Coventry Health Care of Mo., Inc. v. Nevils, 137 S. Ct. 1190

Background

FEHBA authorizes OPM to contract with private carriers for federal employee health plans and contains an express-preemption clause, 5 U.S.C. §8902(m)(1), which preempts state laws that “relate to health insurance or plans” when contract terms “relate to the nature, provision, or extent of coverage or benefits (including payments with respect to benefits).”
OPM contracts have long required carriers to pursue subrogation and reimbursement; OPM regulation states those rights are a condition of benefits and, by rule in 2015, explicitly declared such rights preemptive notwithstanding state law.
Nevils, a FEHBA enrollee, received medical payments from Coventry after a car accident, then recovered a settlement and repaid Coventry under its contractual lien; he sued in Missouri claiming state law bars such reimbursement/subrogation.
Missouri Supreme Court held FEHBA’s preemption did not clearly reach subrogation/reimbursement (invoking a presumption against preemption) and also held §8902(m)(1) violated the Supremacy Clause because it made contract terms preemptive.
The Supreme Court granted certiorari, considered OPM’s 2015 rule, and reversed Missouri: it held contractual subrogation/reimbursement "relate to ... payments with respect to benefits" and so are preempted by §8902(m)(1), and that the statutory scheme itself (not mere contracts) effects preemption consistent with the Supremacy Clause.

Issues

Issue	Plaintiff's Argument (Nevils)	Defendant's Argument (Coventry / U.S.)	Held
Whether §8902(m)(1) preempts state laws barring subrogation and reimbursement	Preemption unclear; presumption against preemption should exclude antisubrogation rules	Contractual subrogation/reimbursement "relate to ... payments with respect to benefits" and thus fall within §8902(m)(1)	Held: §8902(m)(1) preempts state laws that bar subrogation/reimbursement
Whether OPM’s 2015 rule deserves deference (Chevron)	Rule not entitled to deference because statute ambiguous and presumption against preemption applies	OPM’s interpretation confirms the statute’s meaning; agency expertise supports deference	Court resolved the statute on its text/context/purpose and did not rely on Chevron here (statute alone controls)
Whether McVeigh’s observation that §8902(m)(1) has "plausible" alternative readings mandates presumption against preemption here	McVeigh’s statement shows ambiguity that calls for presumption	McVeigh addressed a different question (federal jurisdiction), so its remarks are not controlling; full text/context supports preemption	Held: McVeigh’s discussion is not dispositive; preemption determined by text/context/purpose and favors preemption
Whether §8902(m)(1) violates the Supremacy Clause by making contract terms, rather than federal law, preemptive	Invalid: statute attempts to outsource preemption to private contracts, not "Laws of the United States"	The statute itself preempts state law when contract terms fall within the statutory scope; Congress may define preemptive scope and make contract terms operative nationwide	Held: No Supremacy Clause violation — §8902(m)(1) is statutory preemption that validly displaces state law when its criteria are met

Key Cases Cited

Morales v. Trans World Airlines, 504 U.S. 374 (1992) ("relate to" language in preemption clauses signifies broad pre-emptive purpose)
Empire HealthChoice Assurance, Inc. v. McVeigh, 547 U.S. 677 (2006) (interpreting FEHBA preemption as a choice-of-law prescription and addressing federal-jurisdiction question)
Cipollone v. Liggett Group, 505 U.S. 504 (1992) (recognizing presumption against preemption of historic state police powers)
Chevron U.S.A. Inc. v. Natural Resources Defense Council, 467 U.S. 837 (1984) (framework for judicial deference to reasonable agency interpretations)
Marmet Health Care Center, Inc. v. Brown, 565 U.S. 530 (2012) (statutory preemption of state law through contract-based provisions upheld)