Empire Healthchoice Assurance, Inc. v. FinnEmpire Healthchoice Assurance, Inc. v. Finn
Thomas J. Stock, Stock & Carr, Mineola, New York, for Defendant-Appellee.
Before: SACK, SOTOMAYOR and RAGGI, Circuit Judges.
Judge SACK concurs in Judge SOTOMAYOR‘s opinion and in a separate opinion.
Judge RAGGI dissents in a separate opinion.
SOTOMAYOR, Circuit Judge.
Empire HealthChoice Assurance, Inc. (“Empire“) appeals from a judgment entered in the United States District Court for the Southern District of New York (Cote, J.) dismissing for lack of subject matter jurisdiction Empire‘s contract action against Denise McVeigh, as administratrix of Joseph McVeigh‘s estate, for reimbursement of insurance benefits. Because the Federal Employees Health Benefits Act,
BACKGROUND
The Federal Employees Health Benefits Act (“FEHBA“) charges the United States Office of Personnel Management (“OPM“) with negotiating and regulating health benefits plans for federal employees. See
Defendant-Appellee Denise Finn McVeigh (“McVeigh“) administers the estate of Joseph E. McVeigh (“Decedent“), a former enrollee in the Plan. The Decedent suffered injuries in an accident in 1997 and received $157,309.06 in benefits from the Plan between 1997 and 2001, the year of his death. McVeigh subsequently brought state tort actions on behalf of herself, the Decedent and a minor child against the parties who had allegedly caused Decedent‘s injuries. McVeigh received $3,175,000 when the lawsuit settled in 2003.
Prior to the entry of the settlement, Empire became aware of the agreement and notified McVeigh that it had a lien on the Decedent‘s share of the settlement for $157,309.06. McVeigh agreed to place $100,000 of the Decedent‘s share of the settlement funds into escrow pending resolution of Empire‘s claims.
On April 18, 2003, Empire filed suit against McVeigh for $157,309.06 in the United States District Court for the Southern District of New York. The complaint was based on a subrogation and reimbursement provision contained in the Statement of Benefits of the Plan. Under this provision, an enrollee who receives benefits in connection with an injury in addition to compensation from a third party must reimburse the Plan the amount of benefits paid.2 Empire‘s complaint alleged that McVeigh breached this provision and sought a judgment declaring that pursuant to the Plan, FEHBA, its regulations and federal common law, Empire was entitled to reimbursement from McVeigh for the amount of benefits paid for Decedent‘s injuries.
DISCUSSION
A.
We review de novo a district court‘s legal conclusions with respect to its subject matter jurisdiction. Gualandi v. Adams, 385 F.3d 236, 240 (2d Cir. 2004). Empire claims that federal jurisdiction exists pursuant to
FEHBA does not provide a federal statutory cause of action for insurance carriers to vindicate their rights under FEHBA-authorized contracts. Thus, federal jurisdiction exists over this dispute only if federal common law governs Empire‘s claims. See Woodward Governor Co. v. Curtiss-Wright Flight Sys., Inc., 164 F.3d 123, 126 (2d Cir. 1999) (“It is beyond dispute that if federal common law governs a case, that case presents a federal question within the subject matter jurisdiction of the federal courts, just as if the case were governed by a federal statute.“). The ability of federal courts to fashion federal common law, however, is “severely limited.” In re Gaston & Snow, 243 F.3d 599, 606 (2d Cir. 2001); see also O‘Melveny & Myers v. FDIC, 512 U.S. 79, 87, 114 S.Ct. 2048, 129 L.Ed.2d 67 (1994) (stating that the “cases in which judicial creation of a special federal rule would be justified ... are ... few and restricted” (citation and internal quotation marks omitted)). Absent congressional authorization, see Texas Indus. v. Radcliff Materials, Inc., 451 U.S. 630, 641, 101 S.Ct. 2061, 68 L.Ed.2d 500 (1981), courts may only create federal common law where the operation of state law would (1) “`significant[ly] conflict‘” with (2) “`uniquely federal interests,‘” Boyle v. United Techs. Corp., 487 U.S. 500, 507, 508, 108 S.Ct. 2510, 101 L.Ed.2d 442 (1988); see also O‘Melveny, 512 U.S. at 87, 114 S.Ct. 2048; Woodward, 164 F.3d at 127. These circumstances were present, for instance, in Boyle, where the Supreme Court held that federal common law provided a defense shielding a federal defense contractor from liability under state law for defective design. 487 U.S. at 509-12, 108 S.Ct. 2510. The “state-imposed duty of care,” the Court found, was “precisely contrary” to a duty imposed by the government contract. Id. at 509, 108 S.Ct. 2510.
Empire argues that its contract dispute with McVeigh satisfies the “uniquely federal interests” prong of Boyle. Reimbursement, Empire explains, directly affects the United States Treasury and the cost of providing health benefits to federal employees. Moreover, Empire contends, Congress has expressed its interest in maintaining uniformity among the states with respect to the benefits of its health plans.
We need not address these arguments, because we find that regardless of the strength or importance of the federal interests at stake, Empire has failed to demonstrate that the operation of New York state law creates an “an actual, significant conflict” with those interests. Woodward, 164 F.3d at 127; see also id. (“[I]n disputes between two private parties, federal courts ... have shown a marked reluctance to displace state law by finding a significant conflict with a federal interest.“). Tellingly, Empire‘s briefs on appeal fail to mention a single state law or state-imposed duty that runs contrary to the federal interests asserted in this case.
Because it cannot identify any way in which the operation of state law creates an actual conflict, Empire is left to speculate about the various harms that “might” result from state-by-state adjudication of suits brought by insurance carriers under FEHBA-authorized contracts. Empire argues, for example, that state law would undermine the federal interest in uniformity because enrollees in some states “might” successfully avoid reimbursement while others would have to repay. Empire also contends that uncertainties associated with the application of state law “might” reduce the source of funds available to defray overall costs of paying benefits. These speculations do not suffice to satisfy the conflict prong of Boyle. See Woodward, 164 F.3d at 127 (“[A]n actual, significant conflict between a federal interest and state law must be specifically shown, and not generally alleged.” (internal quotation marks and citation omitted)).
B.
We recognize the possibility that at a later stage in the proceedings, a significant conflict might arise between New York state law and the federal interests underlying FEHBA, such that the dispute would satisfy both prongs of Boyle. If, for example, McVeigh were to defend herself in reliance upon a state law that was meant to advance a particular state policy, Empire could argue that such state law — whether statutory or common law — conflicts with federal interests and requires the application of federal common law. This possibility, however, is insufficient to confer federal jurisdiction. See Briarpatch Ltd., 373 F.3d at 304 (“The claims established by the well-pleaded complaint must necessarily be determined from the plaintiff‘s statement of his or her own claim, not including statements raised in anticipation or avoidance of possible defenses that may be interposed.“) (emphasis added); see also Aetna Health Inc. v. Davila, 542 U.S. 200, 124 S.Ct. 2488, 2494, 159 L.Ed.2d 312 (2004); City of Rome v. Verizon Communications Inc., 362 F.3d 168, 177 (2d Cir. 2004). Thus, it would be up to the state court to apply federal common law. See Charles Dowd Box Co., Inc. v. Courtney, 368 U.S. 502, 507-508 & n. 4, 82 S.Ct. 519, 7 L.Ed.2d 483 (1962) (stating that state courts are competent to enforce federal rights and noting that “[i]ndeed, Congress has so arranged the limited jurisdiction of federal courts that some federal laws can be enforced only in state courts.” (citations omitted)); see also Local 174, Teamsters, Chauffeurs, Warehousemen & Helpers v. Lucas Flour Co., 369 U.S. 95, 103-04, 82 S.Ct. 571, 7 L.Ed.2d 593 (1962) (holding that a state court exercising jurisdiction over suit arising from collective bargaining agreement must apply federal common law).
By finding that satisfaction of the two-prong Boyle test does not necessarily create federal jurisdiction under
Empire also argues — and our dissenting colleague agrees — that federal jurisdiction exists pursuant to FEHBA‘s preemption provision,
Though
Taken literally, therefore, FEHBA‘s preemption provision may fail to withstand constitutional scrutiny unless FEHBA-authorized contracts themselves are “Laws of the United States.” They are not. “Law” connotes a policy imposed by the government, not a privately-negotiated contract. See Wolens, 513 U.S. at 229 n. 5, 115 S.Ct. 817 (1995) (finding that “the word series `law, rule, regulation, standard, or other provision‘” as used in a federal statute “connotes official, government-imposed policies, not the terms of a private contract.” (citation and internal quotation marks omitted)); see also id. at 241, 115 S.Ct. 817 (O‘Connor, J., concurring in the judgment in part and dissenting in part) (“To be sure, the terms of private contracts are not `laws’ ....“). Under FEHBA, the government does not impose contract terms as it would impose a law. Rather, the OPM negotiates the contract terms privately with insurance providers, see generally Doe v. Devine, 703 F.2d 1319, 1321-23 (D.C. Cir. 1983), who are under no obligation to enter into the contracts in the first place. Cf. Evanns v. AT & T Corp., 229 F.3d 837, 840 n. 9 (9th Cir. 2000) (“`[A] tariff, required by law to be filed, is not a mere contract. It is the law.‘” (quoting Carter v. Am. Tel. & Tel. Co., 365 F.2d 486, 496 (5th Cir. 1966))); Marcus v. AT & T Corp., 138 F.3d 46, 56 (2d Cir. 1998) (distinguishing between laws and “mere contracts“) (internal quotation marks and citation omitted). Empire‘s attempt to portray FEHBA contracts as “law” is unavailing.6
D.
Turning to the effect of
Two independent conditions must be satisfied in order to trigger preemption under
Judge Raggi contests this characterization of her analysis, explaining that under her interpretation, the second limiting condition might still impose meaningful limits on preemption “where general state or local law affects FEHBA coverage or benefits only tangentially, without attempting to construe or enforce those plan terms.” Post at 158. Even in such circumstances, however, the second limiting condition would likely have no meaning that is independent and distinct from the first limiting condition, which requires that the contract terms at issue specifically relate to health coverage in order for preemption to occur.
In defense of her position, Judge Raggi observes that many Supreme Court and Second Circuit cases construe the term “relates to” quite broadly. See post at 156-57. The cases she cites, however, are not directly applicable because they did not involve FEHBA. As this Court, our sister circuits and the Supreme Court have all recognized, the precise meaning of the vague term “relates to” depends on the larger statutory context. See, e.g., Gerosa, 329 F.3d at 323 (stating that “ERISA‘s nearly limitless `relates to’ language offers no meaningful guidelines to reviewing judges,” and that we must therefore “`go beyond the unhelpful text ... and look instead to the objectives of the ERISA statute as a guide to the scope of the state law that Congress understood would survive‘” (quoting New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 655-56, 115 S.Ct. 1671, 131 L.Ed.2d 695 (1995))); Roach v. Mail Handlers Benefit Plan, 298 F.3d 847, 850 (9th Cir. 2002) (“`[R]elates to’ must be read in the context of the presumption that in fields of traditional state regulation the historic police powers of the States [are] not to be superseded by [a] Federal Act unless that was the clear and manifest purpose of Congress. Here, this means that we must presume that Congress did not intend [FEHBA] to preempt the quintessentially state-law standards of reasonable medical care, because
The non-ERISA cases on which Judge Raggi relies in her dissent similarly fail to justify the excessively broad interpretation of “relate to” that she favors. In Coregis Insurance Co. v. American Health Foundation, Inc., 241 F.3d 123 (2d Cir. 2001), for example, the issue was whether certain lawsuits were “related to” a company‘s financial failure within the meaning of an insurance policy. We noted that the “[l]awsuits are related to the Companies’ financial failure by the very wording of the complaints, which explicitly refer to, discuss, and seek redress for that failure.” Id. at 131. In the instant case, neither Empire nor Judge Raggi has cited any state law that “explicitly refers to” or “discuss[es]” health insurance or plans. Coregis‘s rationale therefore does not apply.14
The Eighth Circuit precedent discussed by Judge Raggi is also distinguishable, see post at 160, because the case involved state law principles that were established in the context of health insurance and that were found to be inconsistent with FEHBA. See MedCenters Health Care v. Ochs, 26 F.3d 865, 866-67 (8th Cir.1994) (citing Westendorf v. Stasson, 330 N.W.2d 699, 703 (Minn.1983)).
31
SACK, Circuit Judge, concurring.
32
I concur. I think, for the reasons elaborated by Judge Sotomayor in the principal opinion, that the Boyle test is applicable here and that Empire has failed to satisfy the second prong of that test because it has not demonstrated that there is a “significant conflict ... between an identifiable federal policy or interest and the operation of state law.” Boyle v. United Techs. Corp., 487 U.S. 500, 507, 108 S.Ct. 2510, 101 L.Ed.2d 442 (1988) (citation and internal quotation marks omitted). I also agree with Judge Sotomayor‘s explanation as to why
33
I write separately, though, simply to identify several issues that I think we do not decide.
34
First, Empire has made a substantial showing that the first part of the Boyle test has been met because this case implicates “uniquely federal interests,” id. at 504, 108 S.Ct. 2510 (citation and internal quotation marks omitted), in providing uniform healthcare coverage for federal employees and in decreasing the administrative costs associated with such insurance. It may well be that, as in Boyle, “the interests of the United States will be directly affected,” id. at 507, 108 S.Ct. 2510, by the outcome of this litigation and of litigation like it. It is Empire‘s inability to meet the second, “significant conflict,” part of the test that leads me to join in Judge Sotomayor‘s opinion affirming the district court‘s dismissal for lack of subject matter jurisdiction.
35
Second, a future litigant in a similar action may, unlike Empire here, be able to point to specific ways in which the operation of state contract law, or indeed of other laws of general application, would conflict materially with the federal policies underlying FEHBA in the circumstances presented. In that case, presumably, the second part of the Boyle test would be met and, if that litigant‘s well-pleaded complaint arises under federal law, a federal court would have subject matter jurisdiction.
36
Third, there is no need for us to decide what course to take if, “at a later stage in the proceedings, a significant conflict might arise between New York state law and the federal interests underlying FEHBA, such that the dispute would satisfy both prongs of Boyle.” Opinion of Judge Sotomayor, Part B, ante at 142. This portion of the opinion therefore does not seem to me to set forth a part of our holding on this appeal.
37
Fourth, and similarly, although I find Judge Sotomayor‘s discussion in Section C of the principal opinion of the proper reading of
38
RAGGI, Circuit Judge, dissenting.
39
In this contract action, Plaintiff-Appellant Empire HealthChoice Assurance, Inc., sues Denise McVeigh, as administratrix of Joseph McVeigh‘s estate, for breach of the reimbursement provision of a federal employee health insurance plan that had covered her husband before his death.17 The court today rules that this dispute cannot be heard in federal court for lack of subject matter jurisdiction. See
I. Federal Question Jurisdiction
40
Under
41
Empire contends that
II. Federal Common Law
42
As the majority observes, neither FEHBA nor its regulations expressly provide a federal cause of action for insurance carriers to vindicate their rights under FEHBA contracts. This does not mean that carriers are without a remedy for FEHBA-based disputes. Congress is understood to legislate against the pre-existing backdrop of the common law. See Astoria Fed. Sav. & Loan Ass‘n v. Solimino, 501 U.S. 104, 108, 111 S.Ct. 2166, 115 L.Ed.2d 96 (1991); United States v. Nucci, 364 F.3d 419, 423 (2d Cir.2004); see also Kolstad v. American Dental Ass‘n, 527 U.S. 526, 539, 119 S.Ct. 2118, 144 L.Ed.2d 494 (1999) (“[W]here Congress borrows terms of art in which are accumulated the legal tradition and meaning of centuries of practice, it presumably knows and adopts the cluster of ideas that were attached to each borrowed word in the body of learning from which it was taken and the meaning its use will convey to the judicial mind unless otherwise instructed.” (internal quotation marks omitted)). It is an elementary common-law principle that a party to a valid contract is bound by its terms and is subject to suit for their enforcement. See, e.g., Mobil Oil Exploration & Producing Southeast, Inc. v. United States, 530 U.S. 604, 607-08, 120 S.Ct. 2423, 147 L.Ed.2d 528 (2000); Gerrish Corp. v. Universal Underwriters Ins. Co., 947 F.2d 1023, 1028 (2d Cir.1991). See generally O.W. Holmes, The Common Law 227-40 (1881) (describing the characteristics of contracts). Nothing in FEHBA suggests that FEHBA contracts are to be treated differently. The Act does not, for example, provide a comprehensive remedial scheme that supplants a common-law action, cf. Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 147, 105 S.Ct. 3085, 87 L.Ed.2d 96 (1985), nor does it contain an express provision precluding such an action, see United States v. Nucci, 364 F.3d at 423. Thus, it is reasonable to conclude that FEHBA contracts are enforceable through common-law breach of contract actions. See Jackson Transit Auth. v. Local Div. 1285, Amalgamated Transit Union, 457 U.S. 15, 20, 102 S.Ct. 2202, 72 L.Ed.2d 639 (1982) (concluding that although the Urban Mass Transportation Act did not provide a cause of action to enforce contracts entered into pursuant to the Act, “it is reasonable to conclude that Congress expected [these contracts], like ordinary contracts, to be enforceable by private suit upon a breach“).
43
That insurance carriers are able to bring breach of contract actions to vindicate FEHBA rights does not, however, mean that these actions are necessarily federal. The presumption, in fact, is to the contrary. As the Supreme Court declared in Erie R. Co. v. Tompkins, “there is no federal general common law.” 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). Thus, contract actions are usually creatures of state law, see Caceres Agency, Inc. v. Trans World Airways, Inc., 594 F.2d 932, 934 (2d Cir.1979); see also Aronson v. Quick Point Pencil Co., 440 U.S. 257, 262, 99 S.Ct. 1096, 59 L.Ed.2d 296 (1979), and, accordingly, absent diversity in citizenship among the parties, are ordinarily not subject to federal jurisdiction, see Nolan v. Meyer, 520 F.2d 1276, 1280 (2d Cir.1975).
44
Since issuing Erie, however, the Supreme Court has made clear that federal common law displaces state law in certain narrow circumstances. See Texas Indus., Inc. v. Radcliff Materials, Inc., 451 U.S. 630, 640-41, 101 S.Ct. 2061, 68 L.Ed.2d 500 (1981); see also Hinderlider v. La Plata River & Cherry Creek Ditch Co., 304 U.S. 92, 110, 58 S.Ct. 803, 82 L.Ed. 1202 (1938) (decided the same day as Erie and declaring that “whether the water of an interstate stream must be apportioned between the two States is a question of `federal common law‘“). See generally Henry J. Friendly, In Praise of Erie — And of the New Federal Common Law, 39 N.Y.U. L.Rev. 383, 405 (1964) (remarking on the various “specialized” categories of federal common law). Specifically, courts may fashion federal common law (1) when “Congress has given [them] the power” to do so, Texas Indus., Inc. v. Radcliff Materials, Inc., 451 U.S. at 640-41, 101 S.Ct. 2061; or (2) if Congress has not granted such authorization, when (a) a case involves an area of “uniquely federal interests” and (b) the application of state law would “significantly conflict” with federal policies in this area, Boyle v. United Techs., 487 U.S. at 507-08, 108 S.Ct. 2510; accord Woodward Governor Co. v. Curtiss Wright Flight Sys., Inc., 164 F.3d at 127; see also Atherton v. FDIC, 519 U.S. 213, 218, 117 S.Ct. 666, 136 L.Ed.2d 656 (1997); O‘Melveny & Myers v. FDIC, 512 U.S. at 87, 114 S.Ct. 2048.
A. Empire‘s Reliance on Boyle to Invoke Federal Common Law
45
46
Empire relies on Boyle v. United Technologies to support its claim that this contract dispute arises under federal common law. Specifically, it urges this court to follow the Fourth Circuit‘s application of Boyle in Caudill v. Blue Cross & Blue Shield of North Carolina, 999 F.2d 74 (4th Cir.1993). Although I do not think that Boyle analysis is necessary to reach this conclusion, I think it useful to begin with a brief discussion of Empire‘s Caudill-based argument.
47
In Caudill, Blue Cross had removed to federal court a state action filed by a FEHBA plan enrollee challenging Blue Cross‘s denial of benefits.18 Noting that federal removal jurisdiction is limited to state court actions “of which the district courts of the United States have original jurisdiction,”
48
As the majority notes, Caudill has been criticized by courts and commentators. That criticism, however, is not leveled at its conclusion that federal common law governs FEHBA claims, but at its failure to adhere to the well-pleaded complaint rule. See Goepel v. Nat‘l Postal Mail Handlers Union, 36 F.3d 306, 314-15 (3d Cir.1994); see also 15 James Wm. Moore et al., Moore‘s Federal Practice § 103.45[3][c] (3d ed.1997) (commenting that Caudill‘s holding “is fatally flawed if the validity of the well-pleaded complaint rule ... [is] accepted“). The criticism is not without force. Under the well-pleaded complaint rule, a plaintiff, as master of his claim, may avoid federal jurisdiction by relying exclusively on state law in his complaint. See Caterpillar Inc. v. Williams, 482 U.S. at 392, 107 S.Ct. 2425. It appears that Caudill‘s complaint pleaded claims under only state law, see Caudill, 999 F.2d at 77, and, thus, on its face, presented no federal claim justifying removal. Although Blue Cross‘s contention that federal common law governed Caudill‘s state claims may have provided the insurer with a federal defense to the claims that it could raise in the state action, this was not a ground for the removal of those state claims to federal court. See Caterpillar Inc. v. Williams, 482 U.S. at 393, 107 S.Ct. 2425.
49
Thus it appears that in Caudill, removal would have been proper only if Blue Cross had demonstrated that plaintiff‘s state claims were “completely preempted” by federal law. City of Rome v. Verizon Communications, Inc., 362 F.3d 168, 176-77 (2d Cir.2004). “[C]omplete preemption” occurs when Congress manifests its intent that federal law displace state law by enacting a “federal statute [that] ... provide[s] the exclusive cause of action for the claim asserted and also set[s] forth procedures and remedies governing that cause of action“; in such cases, the claim, although pleaded in terms of state law, actually arises under federal law. Beneficial Nat‘l Bank v. Anderson, 539 U.S. at 8, 123 S.Ct. 2058; City of Rome v. Verizon Communications, Inc., 362 F.3d at 177. As the Third Circuit has pointed out, however, FEHBA did not provide a cause of action to vindicate the rights at issue in Caudill‘s state-law claims. See Goepel v. Nat‘l Postal Mail Handlers Union, 36 F.3d at 315. Thus, by finding removal proper, the Caudill court implicitly extended the complete preemption doctrine to claims that arise under federal common law but for which Congress has not manifested an intent to provide an exclusive cause of action. See id. at 314-15 (criticizing Caudill for expanding the complete preemption doctrine).
50
In this case, unlike in Caudill, the propriety of applying federal common law does not depend on complete preemption. Empire‘s complaint does not plead claims in terms of state law; rather, it relies exclusively upon federal law. Thus, this court need not decide whether a state-law claim to enforce the terms of a FEHBA plan may be recharacterized as arising under federal law. It need decide only whether federal common law does in fact govern claims to enforce rights under a FEHBA plan. If it does, then this case arises under federal law and the district court had jurisdiction to hear it.
51
I conclude that federal common law does govern the parties’ dispute in this case, but I do not rely on Boyle. Instead, I conclude that in amending
B. Congressional Authorization in § 8902(m)(1) for Federal Common Law to Construe and Enforce FEHBA Plans
52
53
In 1998, Congress amended FEHBA‘s preemption provision by striking the clause alluded to in Caudill, providing for preemption of state laws only “to the extent [they are] inconsistent with” a contractual term, see Federal Employees Health Care Protection Act of 1998, Pub.L. No. 105-266, § 3(c), 112 Stat. 2363, 2366 (1998), and enacting a more expansive provision that reads in full: “The terms of any contract under this chapter which relate to the nature, provision, or extent of coverage or benefits (including payments with respect to benefits) shall supersede and preempt any State or local law, or any regulation issued thereunder, which relates to health insurance or plans.”
54
The amendment thus effectively legislates both Boyle factors. First, by providing for FEHBA coverage and benefits terms to “supersede” certain state and local laws, Congress has identified a unique federal interest in ensuring national uniformity in the construction and enforcement of such terms. Second, by amending
55
As the majority observes, a literal reading of
56
My colleagues in the majority apparently agree that the application of federal law is implicit in
57
Unlike its predecessor, which limited preemption to state laws that actually conflicted with the terms of a FEHBA contract, the 1998 amendment to
58
Although FEHBA does not define what it means for a state or local law to “relate[ ] to health insurance or plans,” the Supreme Court has, in other contexts, recognized that the common meaning of the phrase “relate to” is expansive: “`to stand in some relation; to have bearing or concern, to pertain; refer; to bring into association with or connection with.‘” Morales v. Trans World Airlines, Inc., 504 U.S. 374, 383, 112 S.Ct. 2031, 119 L.Ed.2d 157 (1992) (quoting BLACK‘S LAW DICTIONARY 1158 (5th ed.1979)) (discussing the phrase “relating to” in the context of the Airline Deregulation Act of 1978). Our court has also concluded that the phrase does not imply a causal connection; rather, it is synonymous with the phrases “in connection with,” “associated with,” “with respect to,” and “with reference to.” Coregis Ins. Co. v. American Health Found., Inc., 241 F.3d 123, 128-29 (2d Cir.2001) (interpreting insurance contract); accord Kamagate v. Ashcroft, 385 F.3d 144, 154 (2d Cir.2004) (applying broad definition to removal statute); see Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 139, 111 S.Ct. 478, 112 L.Ed.2d 474 (1990) (applying same definition in ERISA context); see also Celotex Corp. v. Edwards, 514 U.S. 300, 308 n. 5, 115 S.Ct. 1493, 131 L.Ed.2d 403 (1995) (stating that proceedings “related to” a bankruptcy include “suits between third parties which have an effect on the bankruptcy estate“).
59
In the ERISA context, the Supreme Court has ruled that “[u]nder this `broad common-sense meaning,’ a state law may `relate to’ a benefit plan, and thereby be pre-empted, even if the law is not specifically designed to affect such plans, or the effect is only indirect.” Ingersoll-Rand Co. v. McClendon, 498 U.S. at 139, 111 S.Ct. 478 (quoting Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 47, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987)). Recognizing the potential all-encompassing breadth of this definition, the Court has increasingly focused on ERISA‘s objective to establish a uniform system of benefits in determining whether a particular state law “relates to” a plan. In light of this federal interest in uniformity, the Court has concluded that a state law of general application “relates to” an ERISA plan where application of the different states’ laws could yield inconsistent benefit outcomes in similar cases. See New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 658, 115 S.Ct. 1671, 131 L.Ed.2d 695 (1995) (“[L]aws providing alternative enforcement mechanisms also relate to ERISA plans....“); see also Ingersoll-Rand Co. v. McClendon, 498 U.S. at 139, 111 S.Ct. 478. Following these decisions, our court has concluded that ERISA preempts generally applicable state contract law when that law is relied upon to enforce a benefits plan. See Devlin v. Transp. Communications Int‘l Union, 173 F.3d 94, 101 (2d Cir.1999).
60
This precedent supports the conclusion that FEHBA preemption is not limited to state and local laws that expressly regulate health insurance or plans.19 Nor is it limited to specialized state rules applicable only to insurance plans, for example, a rule of decision providing for ambiguities in an insurance policy to be resolved in favor of the insured. See, e.g., City of Burlington v. Indemnity Ins. Co. of N. Am., 332 F.3d 38, 45 (2d Cir.2003); Mostow v. State Farm Ins. Cos., 88 N.Y.2d 321, 326, 645 N.Y.S.2d 421, 423, 668 N.E.2d 392 (1996). Rather, FEHBA preemption also extends to general laws that can reasonably be understood to “relate to health ... plans” whenever such laws would attempt to construe or enforce the coverage or benefits terms of FEHBA health plans.
61
The majority concludes that ERISA precedent is not helpful in determining the preemptive reach of
62
The majority suggests that construing
63
American Airlines, Inc. v. Wolens, 513 U.S. 219, 115 S.Ct. 817, 130 L.Ed.2d 715 (1995), is not to the contrary. The question in that case was whether the Airline Deregulation Act‘s preemption clause, which forbids states from enacting or enforcing “any law ... relating to [air carrier] rates, routes, or services,”
64
The same conclusion obtains as to FEHBA. The 1995 amendment to
65
I recognize that in Wolens the Supreme Court observed that “contract law is not at its core `diverse, nonuniform, and confusing.‘” 513 U.S. at 233 n. 8, 115 S.Ct. 817 (quoting Cipollone v. Liggett Group, Inc., 505 U.S. 504, 529, 112 S.Ct. 2608, 120 L.Ed.2d 407 (1992) (plurality opinion)). Thus, the Court anticipated no serious risk of nonuniform adjudication in the enforcement of a nationwide contract by the various states. The amendment to
66
Here, Empire seeks to enforce a FEHBA plan term that expressly conditions the receipt of benefits on an enrollee‘s duty to reimburse the insurer if he recovers in tort from the third party causing his injuries. Because the operative Plan‘s reimbursement requirement plainly “relates to” the provision of insurance benefits, I conclude that under the broad preemption provision of
67
The 1998 amendment to
68
This conclusion is consistent with MedCenters Health Care v. Ochs, 26 F.3d 865, 867 (8th Cir.1994). Relying on the pre-1998 preemption provision of FEHBA, the Eighth Circuit rejected a jurisdictional challenge to a FEHBA carrier‘s contract claim for restitution, holding that federal law governs such claims. Although the decision is brief, I can only assume that its respected author, Judge Richard Arnold, thought it so obvious that Congress had authorized federal common law to resolve FEHBA coverage or benefits disputes that the point merited little discussion. See also Tackitt v. Prudential Ins. Co., 758 F.2d 1572 (11th Cir.1985) (citing FEHBA‘s former preemption provision for proposition that federal law controls interpretation of FEHBA contracts). Cf. Goepel v. Nat‘l Postal Mail Handlers Union, 36 F.3d at 309 n. 3, 315 (recognizing that FEHBA claims may be governed by federal common law, but declining to reach the issue).
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In sum, because (1) Empire‘s contract action seeks to enforce the benefits terms of a FEHBA plan; (2)
C. The Effect of 5 U.S.C. § 8912 on Federal Jurisdiction in this Case
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Ms. McVeigh insists that, even if Empire‘s claims arise under federal common law, the district court cannot exercise
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Absent some indication to the contrary, statutes vesting courts with jurisdiction over certain matters do not strip courts of their jurisdiction over others. As the Supreme Court stated in Verizon Maryland, Inc. v. Public Service Commission of Maryland, “[t]he mere fact that some acts are made reviewable [under a statute] should not suffice to support an implication of exclusion as to others.” 535 U.S. 635, 643-44, 122 S.Ct. 1753, 152 L.Ed.2d 871 (2002) (internal quotation marks omitted). Section 8912 does not purport to deprive federal courts of
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For all these reasons, I conclude that this suit to enforce the terms of a FEHBA plan does arise under federal common law, and I dissent from the majority‘s conclusion that the case was properly dismissed for lack of subject matter jurisdiction.
Notes:
Notes
If another person or entity ... causes you to suffer an injury or illness, and if we pay benefits for that injury or illness, you must agree to the following:
• All recoveries you obtain (whether by lawsuit, settlement, or otherwise), no matter how described or designated, must be used to reimburse us in full for benefits we paid. Our share of any recovery extends only to the amount of benefits we have paid or will pay to you or, if applicable, to your heirs, administrators, successors, or assignees.
The terms of any contract under this chapter which relate to the nature, provision, or extent of coverage or benefits (including payments with respect to benefits) shall supersede and preempt any State or local law, or any regulation issued thereunder, which relates to health insurance or plans.
The OPM has also moved to expand federal jurisdiction. As noted by our dissenting colleague, the OPM modified FEHBA regulations in 1995 to provide that legal actions seeking review of final action by the OPM for a denial of health benefits “must be brought against OPM and not against the carrier or carrier‘s subcontractors.”
[We must determine] whether the surcharge laws have a “connection with” the ERISA plans, and here an uncritical literalism is no more help than in trying to construe “relate to.” For the same reasons that infinite relations cannot be the measure of pre-emption, neither can infinite connections. We simply must go beyond the unhelpful text and the frustrating difficulty of defining its key term, and look instead to the objectives of the ERISA statute as a guide to the scope of the state law that Congress understood would survive.
514 U.S. at 656, 115 S.Ct. 1671.