867 N.W.2d 513
Minn. Ct. App.2015Background
- Minnesota imposes a 1.56% surcharge on hospital net patient revenues; DHS collects it and deposits to the general fund.
- FEHBA preempts state taxes on carriers; 5 U.S.C. § 8909(f) blocks taxes on carriers with payments from FEHBA funds.
- TRICARE program preemption exists under 10 U.S.C. § 1103, with regulatory alignment to FEHBA preemption.
- Hospitals (providers, not carriers) filed seven administrative appeals challenging preemption, settled for summary disposition path.
- ALJ recommended DHS summary disposition; commissioner adopted; hospitals appealed via writ of certiorari.
- Court analyzes express preemption and whether FEHBA/TRICARE preempt Minnesota Minn. Stat. § 256.9657, subd. 2.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does FEHBA preempt Minnesota surcharge on revenues to FEHBA/TRICARE patients? | Hospitals argue FEHBA § 8909(f) preempts the surcharge | DHS argues no preemption of the provider tax by FEHBA/TRICARE | Not preempted; statute stands |
Key Cases Cited
- Altria Grp., Inc. v. Good, 555 U.S. 70 (U.S. 2008) (express preemption depends on clear congressional intent)
- Chamber of Commerce of United States v. Whiting, 563 U.S. 582 (U.S. 2011) (plain language governs preemption when present)
- Rice v. Santa Fe Elevator Corp., 331 U.S. 218 (U.S. 1947) (historic presumption against preemption; police powers)