Myers v. U.S., s. 84-1569

• Decision Date: 16 July 1985
• Docket Number: Nos. 84-1569,s. 84-1569
• Citation: 767 F.2d 1072
• Parties: Donald R. MYERS, Appellee, v. UNITED STATES of America, Office of Personnel Management; and Donald J. Devine, Director of Office Personnel Management; Defendants, and Special Agents Mutual Benefits Association, Inc., Appellant. Prudential Insurance Company of America, Amicus Curiae. Donald R. MYERS, Appellant, v. UNITED STATES of America, Office of Personnel Management; Donald J. Devine, Director of Office Personnel Management; and Special Agents Mutual Benefits Association, Inc., Appellees. Prudential Insurance Company of America, Amicus Curiae. (L), 84-1570.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 1072

767 F.2d 1072

54 USLW 2094

Donald R. MYERS, Appellee, v. UNITED STATES of America, Office of Personnel Management; and Donald J. Devine, Director of Office Personnel

Management; Defendants,

and

Special Agents Mutual Benefits Association, Inc., Appellant.

Prudential Insurance Company of America, Amicus Curiae.

Donald R. MYERS, Appellant, v. UNITED STATES of America, Office of Personnel Management;

Donald J. Devine, Director of Office Personnel

Management; and Special Agents Mutual

Benefits Association, Inc., Appellees.

Prudential Insurance Company of America, Amicus Curiae.

Nos. 84-1569(L), 84-1570.

United States Court of Appeals, Fourth Circuit.

Argued May 8, 1985.

Decided July 16, 1985.

E. Windell McCrackin, McCrackin & Barnett, Myrtle Beach, S.C., for Donald R. Myers.

James R. Barnett, Gordon & Barnett, Washington, D.C., for Special Agents Mutual Benefit Association, Inc.

Mary E.G. Slocum, Asst. U.S. Atty., Columbia, S.C. (Henry Dargan McMaster, U.S. Atty., Columbia, S.C., Donald J. Devine, on brief), for the United States and Donald J. Devine.

Hubert B. Barnes, Associate Counsel, Fort Washington, Pa., Lewis T. Booker, L. Neal Ellis, Jr., Hunton & Williams, Richmond, Va., on brief, for amicus curiae.

Before WIDENER and WILKINSON, Circuit Judges, and CLARKE, United States District Judge for the Eastern District of Virginia, sitting by designation.

WILKINSON, Circuit Judge:

The principal issue here is whether a privately procured insurance policy covering "non-medical expenses and pain and suffering" constitutes double coverage under the terms of an exclusion clause in a government employees' health insurance policy. We conclude that recovery under the government policy is not prohibited by the double coverage exclusion.

Plaintiff Donald R. Myers, a Federal Bureau of Investigation special agent, brought this action, pursuant to 5 U.S.C. Sec. 8912 (1982), based on alleged wrongful refusal of the Special Agents Mutual Benefit Association (SAMBA) Health Benefits Plan to pay his claim for medical benefits arising from an accidental injury. SAMBA is a non-profit corporation providing health insurance to FBI employees under a contract with the Office of Personnel Management (OPM), the administrative agency responsible for federal employee health insurance pursuant to 5 U.S.C. Sec. 8901 (1982) et seq. Myers, insured under the SAMBA plan as an FBI agent, also elected to purchase a $5,000 insurance policy from Special Agents Travel Insurance (SATI), a private insurer, at his own expense.

Following his injury on March 19, 1979, Myers incurred $3,906.89 in medical expenses. SATI paid Myers the full coverage of $5,000 under its policy, which authorizes indemnification for "non-medical expenses and pain and suffering." ^* SAMBA, however, paid Myers only the $50.00 deductible under the SATI policy, refusing the remainder of Myers' medical expenses claim on the ground that the SATI policy represented double coverage. The double coverage exclusion of the SAMBA policy is applicable when "a person is eligible for benefits under any other kind of group health coverage...."

                *  It requires, in such cases, that benefits be reduced to an amount which will not exceed all reasonable and customary expenses "when added to the benefits available from all plans for the same covered expenses."    The district court determined that the SAMBA and SATI plans "plainly provide coverage for two different types of loss," and ruled that Myers was entitled to recover $3,856.89 under the SAMBA policy for the remainder of his medical expenses
                

We agree. While the SAMBA and SATI plans are both group policies, the SATI plan is not health insurance, but an accident indemnification plan covering non-medical losses, and so falls outside the double coverage provision. A health benefits plan, as defined by 5 U.S.C. Sec. 8901(6), is a group insurance policy provided "for the purpose of providing, paying for, or reimbursing expenses for health services." It is obvious from the face of the SATI policy that expenses for health services are not being reimbursed, but only non-medical expenses and pain and suffering, as expressly stated. Medical expenses and reimbursement for non-medical pain and suffering cannot be equated.

The government relies on a 1979 OPM decision that found the SATI policy provision in issue to constitute double coverage with the SAMBA plan, because medical expenses must be incurred as a precondition to payment by SATI. Under the SATI policy, the amount of indemnity is "equal to the expense incurred for the medical and dental treatment of the bodily injury." We are, of course, required to defer to an administrative agency's interpretation of its own regulations unless "plainly erroneous or inconsistent with the regulation." United States v. Larionoff, 431 U.S. 864, 872, 97 S.Ct. 2150, 2155, 53 L.Ed.2d 48 (1977), quoting Bowles v. Seminole Rock Co., 325 U.S. 410, 414, 65 S.Ct. 1215, 1217, 89 L.Ed. 1700 (1945); Allen v. Bergland, 661 F.2d 1001, 1004 (4th Cir.1981). Here, however, the OPM interpretation is not a reasonable one, and must be regarded as inconsistent with the double coverage provision. OPM was not entitled to disregard the express non-medical nature of the SATI coverage merely because benefits were calculated with reference to medical expenses. Pain and suffering, being subjective, must necessarily be assessed by an insurer according to some objective criterion. There was nothing inappropriate in SATI's selection of medical expenses as a means to quantify such loss, rather than paying some arbitrary sum.

We also concur in the district court's denial of attorney's fees claimed by Myers under South Carolina law. It is unnecessary to decide whether SAMBA's refusal to pay was "without reasonable cause or in bad faith," as required by the state statute in issue, S.C.Code Ann. Sec. 38-9-320(1) (1985), for we conclude that state law is preempted where a federal employees' insurance policy and the regulations pertaining thereto are concerned. 5 U.S.C. Sec. 8902(m)(1) (1982) provides:

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.

Nowhere does the SAMBA policy or the relevant federal law authorize a plaintiff to recover attorney's fees in an action brought under 5 U.S.C. Sec. 8912, and a state law which purports to allow recovery of additional benefits not contemplated by a federal insurance contract must be deemed inconsistent. Accordingly, federal law precludes any award of attorney's fees here.

For the reasons stated, both the district court's judgment in plaintiff's favor for $3,856.89 in insured medical expenses and the denial of attorney's fees are

AFFIRMED.

CLARKE, District Judge, dissenting:

I respectfully dissent. I would reverse the district court's determination that the The Federal Employees Health Benefits Act (the Act), 5 U.S.C. Sec. 8901, et seq., was enacted to provide health insurance protection for federal employees. It is a comprehensive statutory scheme, regulating all aspects of federal employee health benefit plans. The Office of Personnel Management (OPM) is charged with administering the Act, 5 U.S.C. Sec. 8902. Because the SAMBA plan is a health benefits plan under the Act, it is subject to "such maximums, limitations and other definitions of benefits as the OPM considers necessary or desirable." 5 U.S.C. Sec. 8902(d).

plaintiff's claim for benefits under the SAMBA Health Benefits plan did not fall within the "Double Coverage" provision promulgated by the Office of Personnel Management (OPM). In my view, the plaintiff's claim did fall within the double coverage provision of the SAMBA policy.

Pursuant to its statutory authority in 5 U.S.C. Sec. 8913, the OPM promulgated in January 1979 the limitations provision known as a "Double Coverage" provision to be applied in all health benefits plans sanctioned under the Act. The double coverage provision states in pertinent part that:

DOUBLE COVERAGE

The Double Coverage limitation is intended to prevent payment of benefits which exceed expenses. It applies when a person is eligible for benefits under any other kind of group health coverage, Medicare, or "no fault" automobile insurance. When Double Coverage exists, this Plan will pay either its benefits in full or a reduced amount which, when added to the benefits available from all plans for the same covered expenses, will not exceed 100 percent of reasonable and customary expenses; but in no case will this Plan pay an amount which is more than what would have been paid in the absence of other insurance.

According to a letter from SAMBA to its membership dated June 25, 1979, SAMBA officials became concerned about those of its enrollees who were also enrolled in another group accident plan available to FBI agents. The SAMBA officials believed that the other plan provided payments which would be considered double coverage under the SAMBA plan, so they formally requested an OPM ruling on that issue. The specific SATI provision which was...