Macon-Bibb County Hosp. Authority v. National Treasury Employees Union

• Decision Date: 30 May 1995
• Docket Number: No. S94G1622,MACON-BIBB,S94G1622
• Parties: , 19 Employee Benefits Cas. 1501 COUNTY HOSPITAL AUTHORITY v. NATIONAL TREASURY EMPLOYEES UNION.
• Court: Georgia Supreme Court

Page 95

458 S.E.2d 95

265 Ga. 557, 19 Employee Benefits Cas. 1501

MACON-BIBB COUNTY HOSPITAL AUTHORITY v. NATIONAL TREASURY EMPLOYEES UNION.

No. S94G1622.

Supreme Court of Georgia.

May 30, 1995.

Reconsideration Denied July 7, 1995.

John A. Draughon, Michelle W. Johnson, Sell & Melton, Macon, for Macon-Bibb County Hosp. Authority.

Gregory O'Duden, National Treasury Employees Union, Washington, DC, Elaine Kaplan, Mark Sanger, National Treasury Employees Union, Atlanta, for appellant.

Jack Spalding Schroder, Jr., Daniel A. Kent, Alston & Bird, Atlanta, amicus curiae.

BENHAM, Presiding Justice.

The Macon-Bibb County Hospital Authority (the Authority) provided medical care to the newborn son of a federal employee who was an insured under a group insurance policy sponsored by the National Treasury Employees Union (NTEU) and issued under the Federal Employees Health Benefits Act (FEHBA), 5 U.S.C. § 8901 et seq. The Authority alleged that it provided care after being assured by the insurer that the infant was covered by his mother's insurance policy. When the insurer subsequently denied coverage for the infant, the Authority filed suit in the State Court of DeKalb County, seeking damages for NTEU's alleged negligent misrepresentation. The trial court denied NTEU's motion for summary judgment in which NTEU asserted that the Authority's state law claim was federally preempted under FEHBA, 5 U.S.C. § 8902(m)(1). The Court of Appeals granted NTEU's application for interlocutory review and, relying on a U.S. Supreme Court decision addressing preemption under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001 et seq., reversed the trial court's judgment. NTEU v. Macon-Bibb County Hosp. Auth., 213 Ga.App. 724, 445 S.E.2d 777 (1994). Shortly thereafter, the U.S. Court of Appeals for the Eleventh Circuit issued an opinion concerning federal preemption of a third-party health care provider's state law claims in Lordmann Enterprises v. Equicor, 32 F.3d 1529 (11th Cir.1994). We granted the Authority's petition for certiorari, asking the parties to evaluate the validity of the Court of Appeals' judgment in light of the 11th Circuit's holding in Lordmann.

1. FEHBA is legislation passed by Congress "to protect federal employees against the high and unpredictable costs of medical care" and "to afford federal employees the best possible health coverage at the lowest possible cost to themselves." Doe v. Devine, 703 F.2d 1319, 1327-1328 (D.C.Cir.1983). The FEHBA preemption statute at the center of this controversy, 5 U.S.C. § 8902(m)(1)(a), states:

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.

The issue is whether the Authority's negligent misrepresentation claim "relates to health insurance or plans ..." in a manner inconsistent with the health insurance policy's contractual provisions.

As noted by the Court of Appeals, the decisions of the federal courts of appeal are not binding on this court, but their reasoning is persuasive. Felker v. State, 252 Ga. 351, 361, 314 S.E.2d 621 (1984). But see T.G. Stegall Trucking Co. v. Tower Lines, 135 Ga.App. 286(5), 217 S.E.2d 488 (1975) (where the Court of Appeals held that a federal appellate decision was "controlling authority" in a case involving the construction of the rules of the Interstate Commerce Commission). While a decision construing a federal statute rendered by the U.S. Supreme Court would be binding on this court (Thornton v. Lane, 11 Ga. 459, 500 (1852)), that Court has yet to address the question with which we are faced: whether federal law has preempted a third-party health care provider's state law claim against a FEHBA plan's sponsor.

2. The issue of federal preemption of state law is "fundamentally 'a question of Congressional intent ...' [Cit.]." Burkey v. Government Employees Hosp. Ass'n, 983 F.2d 656, 659 (5th Cir.1993). In construing the phrase "relates to" found in FEHBA, the 11th Circuit has been "assisted ... by" judicial construction of the phrase as used in the preemption provision of ERISA. ¹ Blue Cross & Blue Shield v. Dept. of Banking, 791 F.2d 1501, 1504 (11th Cir.1986). While both the FEHBA and ERISA preemption provisions use the phrase "relates to," the two preemption provisions are quite distinct. The "preemptive reach of [§ 8902(m)(1) FEHBA's preemption provision], unlike ERISA, is quite narrow...." Craig v. GEICO, 134 F.R.D. 126 (D.C.Md.1991). ERISA's preemption provision has been called "[t]he virtually unique preemption provision," while FEHBA's provision is described as "the limited preemption doctrine...." Fields v. Blue Shield of Calif., 163 Cal.App.3d 570, 209 Cal.Rptr. 781, 793 (1985). The U.S. Supreme Court described the ERISA preemption statute as "broadly worded," "deliberately expansive," and "conspicuous for its breadth," in Ingersoll-Rand v. McClendon, 498 U.S. 133, 138, 111 S.Ct. 478, 112 L.Ed.2d 474 (1990). Because of the difference in the breadth of each Act's preemption provision, careful scrutiny must be given ERISA cases before they are used in construing the FEHBA preemption provision.

Both the insurer and the decision of our Court of Appeals rely on the Supreme Court's decision in Ingersoll-Rand Co., supra, to conclude that the Authority's negligent misrepresentation claim is preempted by the federal law. In Ingersoll-Rand Co., 498 U.S. at 140, 111 S.Ct. at 483, the Court had "no difficulty" in concluding that the ERISA provision preempted an employee's state law claim for wrongful discharge allegedly brought about by the employer's desire to avoid contributing to or paying benefits under the employee's pension fund. The Court determined that the judicially-created cause of action "relate[d] to" an ERISA plan since the employee had to prove the existence of a pension plan and that the employer had a pension-defeating motive in terminating the employment. Id. At the same time, the Court recognized that there were limits to ERISA's sweeping preemption clause. Id. In Shaw v. Delta Air Lines, 463 U.S. 85, 100 n. 21, 103 S.Ct. 2890, 2901 n. 21, 77 L.Ed.2d 490 (1983), the Court observed that a state law may have a connection with or reference to an ERISA plan in "too tenuous, remote or peripheral a manner to warrant a finding that the law 'relates to' the plan." In Mackey v. Lanier Collection Agency & Serv., 486 U.S. 825, 108 S.Ct. 2182, 100 L.Ed.2d 836 (1988), the Court determined that ERISA did not preempt the use of Georgia's general garnishment statute to collect a judgment won against an ERISA plan participant. The Court held that an ERISA plan could be sued "for run-of-the-mill state-law claims such as ... torts committed by an ERISA plan ...," even if substantial administrative costs and burdens resulted. Id., at 833, 108 S.Ct. at 2187.

The Supreme Court's decision in Ingersoll-Rand Co. is not dispositive of the issue before us for several reasons. First and foremost, it involved a suit between an employee covered by an ERISA...