Buatte v. Gencare Health Systems, Inc.Buatte v. Gencare Health Systems, Inc.
Gencare Health Systems, Inc. (“Gencare”) appeals from the entry of summary judgment in favor of Lonnie and Theresa Buatte in their declaratory judgment action seeking interpretation of a subrogation рrovision of an insurance policy. The trial court found that state law governed and based the grant of summary judgment, in part, on Gencare’s waiver of its right of subrogation. We find that federal law permitting subrogation рreempted state law and that Gencare did not waive its right to subrogation. We reverse and remand.
In 1987 Lonnie and Theresa Buatte enrolled in the Sanus Health Benefit Plan (“Plan”) 1 through Mr. Buatte’s employment with the fedеral government. In 1990, while still enrolled in the Plan, Theresa Buatte was injured in a ear accident involving a railroad company. As a result of the accident, she incurred $71,640.00 in medical expenses which were pаid by Gencare.
The Buattes filed a personal injury action in the Circuit Court of the City of St. Louis against the railroad company. Gencare was informed about the suit and filed a petition to intervene in the aсtion, however, it later withdrew its petition. The railroad settled the suit by paying $400,000 to the Buattes. Gencare requested that the Buattes reimburse it for the money it had spent on Theresa Buatte’s medical expensеs pursuant to the subrogation/reimbursement provisions of the Plan.
The Plan stated, in a section titled “Third Party Actions,”:
If a covered person is injured through the act or omission of another, the Plan requires that it be reimbursеd for the benefits provided, in an amount not to exceed the amount of the recovery or that it be subrogated to the person’s rights to the extent of the benefits received under this' Plan, including the right to bring suit in the pеrson’s name.
The Buattes refused to reimburse Gencare and filed a declaratory judgment action in the Circuit Court of the City of St. Louis seeking an interpretation of the Plan’s subro-gation provision. Gencare rеmoved the action to the United States District Court. The district court remanded the case back to the state court stating that the action did not arise under federal law.
The Buattes filed a motion for summary judgment listing four grounds. First, they argued that Gencare had waived its right to subrogation by failing to intervene in the action against the railroad that was now settled. Second, they contended that their settlement with the railroad did not preclude Gencare from pursuing indemnification directly from the railroad. Third, they stated that there was no proof before the court that they were subject to any subrogation provision in the policy thаt covered them. Finally, they argued that the Plan’s provision granting Gencare subrogation rights was contrary to the public policy of Missouri and void.
The trial court granted the motion for summary judgment based upon the Buattes’ first three grounds and specifically found that Missouri law governed. Gencare now appeals the grant of summary judgment.
The standard of review for summary judgment cases is governed by
ITT Commercial Finance Corр. v. Mid-America Marine Supply Corp.
In its first point on appeal, Gencare contends that the trial court erred in applying Missouri law, as the Federal Employees Health Benefits Act (FEHBA),
Missouri law, as a matter of public policy, does not allow an insurer to aсquire part of the insured’s rights against a tortfea-
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sor through the payment of medical expense, either by assignment or subrogation.
Wage v. Bankers Multiple Line Ins. Co.,
The FEHBA, however, permits subrogation by providing:
The provisions of any contract under this chapter which relate to the nature or extent of coverage or benefits (including payment with respect to benefits) shall supersеde and preempt any State or local law, or any regulation issued thereunder, which relates to health insurance or plans to the extent that such law or regulation is inconsistent with such contractual provisions.
Although no Missouri cases have addressed the FEHBA’s preemption of inconsistent state law, the FEHBA has been found to preempt state law in other jurisdictions. Those courts have enforced subrogation and reimbursement clauses of health plans where state law would not have permitted the same. In
NALC Health Benefit Plan v. Lunsford,
Similarly, in
Medcenters Health Care v. Ochs,
We likewise find that Missouri state law prohibiting subrogation is preempted by the FEHBA. The FEHBA requires preemption of state law if it would differ the “nature or extent of coverage or benefits” offered under the FEHBA authorized plan. In the prеsent case, prohibiting Geneare from seeking reimbursement from its insured would clearly differ the extent of coverage or benefits.
The Buattes do not dispute on appeal that Missouri’s law was preemрted by the FEHBA to the extent that there was an inconsistency between state, law and the Plan’s provisions. They claim that their motion for summary judgment, and the court’s granting thereof, was premised upon Gen-care’s waiver of subrogation by failing to intervene in their earlier action with the railroad. Since the Plan was silent as to whether subrogation was waived by failing to intervene, they argue that no inconsistency exists between the plan and state law, and thus Missouri law on waiver would still apply.
The Buattes do not cite to any Missouri cases in which an insurer’s failure to intervene in an insured’s cause of action against a third party tortfeasor serves to waive the insurer’s right of reimbursement. The only case cited by the Buattes on this issue,
Prudential Commercial Ins. Co. v. Michigan Mut. Ins. Co.,
In addition, at least one other jurisdiction has held that the failure to intervene by the insurer did not constitute waiver. The insurer’s right to subrogation was not waived under similar facts in
Motor Club Insurance Association v. Barbunek,
We agree with the analysis of the Nebraska court. Gencare did not waive its subro-gation/reimbursement rights by failing to intervene in the Buattes’ action against the railroad. Summary judgment, therefore, can not be based upon Geneare’s failure to intervene.
The Buattes’ second basis for summary judgmеnt was that their settlement with the railroad had no effect on Gencare’s right of subrogation. The Buattes argue that since the railroad was aware, at the time of settlement, that they had been indemnified by Genсare for the medical expenses, Gencare was not barred from directly pursuing the railroad to recover those expenses. Whatever rights, if any, Gencare might have against the railroad direсtly are irrelevant. Summary judgment cannot be supported on this basis.
The Buattes’ third reason for summary judgment was that there was no evidence before the court of the actual insurance policy which covered Theresa Buatte at the time of her accident. The Buattes contend that they were covered by a 1987 policy rather than the 1990 policy which was filed with the court by the Buattes as an exhibit to their petition. While the 1990 policy contained the reimbursement/subrogation provision, the Buattes later claimed that the applicable policy, the 1987 policy, did not contain, or may not have contаined, a similar clause. This argument is without merit.
In their declaratory judgment petition, the Buattes alleged that they had, “received healthcare benefits under a contract between Sanus and plaintiff Lonnie Buatte’s employer (Exhibit A).” Exhibit A, attached to the petition, was a copy of the 1990 health plan which contained the subrogation/reimbursement paragraph. The allegations in the Buattes’ petition quoted thе 1990 subrogation/reimbursement provision and asked the court to invalidate that provision or find that Gencare had waived its rights to enforce the provision. In Gencare’s answer to the petition, it admitted that it extended health benefits to the Buattes pursuant to Exhibit A.
Allegations or admissions of fact contained in the pleadings upon which the case is tried are binding on the pleader.
Rauch Lumber Co. v. Medallion Development Corp.,
The Buattes’ motion for dismissal of appeal is denied. Judgment is reversed and the cause remanded for further proceedings.
Notes
. Sanus latter became Gencare Health Systems, Inc.