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Anti-Subrogation Beats FEHBA

On May 3, 2016 the Supreme Court of Missouri, sitting en banc, once again sided with the injury victim, and reason. Upon remand from the United States Supreme Court, the Supreme Court of Missouri refused to give Chevron deference to the recent self-serving rule change by the Office of Personnel Management (OPM) (referring to Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984)). This important ruling adds much needed support to the trial bar when confronted by FEHBA plans asserting subrogation/reimbursement claims.

The Missouri Supreme Court had originally held that FEHBA did not preempt Missouri’s anti-subrogation statute in its opinion Nevils v. Group Health Plan, Inc., 418 S.W.3d 451 (Mo. Banc 2014), but was forced to do so again after the OPM changed its regulations in the most transparent and self-serving manner. In June 2015, OPM promulgated a new regulation interpreting FEHBA’s preemption provision. It provides, in part, that:

“A carrier’s rights and responsibilities pertaining to subrogation and reimbursement under any FEHB contract relate to the nature, provision, and extent of coverage or benefits (including payments with respect to benefits) within the meaning of 5 U.S.C. 8902(m)(1). These rights and responsibilities are therefore effective notwithstanding any State or local law, or any regulation issued thereunder, which relates to health insurance or plans.” 5 C.F.R. § 890.106(h).”

Following this change the United States Supreme Court granted certiorari, vacated the Missouri Supreme Court’s opinion and remanded the case back to Missouri to determine if the regulation change established FEHBA preemption of Missouri’s anti-subrogation law, (see, Group Health Plan, Inc. v. Nevils, 135 S. Ct. 2886 (2015)). After an in-depth analysis of Chevron deference, the Supremacy Clause, and the “presumption against preemption” the Court once again found that Missouri’s anti-subrogation provision was not preempted.

In its opinion the Supreme Court of Missouri reasoned that there is a presumption against preemption which can only be overcome by Congress’ clear and manifest intent.

“In determining whether a state statute is preempted by federal law and therefore invalid under the Supremacy Clause of the Constitution, our sole task is to ascertain the intent of Congress.”

Id. quoting California Fed. Sav. & Loan Ass’n v. Guerra, 479 U.S. 272, 280 (1987).

While acknowledging that:

“While Congress’ intent and purpose are the determinative factors, preemption analysis starts with the basic assumption that Congress did not intend to displace state law.”

Id. quoting Maryland v. Louisiana, 451 U.S. 725, 746 (1981);

The Court found that:

“the presumption against preemption … counsels that preemption is warranted only if Congress expressed its clear and manifest intent that the purposes of FEHBA require the preemption of state anti-subrogation laws.”


Under this analysis the OPM regulation did not overcome the presumption and thus it did not establish that FEHBA preempts Missouri law prohibiting subrogation of personal injury claims.

In response to the FEHBA plan’s argument that the 10th Circuit case Helfrich v. Blue Cross & Blue Shield Ass’n, 804 F.3d 1090 (10th Cir. 2015) the Court stood up for federalism, its citizens, and injury victims in every state writing:

“There is no doubt that there is strong federal interest in regulating the provision of health insurance benefits for federal employees. However, it is also true that Missouri has an interest in the uniform enforcement of its anti-subrogation law for all of its citizens.”


The Court’s conclusion is as simple and direct as its reasoning:

“The OPM rule does not alter the fact that the FEHBA preemption clause does not express Congress’ clear and manifest intent to preempt Missouri’s anti-subrogation law.”


Now re-armed with this new opinion from the Supreme Court of Missouri, and the wealth of cases following McVeigh, the personal injury attorney should be able to effectively counter the unreasonable repayment demands from these FEHBA plans and their recovery agents.

However, following this decision one of the top FEHBA recovery attorneys for the insurance industry voiced their obvious, but effective long term strategy.

“The good news is that with the passage of time come more decisions, both state and federal, and more federal action in support of FEHBA preemption. Gradually, the outliers become fewer, and their stubbornness becomes more untenable. Missouri may still be holding out, but if even Arizona can see the light of reason, things are looking up for FEHBA plans.”

The plaintiff’s trial bar is the only obstacle to this prediction becoming a reality. Fight the good fight, and if you need assistance look to Synergy for support.

See full opinion here Nevils v. Group Health Plan, Inc.,  (Mo. en banc 2016)

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