Teresa Bell v. Blue Cross & Blue Shield of OK
823 F.3d 1198
8th Cir.2016Background
- Teresa Bell, a federal employee, received medical benefits under the FEHBA Blue Cross/Blue Shield Service Benefit Plan after an Arkansas car accident; the Plan paid $33,014.01.
- Bell recovered a settlement from the alleged tortfeasor’s insurer (Progressive).
- Blue Cross asserted the Plan’s subrogation/reimbursement terms required Bell to repay benefits from her third-party recovery even if she was not "made whole."
- Bell invoked Arkansas law (the "made whole" rule) arguing reimbursement is not required unless the insured is fully compensated.
- Blue Cross relied on 5 U.S.C. § 8902(m)(1) and the Plan brochure; the district court held § 8902(m)(1) expressly preempted Arkansas law and granted judgment for Blue Cross.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether FEHBA § 8902(m)(1) preempts Arkansas "made whole" rule | Bell: Arkansas law bars reimbursement unless plaintiff is fully compensated | Blue Cross: § 8902(m)(1) makes Plan terms governing subrogation/reimbursement supplant state law | Court: § 8902(m)(1) preempts Arkansas law; Bell must reimburse the Plan |
| Whether subrogation/reimbursement provisions “relate to” benefits under § 8902(m)(1) | Bell: statute ambiguous; presumption against preemption favors state rule; provisions do not sufficiently "relate to" benefit payments | Blue Cross: provisions limit or condition payment of benefits and thus relate to benefits | Court: reimbursement/subrogation limit payment of benefits and therefore "relate to" benefits; preemption applies |
| Whether Chevron deference to OPM’s 2015 regulation is required | Bell: courts should favor non-preemption when ambiguous; deference not dispositive | Blue Cross: OPM reasonably interprets § 8902(m)(1); apply Chevron or agency weight | Court: unnecessary to decide Chevron; even without Chevron the statute is best read to preempt state law |
| Constitutional objection to § 8902(m)(1) (contract terms supersede state law) | Bell: clause invalid under Supremacy Clause because it lets contract terms supersede federal law/state law | Blue Cross: clause is consistent with federal interests and can be read to invoke federal law or federal common law where appropriate | Court: constitutional challenge forfeited below; no reversible error; statute can be reasonably construed consistent with federal interests |
Key Cases Cited
- Empire HealthChoice Assur., Inc. v. McVeigh, 547 U.S. 677 (federal interest in FEHBA, ambiguity in § 8902(m)(1))
- Empire HealthChoice Assur., Inc. v. McVeigh, 396 F.3d 136 (2d Cir. 2005) (lower-court reasoning on preemption implications)
- MedCenters Health Care v. Ochs, 26 F.3d 865 (8th Cir. 1994) (holding FEHBA contract subrogation/reimbursement preempted conflicting state law)
- Helfrich v. Blue Cross & Blue Shield Ass’n, 804 F.3d 1090 (10th Cir. 2015) (treating scope of § 8902(m)(1) and agency interpretations)
- Altria Grp., Inc. v. Good, 555 U.S. 70 (presumption against preemption when clause ambiguous)
- United States v. Locke, 529 U.S. 89 (presumption against preemption inapplicable when considerable federal interests exist)
- Buckman Co. v. Plaintiffs’ Legal Comm., 531 U.S. 341 (federal regulatory relationships displace state claims where inherently federal)
- Jacks v. Meridian Res. Co., 701 F.3d 1224 (8th Cir. 2012) (federal-officer removal authority relied on by defendant)