 8912. The purpose of this provision -- evident from its reference to the Court of Federal Claims -- was to carve out an exception to the statutory rule that claims brought against the United States and exceeding $ 10,000 must originate in the Court of Federal Claims. See 28 U.S.C. § 1346(a)(2) (establishing district courts' jurisdiction, concurrent with the Court of Federal Claims, over claims against the United States that do not exceed $ 10,000); see also S. Rep. No. 1654, 83d Cong., 2d Sess., pp. 4-5 (1954) (commenting, with respect to an identical provision in the Federal Employees Group Life Insurance Act, 5 U.S.C. § 8715, that the provision "would extend the jurisdiction of United States district courts above the $ 10,000 limitation now in effect").

Under a 1995 OPM regulation, suits contesting final OPM action denying health benefits "must be brought against OPM and not against the carrier or carrier's subcontractors." 5 CFR § 890.107(c) (2005). While this regulation channels disputes over coverage or benefits into federal court by designating a United States agency (OPM) sole defendant, no law opens federal courts to carriers seeking reimbursement from beneficiaries or recovery from tortfeasors. Cf. 29 U.S.C. § 1132(e)(1) (provision of the Employee...

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  • State v. Wayfair, Inc., 3:16–CV–03019–RAL
    • United States
    • U.S. District Court — District of South Dakota
    • January 17, 2017
    ...both by the Supreme Court and by the Eighth Circuit. See, e.g. , Empire Healthchoice Assurance, Inc. v. McVeigh , 547 U.S. 677, 699–701, 126 S.Ct. 2121, 165 L.Ed.2d 131 (2006) (describing Grable as "exemplary" and creating a "special and small category" of federal question jurisdiction that......
  • Byrne v. Wood, Herron & Evans, LLP, No. 2011–1012.
    • United States
    • United States Courts of Appeals. United States Court of Appeals for the Federal Circuit
    • March 22, 2012
    ...not directly create the cause of action, it is to be read narrowly. See Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677, 126 S.Ct. 2121, 165 L.Ed.2d 131 (2006). In Empire Healthchoice, the Court concluded that federal question jurisdiction does not exist over a health insurance......
  • Associated Wholesale Grocers, Inc. v. United Egg Producers (In re Processed Egg Prods. Antitrust Litig.), MDL No. 2002.
    • United States
    • United States District Courts. 3th Circuit. United States District Court (Eastern District of Pennsylvania)
    • December 20, 2011
    ...depends on resolution of a substantial question of federal law.” Empire Healthchoice Assurance Inc. v. McVeigh, 547 U.S. 677, 690, 126 S.Ct. 2121, 165 L.Ed.2d 131 (2006) (citing Franchise Tax Bd., 463 U.S. at 27–28, 103 S.Ct. 2841).2 A familiar, if cynical, corollary to the well-pleaded com......
  • Barone v. Bausch & Lomb, Inc., 6:17-CV-06877 EAW
    • United States
    • United States District Courts. 2nd Circuit. United States District Court of Western District of New York
    • March 12, 2019
    ...13-CV-652-A, 2013 WL 3761550, at *2 (W.D.N.Y. July 16, 2013) (quoting Empire Healthchoice Assurance, Inc. v. McVeigh , 547 U.S. 677, 699, 126 S.Ct. 2121, 165 L.Ed.2d 131 (2006) ); see NASDAQ OMX Grp., Inc. v. UBS Sec., LLC , 770 F.3d 1010, 1019 (2d Cir. 2014) ("[T]he Supreme Court has been ......
  • Request a trial to view additional results
433 cases
  • State v. Wayfair, Inc., 3:16–CV–03019–RAL
    • United States
    • U.S. District Court — District of South Dakota
    • January 17, 2017
    ...both by the Supreme Court and by the Eighth Circuit. See, e.g. , Empire Healthchoice Assurance, Inc. v. McVeigh , 547 U.S. 677, 699–701, 126 S.Ct. 2121, 165 L.Ed.2d 131 (2006) (describing Grable as "exemplary" and creating a "special and small category" of federal question jurisdiction that......
  • Byrne v. Wood, Herron & Evans, LLP, No. 2011–1012.
    • United States
    • United States Courts of Appeals. United States Court of Appeals for the Federal Circuit
    • March 22, 2012
    ...not directly create the cause of action, it is to be read narrowly. See Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677, 126 S.Ct. 2121, 165 L.Ed.2d 131 (2006). In Empire Healthchoice, the Court concluded that federal question jurisdiction does not exist over a health insurance......
  • Associated Wholesale Grocers, Inc. v. United Egg Producers (In re Processed Egg Prods. Antitrust Litig.), MDL No. 2002.
    • United States
    • United States District Courts. 3th Circuit. United States District Court (Eastern District of Pennsylvania)
    • December 20, 2011
    ...depends on resolution of a substantial question of federal law.” Empire Healthchoice Assurance Inc. v. McVeigh, 547 U.S. 677, 690, 126 S.Ct. 2121, 165 L.Ed.2d 131 (2006) (citing Franchise Tax Bd., 463 U.S. at 27–28, 103 S.Ct. 2841).2 A familiar, if cynical, corollary to the well-pleaded com......
  • Barone v. Bausch & Lomb, Inc., 6:17-CV-06877 EAW
    • United States
    • United States District Courts. 2nd Circuit. United States District Court of Western District of New York
    • March 12, 2019
    ...13-CV-652-A, 2013 WL 3761550, at *2 (W.D.N.Y. July 16, 2013) (quoting Empire Healthchoice Assurance, Inc. v. McVeigh , 547 U.S. 677, 699, 126 S.Ct. 2121, 165 L.Ed.2d 131 (2006) ); see NASDAQ OMX Grp., Inc. v. UBS Sec., LLC , 770 F.3d 1010, 1019 (2d Cir. 2014) ("[T]he Supreme Court has been ......
  • Request a trial to view additional results

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