July 17, 2019

Archives for February 8, 2016

Tenth Circuit: Federal Health Insurance Contract’s Terms Preempt State Antisubrogation Statute

The Tenth Circuit Court of Appeals issued its opinion in Helfrich v. Blue Cross & Blue Shield Association on Thursday, October 29, 2015.

Lee Ann Helfrich is a federal employee enrolled in a federal-employee health insurance plan, the Blue Cross & Blue Shield Service Benefit Plan (Plan). In December 2012, she was involved in a car accident and suffered serious injuries. The Plan paid $76,561.88 in benefits for her injuries, and she settled with the other driver for his policy limits of $100,000. The Plan sought reimbursement of its benefits paid as a subrogated insurer. Helfrich filed a petition in Kansas state court against Blue Cross, arguing a state regulation prohibiting subrogation negated Blue Cross’s claims. Blue Cross removed to federal court and argued the Federal Employees Health Benefits Act of 1959 (FEHBA) preempted the federal regulation. Blue Cross moved for judgment on the pleadings, and the district court held that the Kansas antisubrogation law was preempted by 5 U.S.C. § 8902(m)(1). The district court granted Blue Cross’s motion and Helfrich appealed.

On appeal, the Tenth Circuit likened Helfrich’s situation to the situation presented in Boyle v. United Technologies Corp., 487 U.S. 500 (1988), in which the Supreme Court set forth a test to determine whether federal law preempts state law. The Tenth Circuit found that Blue Cross contracted with the federal government pursuant to FEHBA to provide insurance benefits for federal employees, and its federal contract required it to seek reimbursement of costs paid that were ultimately reimbursed by a third party. The Tenth Circuit noted that Boyle introduced the Federal Tort Claims Act’s discretionary-function standard as a test to determine whether there was a significant conflict between state law and the term of a government contract, noting that state law must yield if such a conflict exists. The Tenth Circuit found that conflict present here, since the contract between Blue Cross and the government and the provision of quality health care to government employees are matters of federal concern. The Tenth Circuit found the Plan’s reimbursement provision served important functions that were undermined by Kansas’ antisubrogation provision, and noted that here, state law outright forbids Blue Cross from fulfilling its contractual obligations. The Tenth Circuit held that the government’s strong interest in uniformity required federal preemption, since states without an antisubrogation provision would end up financing health care costs for claimants in states with such provisions if preemption did not apply.

Blue Cross also argued that FEHBA’s preemption provision provided another ground for overriding the Kansas antisubrogation provision, and the Tenth Circuit agreed. The Tenth Circuit analyzed the language of the provision and found that Blue Cross’s reimbursement rights arose at the payment of benefits; if Helfrich had not pursued reimbursement from the other driver, Blue Cross reserved the right to do so on her behalf. Analyzing case law from its circuit and others, the Tenth Circuit found strong support for Blue Cross’s preemption argument.

The Tenth Circuit affirmed the district court. Judge Lucero wrote a concurrence, agreeing with the conclusion but disagreeing with the majority’s application of federal common law preemption.

Tenth Circuit: Unpublished Opinions, 2/5/2016

On Friday, February 5, 2016, the Tenth Circuit Court of Appeals issued no published opinion and eight unpublished opinions.

Kirby v. OCWEN Loan Servicing, LLC

Kieffer v. Denham

O’Connor v. Williams

United States v. Herrera

Steigelman v. McDaniel

United States v. Brooks

United States v. Anderson

Gambrill v. Unified Government of Wyandotte County

Case summaries are not provided for unpublished opinions. However, published opinions are summarized and provided by Legal Connection.