Helfrich v. Blue Cross & Blue Shield Assoc

gov- our implications the constitutional HELFRICH, Plaintiff Lee Ann of indi- detention civil prolonged ernment’s Defendant- Counter legal have the whom viduals, many of Appellant, country. By in our work right live order that district court’s upholding the bond head- must hold Judges Immigration AND SHIELD BLUE BLUE CROSS individuals, we detained certain ings for ASSOCIATION, Defendant Judges to Immigration ordering are Counterclaimant-Appellee, individual; rather we any single release safe- procedural a minimal affirming are govern- hearing at which guard —a of Kansas and Blue Shield Blue Cross burden of only an intermediate bears City, Defendant-Appellee. com-, danger to demonstrating proof in ensure that flight

munity or risk of America; Association —to United States detention, period of lengthy after a Organizations, Health of Federal legitimate a to have continues Amici Curiae. of an in- deprivation further No. 14-3179. Judges, Immigration liberty. dividual’s Appeals, group within Court of experienced States United specialized Justice, already en- Tenth Circuit. Department determinations, and these trusted make 29, 2015. Oct. they find any individual need not release community or a danger presents weighing hearing and risk

flight after affirm all as- Accordingly, we

evidence. in- permanent district

pects of court’s We re- exceptions: three

junction, with 1231(a) subclass, and we

verse as to length must consider

hold that IJs hearings every provide bond

detention and hereby remand months. We

six injunction to enter revised

district court our instructions.

consistent with PART; IN REVERSED

AFFIRMED PART; REMANDED.

IN

Matthew Wessler, W.H. Justice, Public P.C., (Sarah Washington, Belton, D.C. E. Justice, Public P.C.,' Oakland, California, Hoffman, and David A. Vasos, Donald W. Offices, Vasos Kansas, Law Fairway, with briefs), him on the for Plaintiff Counter Defendanb-Appellant. (Adam

Anthony F. Shelley P. Feinberg, with brief), him on the of Miller & Chevali- Chartered, er Washington, D.C., for De- fendant Counterclaimant-Appellee Blue Cross and Blue Association, Shield Defendant-Appellee, Blue Cross and Blue Shield City. of Kansas Whitaker, Henry C. Assistant United States Attorney, Appellate (Joyce Staff R. Branda, Acting Attorney Assistant Gener- al, Grissom, Barry R. United States Attor- ney, Klein, and Alisa B. Assistant United States Attorney, Staff, Appellate and Su- Whitman, san G. Deputy Assistant General Counsel, U.S. Office of Personnel Manage- benefits,” id., supersedes and therefore D.C., on the him ment, Washington, Justice, brief) state law. Wash- Department Curiae, United D.C., Amicus ington, America.

States of I. BACKGROUND Suter, Ermer Ermer, Jason C. David M. The Plan A. D.C., Amicus for Washington, Group, Law pro to program establishes FEHBA Or- Health Curiae, Association Federal employ for federal health insurance vide ganizations. §§ 8901- 5 U.S.C. annuitants. See ees and LUCERO, HARTZ, and Before I). (2012 purpose is Supp. Its ed. and HOLMES, Judges. Circuit to healthcare quality affordable provide Doe v. De See employees. government HARTZ, Judge. Circuit (D.C.Cir. n. 41 vine, 708 F.2d benefits received Ann Helfrich Lee (“FEHBA’s 1983) to ensure maxi goal is federal-employee health-insur through her employees ‘at the mum health benefits for Shield Cross and Blue the Blue plan, ance and cost themselves possible lowest (the Plan), for the Plan Benefit Service ”) H.R.Rep. No. (quoting the Government.’ in a car injuries she sustained treatment (1959), 1959 U.S.C.C.A.N. Helfrich reached After Ms. accident. 2916). insur the other driver’s settlement .with to enter into authorizes OPM FEHBA Shield Cross and Blue company, Blue ance pro- carriers and with insurance contracts (BCBSA) Blue and Cross Association carry pro- out the regulations to (BCBSKC) mulgate City of Kansas Blue Shield 8902(a); § id. 5 U.S.C. gram. See for the benefits sought 8913(a). contracted with § OPM has of the Plan. in the terms provided paid, Plan, is adminis- which BCBSA judgment of from the appeals Helfrich Ms. and Blue Blue Cross Shield by local for the tered District Court States the United 8903(1). § id. Under companies. See her to reim requiring District of Kansas pays ap- government the federal FEHBA (together and BCBSKC BCBSA burse premium, an enrollee’s 70% of Cross) Employ proximately the Federal Blue (FEHBA) pays remainder. See enrollee Act of 1959 Health Benefits ees 29,203. 8906(b); Fed.Reg. Premi- § regulation id. insurance a Kansas preempts government enrollees from ums subrogation and reimburse prohibiting Employees into the Health deposited Ex are insurance contracts. clauses in ment within the United States Fund U.S.C. Benefits jurisdiction under 28 ercising 8909(a). § 5 U.S.C. Treasury. must re affirm. Ms. Helfrich § we BCBSA, carri- experience-rated like other com because federal Blue Cross imburse necessary to ers, Fund as from the antisubroga the Kansas draws displaces mon law claims and administrative which, pay benefit applied to the regulation, 1632.170(b); § id. expenses, see 48 C.F.R. Plan, uniquely conflict 1652.216-71(b), § weight to Alternatively, giving interests. services, fee for its see negotiated pays Man of Personnel Office

the views words, any pre- § In other (OPM) meaning of id. 1615.404-4. regarding agement or pay benefits that are used 5 U.S.C. miums provision, FEHBA’s prop- remain the expenses administrative 8902(m)(1), hold that the § reimburse we and BCBSA earns government, erty Plan “relate[s] in the fee. Communi- from the profit service nature, coverage or extent provision, carriers, ty-rated contrast, premi- set suit, settlement, [enrollee] ums based on the attributes the insured otherwise any third party or its in- pool, premiums Fund, receive from the surer for benefits which have also pay claims; benefit the difference be- been paid under [the] contract.” Id. tween premiums and the cost of benefits is is required BCBSA to make “a reasonable profit. 1632.170(a). their § See id. Any effort to seek recovery of amounts to surplus may be used at OPM’s Fund which it is entitled to recover in cases discretion reduce premiums or increase which brought to its attention.” 8909(b); benefits. See 5 U.S.C. 5 C.F.R. (It appears that this requirement does not 890.503(c)(2). (as extend to pursuing subrogation op- requires FEHBA reimbursement) that OPM’s contracts posed because the car- with carriers “contain a detailed statement rier is not “required recover to. of benefits offered and shall include such amounts any person from ... who causes máximums, limitations, exclusions, and injury an for which the [enrollee] other definitions of benefits as con- [OPM] Id.). makes for claims benefits.” Reim- siders necessary or desirable.” 5 U.S.C. bursement subrogation and recoveries ob- 8902(d). § The contract between OPM by tained experience-rated carriers like and BCBSA states that “[t]he Carrier BCBSA be must returned to the Treasury provide shall the benefits as described in Fund. See 48 31.201-5; § C.F.R. id. agreed upon brochure text” attached § 1631.201-70(a), (g); § id. 1652.216- as an appendix, JApp., 57; 1Vol. 71(b)(2)(i). According OPM, “FEHB brochure is “the official statement bene- carriers were by reimbursed approximate- fits,” id. at 131.1 provides It ly in million subrogation $126 recoveries in enrollee “obligated terms, to all condi- [2014].” Federal Employees Health Bene- tions, provisions and of [the] contract.” Program: fits Subrogation and Reim- Id. at 58. Among provisions those is the Recovery, bursement 29,203 Fed.Reg. grant to the carrier rights of the of subro- 2015). (May gation (sometimes and reimbursement col- The contract also provides that lectively “[t]he referred to subrogation). The Carrier’s subrogation rights, procedures contract states that anif enrollee receives policies, and including recovery rights, benefits from the carrier for treatment of shall be accordance provisions with the injury caused party, third “the agreed of the upon Carrier shall have brochure right Id. at to be subro- .text.” gated 61.2 The attached any rights says and succeed to brochure that if a recov- ery against party any person third injury causes organization an enrollee' “paid whom and the legally [enrollee] is Plan inju- enti- benefits for that tled to all part ry,” receive all of those same recoveries the enrollee obtains benefits_” Id. at may 84. carrier “must be used to reimburse [the Plan] ie., also be “recover directly full for paid.” benefits [it] reimbursed — 140. The from the [enrollee] all amounts received Plan is entitled to reimbursement if even language We use from the contract and 2. The 2013 contract includes lan- additional operative guage: brochure that were in 2012. Be- subrogation rights, “The Carrier’s procedures policies, cause Ms. including Helfrich’s treatment recovery occurred in rights, payments respect both with we will any footnote benefits shall be in provisions accordance with difference the 2013 contract and brochure agreed upon text.” brochure Id. at 104 language. added). (emphasis are payments and benefit that benefits all whole” for “made is not

the enrollee on the individual covered recovery to a extended right of Plan’s and the damages, may pur carrier attorney’s the FEHB condition to reduction subject is “not and reim may, subrogation costs”; the Plan and receive but sue fees and recovery to the con pursuant discretion, its share recoveries reduce bursement (inter- (codified Id. 5 C.F.R. considerations. these Id. tract.” based omitted). Further, 890.106(b)(2)). the rule declares Finally, § nal he or damages, subrogation does limiting seek the enrollee laws that state recov- the Plan initiate under permit preempted she must are Plan Finally, the or her behalf. ery on his 8902(m)(1): recovery right [its] may “enforce responsibilities rights A carrier’s at 141. future benefits.” offsetting reim pertaining FEHB under bursement Preemption Provision B. and ex nature, provision, relate provision, FEHBA’s (including benefits coverage or tent of 8902(m)(1), terms of “The states: U.S.C. benefits) with respect payments re chapter which under any contract 8902(m)(1). meaning of 5 U.S.C. nature, or extent of provision, late to responsibilities rights and These (including payments or benefits coverage any notwithstanding effective therefore benefits) supersede shall respect with law, is any regulation local or state or any or or local any preempt State and thereunder, to health which relates sued thereunder, re which issued regulation plans. or insurance plans.” In or health insurance lates to (codified 29,205 at C.F.R. Id. at to all 2012, a letter issued OPM June 890.106(h)). § position expressing carriers FEHBA to reimbursement rights that contractual Litigation This C. purview of fall within the subrogation en employee is a federal Ms. Helfrich 8902(m)(1) state laws and thus override § Plan; BCBSKC administers rolled in the plans. or insurance to health that relate 2012, In December in her the Plan area. published January OPM On a car accident was in Ms. Helfrich address proposed a rule Register Federal received injuries. She serious suffered limiting of state laws ing the Plan in $76,561.88 in benefits from See 80 and reimbursement. subrogation injuries. Helfrich her Ms. connection with comment, notice and Fed.Reg. 931. After the other driver against claim asserted a May on the final rule promulgated OPM driver’s with the settled accident (while pending). litigation was $100,000. limit of policy insurer for states, 29,203. “All The rule at id. See sought reimbursement then Blue Cross provide plan contracts shall health benefit according to terms paid the benefits Bene Employees Health the Federal that a Helfrich filed response, In Ms. the Plan. (FEHB) pursue .carrier entitled fits Blue Cross Kansas petition against recover and reimbursement that the subro- seeking a declaration court such pursue ies, policy a and shall have is unenforceable in the Plan gation clause the terms of accordance recoveries 8902(m)(1) § that under Kansas 29,204 (codified at this section.” antisubroga Kansas preempt does 890.106(a)). re also § The rule C.F.R. “[n]o provides that regulation, which tion containing subroga that contracts quires company health insurer insurance “provide clauses reimbursement tion or may issue any contract or certificate of raised below, them they briefed, were insurance in Kansas containing a subroga- Blue Cross raises them again on appeal. clause, policy other Johnson, See Havens having purpose or effect similar to that Cir.2015). clause, of a subrogation applicable to cov- erages providing- for reimbursement of' A. Federal Common Law medical, surgical, hospital, or ex- funeral Blue argues Cross that federal common penses.” Kan. Admin. -Regs. 40-1-20. displaces the Kansas antisubrogation The parties appear assume that regulation under the doctrine set forth in regulation encompasses Boyle v. United Technologies Corp., claims an insurer. 101 L.Ed.2d 442 Blue Cross removed the case to federal (1988). Boyle In' a United States Marine court3 and BCBSA filed counterclaim helicopter copilot was killed when his heli- seeking reimbursement $76,561.88, copter crashed off the coast of Virginia. declaration Ms. Helfrich obligat- See id. at 108 S.Ct. 2510. copilot ed Plan, to reimburse the and a declara- survived the crash but was unable to es- tion that a lien existed against Ms. Helf- cape from the helicopter and drowned. rich’s proceeds. settlement Blue Cross id. plaintiff, on behalf of the moved for judgment the pleadings, ar- copilot’s estate, heirs and brought a diver- guing that Kansas antisubrogation law is sity action contractor built

preempted 8902(m)(l) under and, alter- helicopter States, the United claim- natively, federal common law dis- ing that it was liable under Virginia tort places application regu- Kansas law for a defectively designed escape lation. The district court held hatch, opened which out in, instead of see 8902(m)(l) preempted Kansas law and id. as stated in granted judgment in of favor Blue Cross. specifications, the contract see id. at 108 S.Ct. 2510. Ultimately Supreme the II. DISCUSSION Court held that even in the absence of an “We review a district grant court’s of a applicable statute, federal protected law motion for judgment on the pleadings de federal contractor against design-defect li- novo, using the same standard applies that ability “(1) under state law if the United 12(b)(6) to a Rule motion.” Colony Ins. approved States reasonably precise specifi- Burke, Co. v. (2) cations; equipment the conformed to Cir.2012) (internal quotation marks omit- specifications; (3) those the supplier ted).- We affirm the district grant court’s warned the United States about the dan- of judgment on the pleadings for Blue gers the use of equipment the that were (1) Cross grounds on the that com- federal known to supplier the but not to the Unit- mon displaces the Kansas antisubroga- ed States.” Id. at 108 S.Ct. 2510. tion regulation and the pre- FEHBA Because path the taken the Court to emption provision overrides regulation. the reach that conclusion is essential to our Although the district court did not address analysis, we it in review some detail. the ground first or some of the reasoning supporting second, the can First, we properly rejected the Court plaintiffs rely on them to affirm because Blue Cross argument that not recognize could 3. Blue Cross jurisdiction first claimed federal diversity jurisdiction claimed under 28 U.S.C. 1442(a)(1) under 28 U.S.C. 1332(a) (BCBSKC but later also Missouri). is a citizen contractor independent “involve[d] case design- the state defense

federal-law procure- obligation under a statute performing absence in the defect claim per- ac Although contract, than an official immunity. rather that conferring validity of general employee,” duty as a federal knowledging his forming “a few that it noted im- position, obviously plaintiffs “there circumstances both interests, federal areas, uniquely involving getting the the same plicated by the Constitution are so committed Id. done.” work Government’s control to federal States United laws of the reasons that these concluded Court replaced, pre-empted that state out arising “civil liabilities made a con law of by federal necessary, where con procurement of federal performance (absent statutory explicit prescribed tent inter uniquely federal tracts” a matter directive) by the courts—so-called 506, 108 The Court S.Ct. 2510. Id. at est. common law.” new, nothing was quotation' view (citation and internal added prece omitted). that its had said in 1940 the Court The Court out that pointing uniquely federal two identified could not be dents had contractor that a federal held dispute be that “border[ed]” interests allegedly for erosion suit private in a liable held First, “ha[d] Court it. fore Id. work, saying construction by dike caused “ of the United rights to and obligations carry out authority to ‘if the governed contracts under its States is, conferred, validly project Second, Id. law.” exclusively by federal constitution within the was done was what peculiarly to be of found “ha[d] the Court liability no there is Congress, al power concern, warranting displace executing for contractor part liability of the civil ment of state ” omitted) (brackets (quoting its will.’ actions taken officials Co., Ross v. W.A. Constr. Yearsley 505, 108 S.Ct. duty.” Id. of their course 20-21, L.Ed. 554 S.Ct. 2510. (1940)). Thus, dispute in although the either concern precisely Boyle did parties, private was between Boyle interest; found the differ- but were still States United interests reasons unimportant. “[T]he ences See id. at directly implicated. closely related areas considering these interest,” said federal’ ‘uniquely be of civil Court, well the liabilities as “apply law, howev Displacement state of federal performance the arising out just presence of er, more than the requires 505-06, Id. at contracts.” procurement “Displace interest. uniquely a federal inter- the first Regarding 2510. 108 S.Ct. signifi ... a only where occur ment will ease acknowledged that the est, the Court an identifiable conflict between cant exists obligation to the Unit- did “not involve operation and the or interest policy contract, lia- but rather under its ed States of state law application the 505, at persons.” Id. bility to third objectives of feder specific frustrate would design-defect The contractor’s S.Ct. 2510. at 108 S.Ct. 2510 Id. legislation.” al per- “out of however, arose liability, tort citation, quotation internal (brackets, liabili- and such of the contract” formance omitted). of state Displacement marks as traditionally regarded had ty been necessary could be grounds these the al- contract for closely related would oth of state law preemption even Similarly, the Id. item. legedly defective in order: not be the though erwise recognized that even Court The conflict with policy need not those with whom the United States con sharp be as as that which must exist for tracts might be sued third-party benefi ordinary pre-emption when Congress ciaries to the contracts.” Id. at legislates in a field which the States S.Ct. 2490. “[A]ny federal interest in the have traditionally occupied. put toOr outcome of question the before [the Court] point differently, the the far speculative, [was] fact too far too remote a question area in is one unique possibility feder- justify application of fed al changes concern what would other- eral law to transactions essentially local wise ahe produce cannot conflict 32-33, concern.” Id. (in 97 S.Ct. 2490 into pre-emption one that can. omitted). ternal In con 507-08, Id. at 2510 (emphasis trast, the federal in Boyle was added) (citation, footnote, and internal quite real. Boyle As the said, “The omitted). quotation marks The extent of imposition of liability on Government con vary. could “In some tractors will directly affect the terms of eases, example where the federal inter- Government contracts: either the contrac requires rule, est a uniform the entire tor will decline to manufacture the design body of state law applicable to the area specified by Government, or it will replaced conflicts and is by federal rules.” raise price.” its U.S. 108 S.Ct. Id. at 108 S.Ct. 2510 (citing Clearfield Further, the plaintiffs in Miree States, Trust Co. v. United were “not seeking to impose upon per (1943)). 87 L.Ed. 838 But in son contracting with the Government a other cases “the narrow, conflict is more duty contrary to duty imposed by the and only particular elements of state law Government contract” but instead were are superseded.” Id. seeking to enforce “the duty contractual On hand, the other conflict, no no dis- Id. at 108 S.Ct. 2510. Boyle, itself.” placement. The Court discussed prior however, was “at opposite extreme ” opinion in Miree v. DeKalb County, 433 from Miree because Virginia’s tort-law 25, 26-27, 53 L.Ed.2d duty of care was “precisely contrary” to (1977), as an example of a case in duty imposed by con which there was adequate no federal inter- 509, 108 tract. S.Ct. 2510. est and no conflict with federal policy. In Finally, Boyle had to formulate when Miree plaintiffs alleged plane that a contractor’s tort liability for a design de- crashed because County had garbage fect that appears specifi- contract’s dump too close to airport, than closer cations creates “a significant conflict with permitted in the County’s grant contracts (internal federal policy or interests.” with the Federal Aviation Administration omitted). quotation marks every Not tort (FAA). id. at 97 S.Ct. 2490. claim present “If, such conflict. They argued they could sue under for example, a procurement officer state law third-party beneficiaries of the orders, by number, model a quantity of contracts. See id. at 97 2490. S.Ct. helicopters stock happen be The law, Court held that state rather than equipped escape opening hatches out- applied common to the plain- ward, it impossible say that the Gov- tiffs’ claims because operations “[t]he of significant ernment a in that the States in United connection with FAA particular feature.” Id. grants ... would be [not] burdened or subjected to uncertainty by guidance, variant state- For the Court turned to the law interpretations regarding whether (FTCA). Federal Tort Claims Act by set forth requirements tractor. immunity to allow sovereign waives

FTCA lia- design-defect for contractor injuries the Court States United the against suits immunity contractor wrongful bility conduct ensured or negligence by caused design the defect when private person if a available would be employees by federal discretionary decision a same conduct. product was the of for the liable would be 1346(b). recog- The statute government. the 28 U.S.C. however, for discretion- exception,

nizes an view, analysis Boyle in the In our “[a]ny on not allowed Suit ary acts. the Kansas the requires displacement per- or the exercise upon ... based claim in the context antisubrogation regulation per- or to exercise failure or the formance Ms. Helf- against claim Blue Cross of the duty discretionary function a form suggests The concurrence rich. employ- or an agency a federal part of the to the dis only analysis applies Boyle’s the Government, or not whether ee policy tort law. But of state placement Id. be abused.” involved discretion in Boyle in are expressed considerations 2680(a). selec- viewed “the The Court the state cause nature of of the dependent military design for appropriate tion of by the state laws addressed action. The assuredly a discretion- [as] equipment just Boyle were relied on precedents at Boyle, 487 U.S. ary function.” Trust, See, e.g., laws. tort Clearfield thought: itAnd S.Ct. (commercial paper); 63 S.Ct. against, contractors tort suits [S]tate (third- Miree, sought to effect produce same would claim). Boyle introduced party-beneficiary exemption^ by the FTCA avoided be discretionary-function stan FTCA’s judg- burden financial because] [t]he whether to determine simply test dard ul- would the contractors ments between conflict significant was a there through, substantial- timately passed be and state government of a term the United States totally, ly if not significant if law—the conflict pre- contractors itself, defense will since discretionary deci term was informed cover, or to prices their dictably raise State contracting officer. sion liability for contingent against, insure tort law otherwise —must law—whether designs. the Government-ordered such a contractual if it conflicts with yield 2510. The inter uniquely in an area of term should that the contractor concluded ests. would government in tort be liable the con debate that There can be little sense,” “It makes little been. not have government and the BCBSA between tract Court, “to insulate Govern- said quality of affordable and the liability financial ment against employees government healthcare mili- feature of particular judgment that inter “uniquely federal” both matters necessary when the Gov- tary equipment has an no “The States doubt est. United itself, equipment produces ernment attracting able overwhelming interest for the produc- it contracts but not when workforce to the federal workers other S.Ct. 2510. In tion.” Id. work when, the health and welfare words, circumstance — carry relies to out whom it upon ers term actual- contrary to a contract law was Assur Healthchoice Empire (a functions.” “dis- agency ly the federal selected ance, McVeigh, 547 U.S. Inc. v. decision) be a cretionary” —there L.Ed.2d 131 conflict” “significant between omitted). (internal marks quotation liability of the con- tort policy and state And provision the reimbursement in the have pay reimbursements that are then (whose Plan negotiation by government of- used to benefit enrollees throughout ficials assuredly “is a discretionary func- country, even those who live in states tion,”4 Boyle, 108 S.Ct. they where keep could their tort recover- 2510) important serves purposes that are ies without paying reimbursements. See by antisubrogation undermined laws. For Corp. FMC v. Holliday, 52, 60, 498 U.S. experience-rated Cross, carriers like Blue (1990) L.Ed.2d 356 money through subrogation recovered (“Pennsylvania’s antisubrogation or reimbursement is-used either to reduce requires plan providers to calculate benefit premiums (paid largely by govern- levels Pennsylvania based on expected ment) or to coverage. increase See 5 liability conditions that differ from those in 8909(b); 890.503(c)(2). U.S.C. 5 C.F.R. States that have not enacted similar anti- The conflict between the state regulation subrogation legislation. Application dif- and the federal requirement contractual fering state subrogation laws plans that Blue pursue Cross the reimbursement would therefore plan frustrate administra- claim against one, Ms. Helfrich is a stark continuing tors’ obligation to calculate uni- starker than in Boyle. In Boyle pros- nationwide.”). form benefit levels The leg- pect of liability tort could deter a contrac- islative history of FEHBA confirms tor doing government’s bidding congressional interest in uniformity. In or cause it to raise the price. enacting provision the FEHBA preempt- Here, state law outright forbids Blue (a ing certain state laws ad- we Cross from fulfilling contractual obli- dress more fully in the next section of the gation to bring a reimbursement claim.5 opinion), Congress expressed that concern There is strong also a federal interest in the imposition of requirements state-law uniformity that is undermined by allowing on FEHBA contracts would result in “[a] the subrogation override lack of uniformity of benefits for enrollees requirements reimbursement of the feder- plan same which would result al contract. See United States v. Kimbell enrollees some States paying premium Foods, Inc., 715, 728, based, in part, on the cost of benefits (“federal 59 L.Ed.2d 711 pro- provided only enrollees other States.” grams by that their nature are and must H.R.Rep. (1977); No. at 4 also be see uniform in character throughout in-, 29,203 Fed.Reg. Nation (supplementary necessitate formulation of control- formation ling (internal introducing OPM’s rules” rule recent omitted)). explains Recognition of state an- state anti- tisubrogation laws would create unfairness laws “furthers Congress’s within the ranks of government employees. of ... goals uniform, enabling nationwide Those in states without such contracts”). laws would application of FEHB 4. Contrary to the by assertion the concur suggests 5. The concurrence collecting rence, $126 decision year OPM to through subrogation include the million a subrogation provision significant is not' in the Plan type is the policy that sum is a small fraction protected decision of total premiums. insurance But size discretionary-function exception liability fraction is Boyle irrelevant. did not consider .See, under e.g., the FTCA. Garcia v. U.S. Air allowing whether tort claims Force, contrac- 1175-76 Cir. large tors would to a percentage lead increase 2008). budget. in the defense

1100 expertise its OPM, presumably espe- is propositions these force of efficiencies savings and cost provides of the context in the cially strong to handle If OPM chose program. the OPM, because and BCBSA between in-house, be no doubt there would service agent be- only a service BCBSA acts in the provision enforce a it could its own and government the federal tween reim- to make enrollees requiring Plan relationship between the and employees, areWe tort of recoveries. bursements out gen- is employees and its government the law to allowing state no case aware of As interference. from state immune erally gov- in a contract requirement a override above, experience- is an BCBSA explained the feder- relationship between erning the receive not does BCBSA rated carrier. there and employee, and an al deposited a They are premiums. the a state would in which hardly an area is withdraws BCBSA from which fund than this legitimate have less of a administrative necessary pay its amount state allow relationship.6 To employment does claims. BCBSA expenses and benefit a con- such a to override it does not game; in the interference just have permit skin tract would have re- cover- that courts in the insurance federal functions the risk underwrite paraphrase To to countenance.7 fused a facilitator merely acts as It age. States through which the United note, anti- contracts way, Kansas by that the 6. We [and] functions exercising constitutional does not regulation apparently rights and obli on the consequences their plans. single-employer apply to self-insured questions present of Sloan, parties ... gations of the 19 Kan. Dist. 259 v. Sch. See Unified by law of not controlled 861, federal law state.”); 445, (1994). P.2d 867 App.2d 871 423, California, 283 U.S. v. Arizona Mexico, 455 U.S. States v. New (1931) ("The 7. See United 522, 451, L.Ed. 1154 S.Ct. 75 51 1373, 720, 735, L.Ed.2d 580 71 102 S.Ct. with may perform its functions United States tax-immunity (1982) purpose (principal of regulations police conforming out sovereign “forestalling 'clashing 51, doctrine is state.”); Maryland, 254 U.S. v. Johnson laying de by preventing 16, (1920) the States ty,' 56-57, 126 65 L.Ed. Government” directly the Federal on- mands (“[E]ven unquestionable and most most omitted) Mary (citation v. (quoting laws, M’Culloch such as applicable of universally state 316, 430, land, 4 4 Wheat. L.Ed. murder, 17 U.S. allowed concerning not be will those Seckinger, (1819))); 397 United States 579 a marshal of conduct of to control the 203, 209, 25 L.Ed.2d 224 U.S. pursuance acting under and United States ("federal interpreta law controls It seems to United States. the laws the United contract” between tion of the immunity instruments us that the contractor); private plumbing per States and from state control United States Co., 332 U.S. require v. Standard Oil United States ato their duties extends formance of L.Ed. 2067 S.Ct. 91 States [employees the United (1947) ("Perhaps between the no relation until performance desist from Post Office] State], distinctive a citizen more driving and they Government licenses from [obtain merely between it touch ly in character than requirement does not Such a by gener whatev remotely armed To of its forces. and members servants the Government conduct; apply govern may lays of them in er extent state rule of hold al obey others in the and re attempt soldiers or orders specific relations between their persons outside them or to those quires qualifications addition armed forces scope, pronounced sufficient.” governmental agencies, the Government nonfederal States, omitted)); (citation nature, consequences United Gilman v. legal incidents Cir.1953) ("the 848-49 persons in service and between the relation by a Government duty owed fundamentally question of the derived the Government one to be by employee the Government governed from federal sources law”), Cnty., Allegheny determined authority.”); United States v. L.Ed. 898 174, 183, aff'd, S.Ct. L.Ed. (1954). (1944) ("The validity construction of Boyle, it makes little sense permit here we are concerned with the federal to enforce a reimbursement by invoked dispute’s subject requirement when it administers the Plan matter.8

itself but not when it contracts out the Id. at 681. administration. See 512, Supreme The Court’s decision in O’Mel (“It S.Ct. 2510 makes little sense to insu- veny Myers FDIC, & 79, 512 U.S. late the against Government financial lia- 2048, S.Ct. (1994), L.Ed.2d 67 does not bility for judgment that a particular conflict our with analysis. The Federal feature of military equipment is necessary Deposit Insurance Corporation (FDIC), as when the produces Government the equip- receiver of a California-chartered federally itself, but not when contracts for (S insured savings L) and loan & sued production”). attorneys provided who services to the S & The Seventh Circuit considered a similar L for negligence and breach of fiduciary issue Downey v. State Fire Farm & duty with respect to fraudulent by conduct Co., Casualty Cir.2001), F.3d 675 & LS officers. See 81-82, id. at in which an insured brought suit 2048. One defense of the attorneys was his insurer on a policy bought through the that, under California knowledge of National Flood Insurance Program the fraud must be imputed L, to the &S (NFIP). See id. at 681-82. and therefore to the FDIC. See id. at court noted that under the program the S.Ct. 2048. The argued FDIC private insurer, Farm, State remitted all federal, state, not governed law imputation premiums, fee, minus a to the Federal and federal law would not recognize the Emergency Management (FEMA), Agency defense. See id. at 114 S.Ct. 2048. and if the insurer paid a claim it was The Court saw no conflict with federal law by reimbursed FEMA. See id. at 679. require the displacement of State merely Farm acted as an administra- state law governing imputation. id. at See agent, tive selling policies and processing 85, 89, 114 S.Ct. 2048. It observed claims for FEMA. id. at 679-80. The the FDIC had significant “identified no court concluded that the federal interest conflict an identifiable policy justified application interest.” 114 S.Ct. 2048. the suit: FEMA runs a program, and be- Several statements might Court cause it bears the risk on NFIP all at first argue seem to against displace- contracts, FEMA’s duties are at issue ment of state law our case. But not closer, whenever NFIP policy is interpreted. First, after a look. re- Replacing “FEMA” with “State Farm” jected the argument FDIC’s that Califor- in the caption of case changes noth- nia law compromise could federal interests ing; a judgment against State Farm and because “state rules regarding imputa- a judgment against FEMA have identi- knowledge might deplete the depos- cal effects: FEMA pays. though (brackets And it insurance fund.” Id. and in- we were concerned with the par- formal omitted). ternal ties to this action interpreted when we FDIC’s argument proved too much. jurisdictional [a “[Njeither NFIP], [the relevant statute] nor the 8. Downey's holding that there was federal this does affect its discussion of the feder- jurisdiction may over the suit survive al interest. McVeigh, 547 U.S. 126 but opinion), next section level anticipated any forth sets prior strong fed override limitation cannot must fund, FDIC] [the what so for the in our state law displacing eral interests forgoing simply ‘depletion’ mean Co., Motor Honda v. Am. case. See Geier any conceiva- which, under money fund.” rules, accrue might legal ble “pre-emption (express L.Ed.2d 914 in words, interest general a other

Id. In itself, not does foreclose provision, fund was of the depletion preventing any possibil implication) (through negative no limit- there was not sufficient (brack pre-emption” conflict ity implied of however, case, our In ing principle. omitted)); internal ets and interest, not a law- is which government’s 108 S.Ct. at Boyle, 487 U.S. in a feder- expressed is but yer’s construct one in (“the question area that the fact untethered; limited it is contract, is not al changes what concern federal unique of of the boon prevent funds to recovering cannot a.conflict that be otherwise would enrollees for some recoveries double can” one into produce pre-emption em- increase money instead to to use omitted)); Nor (footnote v. United States premiums. reduce ployee benefits n. 4 throp Corp., O’Melveny & in Second, the Court (“[W]e the Su Cir.1995) think that do not case “[t]here in that Myers declared intended O’Melveny in preme Court generic that most stake not even at [was] with displacing, possibility foreclose the invoked) in- (and alleged federal lightly rule, rule of a state common a federal uniformity.” Id. in terests, interest specific conflict with would decision that interesf in have federal But here we comprehensive a policies employees'— of federal treatment uniform Myr Corp. scheme.”); Freightliner cf. to subsi- requiring not some particular, in ick, 115 S.Ct. 514 U.S. (such as antisubro- ways in an dize others (“The ex fact an L.Ed.2d 385 law) not available all. gation reach pre-emptive of the definition press a reason supports ‘implies’ i.e., a statute Myers said O’Melveny & finally, And — in Congress did not inference—that able a court- “adopt not that the Court would matters does pre-empt other tend statutory supplement rule made entirely fore clause express' mean that de- comprehensive that is regulation implied pre-emp any possibility closes in such a tailed; unaddressed matters left tion.”). subject left presumably are scheme law.” Id. by state provided disposition in tension ruling our Nor in the con- arose But statement 85. McVeigh, detail about provided sought a statute that insurer text of a FEHBA in case which sue as FDIC could of a enrollee on which out terms reimbursement say rules of receiver, did not “special McVeigh creating tort settlement. defenses reimburse- by, necessarily claims regarding controlled state decision It FEHBA contract. Id. at 86. under a as receiver.” ment claims against, FDIC federal-ques- no regarding there contrast, only that is silent held In FEHBA a reimburse- over such jurisdiction against enrollees claims insurers of the claim, requiring dismissal thus tortfeasors; reimburse- ment subrogation and sure, claim. id. To be insurer’s mentioned. rules (There jurisdictional no issue provision; but FEHBA citizenship diversity of case, given reim- our cover does not if the even (a parties.) reject we proposition claims bursement On the issue of displacement of state tween New York state law and the federal law, McVeigh, if anything, supports our interests FEHBA, underlying such that conclusion. It acknowledged the federal dispute satisfy prongs both claims, saying If, Boyle. for example, [the estate’s ad- that “distinctly federal interests are in- ministrator] were defend herself in reli- volved” claim for carrier’s reimburse- upon ance a state law that was meant to ment (though these interests are not suffi- advance a particular policy, car- [the cient jurisdiction). to confer 547 U.S. at rier] could argue that such state law— 696, 126 S.Ct. 2121. In particular, “reim- whether statutory or common law—con- bursements fund, are credited to a federal flicts with federal interests and requires and the OPM-BCBSA master contract the application of federal common law. could be described as ‘federal nature’ This possibility, however, is insufficient to negotiated is by a agen- federal jurisdiction.”). confer federal In this case cy and concerns federal employees.” Id. there is certainly conflict, such a with the The Court also noted the federal interest state law attempting nullify to provision in uniform treatment of federal employees. in the FEHBA contract. See id. at (purpose of 8902(m)(l) § is ensure uniform “[t]o cover- Ms. Helfrich relies on McVeigh’s state- age plans and benefits under OPM negoti- ment that “the right reimbursement ates for federal employees”). question, predicated on a FEHBA-author- sure, To be such federal interests do not contract, ized is not a prescription of feder- necessarily require displacement. The Id.; al (carrier’s law.” see also id. “con- Court explained that Boyle, under “the tract-derived claim for reimbursement is of involvement an area of uniquely federal not a (brackets creature of federal law” a necessary, establishes not a suf internal omitted)); ficient, condition for the displacement of (reimbursement id. 126 S.Ct. 2121 state law.” Id. at 126 S.Ct. 2121 provisions in OPM- (ellipsis and internal quotation marks omit BCBSA “are together linked ted). Noting that the Second Circuit had depend upon a recovery from a party third determined that the carrier had not shown under terms and conditions ordinarily gov- a significant conflict between a federal in law”). erned state But even that of is (no terest and state law state antisubroga importance critical in determining whether mentioned), tion law was said, Court a claim arises under federal for pur- and until “Unless that showing made, is poses of jurisdiction, hardly is there no to displace law, cause state dispositive on displacement the issue of much less to lodge this case in federal Indeed, state law. the displacement issue court.” 126 S.Ct. 2121. Implic (under law) federal common does not arise it in statement, this however, is that a if a federal statute sets forth the control- state regulation that directly conflicts with ling standard. Although reimbursement is interests must be displaced. And generally governed by law, Circuit, the Second state without rebuke may Supreme Court, displace nonetheless aspects said as much. See Em pire all, Assurance, law. After a design-defect HealthChoice Inc. v. tort McVeigh, (2d claim Cir.2005) law, F.3d creature but that J.) (“We (Sotomayor, recognize preclude did possi the displacement of part bility that at a stage in proceed later law in Boyle. See 487 U.S. at ings, a significant conflict might arise be- 108 S.Ct. 2510. benefits,” falling thus to respect with antisubro- the Kansas conclude We 8902(m)(l)’s On compass. § by federal within displaced regulation

gation hand, a claim other this case. law in “coverage” long after arises ordinarily Preemption Express re B. have been questions and “benefits” “payments solved, corresponding pre- FEHBA’s raises also Blue Cross have been to benefits” respect with for over- ground aas provision emption insured. or the providers to made care regula- antisubrogation the Kansas riding view, consideration With states: The tion. 8902(m)(1)’s may be read words under any contract terms The relating to the terms to contract refer nature, pro- relate which chapter (or lack there beneficiary’s entitlement or benefits coverage vision, extent or health of) certain payment to Plan ben- respect (including payments received, and he or she care services sh,all preempt efits) supersede carrier’s relating to terms any regulation or local State right reimbursement. postpayments thereunder, which relates issued (citation omitted, original). plans. ellipses insurance health Court, however, not need did 8902(m)(1).9 5 U.S.C. construc these “plausible between choose pro- discussed this Supreme preemp “even FEHBA’s tions” Although the issue McVeigh. vision reim contract-based reaches provision tion jurisdiction, federal-question was that case not claims, is provision bursement law, the of state the not juris to confer sufficiently broad rele- are nevertheless observations Court’s 2121. 698, 126 at diction.” is “unusual provision the It said that vant. contract state preemptive Supreme the Court’s it renders in that Given ambiguous not re plans, provi- insurance in health terms ment thus reim by Congress,” effect of preemptive garding enacted sions interpretation.” clauses, argues Helfrich Ms. cautious “warrants bursement 697, 126 S.Ct. the well-established apply McVeigh, 547 U.S. we must see, ambiguity, e.g., provision’s against preemption, presumption It noted the also 555, 565, Levine, respect to reimbursement: Wyeth least (2009), and L.Ed.2d 8902(m)(1) puzzling meas S.Ct. is a Section preempt construction, that Kansas law conclude than ure, one open to more apply does not presumption But that pre ed. seems us prior decision no that, as same reason much here reimburse Reading cisely point. on opin of this prior section discussed the master OPM-BCBSA clause in anti- the Kansas ion, displaces federal law .or limitation condition as a contract Supreme The regulation. employ by federal received “benefits” recognized a fed has at least twice among ranked Court ee, could be the clause general pre exception to ... relating] eral-interest terms “[contract] against preemption. sumption “payments or benefits” coverage der, insurance to health which relates 8902(m)(1) originally was enacted 9. Section regulation law or that such extent preemp plans amended in Until in 1978. provi contractual with such inconsistent provisions of more The was restricted. (effective 8902(m)(1) 5 U.S.C. only "any State sions." preempted FEHBA added). 18, 1998) (emphasis law, Oct. any regulation issued thereun- or local In Buckman Co. v. Legal s’ the' preemption of state regulations gov Plaintiff Committee, 341, 344, 121 S.Ct. erning tanker-ship operations design. (2001), 148 L.Ed.2d 854 individuals See id. at 120 S.Ct. 1135. pre who injured to have by claimed been sumption against preemption inappli implantation of orthopedic bone screws cable because these laws upon touched brought state tort alleging claims that a “national and international maritime com consulting company fraudulent rep- made merce,” a field in which “Congress ha[d] resentations to the Food and Drug Admin- legislated ... from the earliest days of the (FDA) istration while seeking approval to Republic, creating an extensive federal market screws. Supreme statutory and regulatory scheme.” Id. at held that plaintiffs’ state-law fraud-on- 108, 120 S.Ct. 1135. the-agency tort claims impliedly were This court has followed that lead. In preempted by Food, the Federal Drug, US Airways, O’Donnell, Inc. v. Act, and Cosmetic amended (10th Cir.2010), we considered Medical Device Amendments whether New liquor Mexico applied laws 1976(MDA). 344, 348, See id. at to airline flights in the state. We said that 1012. Although common-law claims for the presumption against preemption did fraud are a traditional feature of state not apply to the preemption of a state’s common the Court did apply regulation of an airline’s alcoholic-beverage presumption against preemption because service because “the field of safety aviation “[p]olicing fraud federal agencies is long been dominated federal inter- hardly a field which the States have tradi- (internal ests.” Id. at 1325 tionally occupied.” omitted). despite This the constitu- (internal omitted). quotation marks tional recognition of the state interest “To the contrary, the relationship between Const, regulation of liquor, see U.S. a federal agency and the entity it regulates (“The XXI, § amend. transportation or inherently is federal in character because importation State, into any Territory, or relationship originates from, gov- the. possession of the United States for deliv- by, erned according terminates to fed- ery or use therein of intoxicating liquors, eral law.” Further, Id. the consulting in thereof, violation of the laws hereby company’s “dealings with the FDA were prohibited.”), which was discussed at prompted by MDA, and the very sub- length later in our O’Donnell, opinion, see ject matter of [the company’s] statements 627 at F.3d 1329-31. were by dictated provisions.” statute’s Id. 121 Thus, S.Ct. 1012. at. The federalism concern (respecting state case did implicate “federalism concerns sovereignty) behind presumption and the historic primacy of state regula- against preemption purchase has little tion of matters of health safety.” The preemption case. provision does (internal at 121 S.Ct. 1012 not affect the relationships pri between omitted). 8902(m)(1) vate citizens. governs Section Similarly, in Locke, only United States v. contracts for the benefit of federal 89, 120 employees. It is an L.Ed.2d say understatement (2000), the Court said that “an ‘assump- “there has been a history signifi of tion’ of nonpre-emption is not triggered cant presence,” Locke, 529 U.S. at when the regulates State in an area where in the area of federal there has been a history significant' of employment. Congress legislated has presence.” The issue in Locke was the matter from the outset. the Plan to recovery permitting or later interpre to the turn therefore

We No won 8902(m)(l) enrollee’s behalf. on the § recover of language tation of subroga reimbursement that the presumption. der consideration without contained respect are requirements with preempted state law Again, Id. at 131. “which of benefits.” a FEHBA Plan’s “statement to the terms nature, or extent courts have several circuit provision, note that We relate (including payments authoriz benefits an ERISA coverage interpreted 8902(m)(1). benefits).” § due benefits respect actions to “recover ing with civil matter say on the little to has 29 U.S.C. plan,” Ms. Helfrieh terms of [a] ... under the said about McVeigh what echoing suits dis beyond 1132(a)(1)(B), encompassing as § coverage the terms efforts. possibility plan’s reimbursement puting payment limited “Plan are Corp., Healthcare v. United Levine See benefits enrollee] [an sendees health-care Cir.2005) (“Where, certain (3d 156, 163 402 F.3d relating to received, and not terms their ERISA here, claim that plaintiffs as right to reim postpayments carrier’s sought reimbursement wrongfully plan, 697, 126 S.Ct. bursement.” benefits, the claim paid health previously view, Supreme Ms. Helfrich’s due’....”); Arana v. Ochs is for ‘benefits one. plausible McVeigh, is a Court said Plan, 437-38 338 F.3d Health ner contrary also said that But the Court (5th Cir.2003); Singh v. Prudential Cross taken Blue one view—the Inc., Plan, 335 F.3d Health Care plau also as amicus—is States the United Cir.2003). Rawlings But see Wurtz task, then, the tools is to úse sible. Our Cir.2014). (2d Co., at the to arrive interpretation statutory and subro- Further, provi construction best have a of the Plan second gation provisions view, strongly these tools In our sion. Any recovery to benefits. close connection Blue Cross. support to a Trea- provisions goes these through and re with, begin To may be reduce sury used fund that the Plan are requirements imbursement to increase benefits. premiums respect to directly “payments tied 890.503(c)(2). 8909(b); § § 5 C.F.R. U.S.C. 8902(m)(1). They trig benefits.” 8902(m)(1) history legislative injures an en- party a third gered when history re support. lends also some “pa[ys] Plan benefits rollee and the interference a concern about veals 140. If the injury.” J.App., Vol. uni and the cost-cutting measures party, third from the enrollee recovers employees form treatment to reim “must be used those recoveries Report on The House across the nation. benefits [it] in full for [the Plan] burse fear that expressed measure original may “enforce [its] Plan Id. The paid.” requirements of state-law imposition offsetting future ben recovery by right of result “[fin- contracts would FEHBA on the enrollee And if efits.” at the Govern costs to both premium creased third to recover from does not seek unifor enrollees, lack of and [a] to initiate the Plan permit party, she must same for enrollees mity of benefits Thus, a carrier’s recovery behalf. on her in enrollees in result plan which right to reimbursement contractual based, in paying premium some States payment of from its subrogation arises only provided cost of benefits on the part, enti benefits; ultimate an enrollee’s H.R.Rep. in other States.” to enrollees is conditioned payments tlement to benefit (1977); Rep. H.R. 95-282, 4 see also at No. upon providing

1107 105-374, (1997) (“this at *9 bill No. 11 628(VB), broadens CV 2013 1250448, WL (S.D.N.Y. provisions in current law *4 20, 2013); Feb. Bryan v. cf. strengthen ability plans of national Mgmt., Pers. 1315, 165 F.3d 1320 Office of to offer uniform (10th benefits and rates Cir.1999) to en- 8902(m)(1) (interpreting regardless rollees of where they may broadly to preempt state law allowing live”); 95-903, Rep. (1978), S. at *2 1978 courts to award attorney fees pre 1413, U.S.C.C.A.N. (purpose 0 of preemp- vailing party in a suit between an insured “is to uniformity insurer). establish in and The state courts are divid benefits and coverage” under FEHBA and ed. Compare Thurman v. State Farm “at the same time ... recognize Co., Mut. Auto. Ins. 162, 278 Ga. 598 rights of states to determine 448, (2004) who (state S.E.2d 451 law preempt provide health services” (capitalization ed), Aybar v. N.J. Transit Bus Opera omitted)). In addition, Congress tions, Inc., wanted 32, 305 N.J.Super. 701 A.2d “prevent carriers’ cost-cutting 932, initiatives 937 (N.J.Super.Ct.App.Div.1997) from being by frustrated State (same), laws.” with Nevils v. Grp. Plan, Health H.R.Rep. (1997). No. Inc., beTo 451, (Mo.2014) (en S.W.3d sure, nothing banc) this history (No specifically preemption because “[t]he sub- refers to reimbursement and subrogation; rogation provision in favor of [the FEHBA and Ms. fairly Helfrich can argue that the carrier] creates a contingent right to reim absence of such implies references bursement and bears no immediate rela procedures those exempted from the nature, tionship provision or extent preemption provision. balance, On howev- of [the enrollee’s] insurance coverage and er, we think that — the expressions of benefits....”), con- vacated and remanded gressional intent suggest preemption U.S.-, here. 2886, 135 S.Ct. 192 L.Ed.2d 918 (2015), Kobold v. Co., Aetna Ins. position of Blue Cross has been Life 100, Ariz. 924, 309 P.3d 928 (Ct.App.2013) embraced decisions other federal — (same), vacated and remanded U.S. courts, which have said FEHBA -, 2886, 192 L.Ed.2d 918 preempts state laws limiting subrogation (2015), and Hillenbrand v. Meyer Med. and reimbursement. See Shields v. Gov’t S.C., Grp., 308 Ill.App.3d 241 Ill.Dec. Emps. Ass’n, Hosp. (6th 450 F.3d 720 N.E.2d 292-94 (appli Cir.2006), overruled grounds on other cation of common-fund doctrine not Wolever, Adkins v. (6th preempted). Cir.2009); MedCenters Health Care v.

Ochs, Cir.1994), F.3d overruled Strongly buttressing the decisions find- jurisdictional grounds by McVeigh, 547 ing preemption is recent regulation is- 2121; Bell v. OPM, Blue sued by agency responsible for Cross Okla., & Blue Shield No. 5:14— administering FEHBA.10 FEHBA author- CV-05046, 2014 WL at *6-8 izes “prescribe OPM to regulations neces- (W.D.Ark. Med-Centers); 2014) Nov. (following sary carry out chapter.” 5 U.S.C. ingo Co., 8913(a). Meridian Res. regulation, Cal promulgated 10. Blue could Cross not have 8902(m)(1). raised § below an response In request to a argument regulation based on this because this court after promulgated OPM the final yet OPM had proposed not it. But Blue Cross rule, parties the and the United States submit argue did the that district court should defer supplemental briefing ted regarding whether to an OPM expressing position letter its that position OPM’s final the rule is entitled to rights contractual to reimbursement and sub- deference. rogation purview fall within the of

1108 (rather agency and desired agency, to all contracts 2015, requires May on courts) whatever possess and reimburse than impose the al- ambiguity a of of discretion degree as a “condition requirements ben a stable provides of or nature benefits thus limitation on lows. Chevron ,ben provision Congress of and on the which rule payments background efit coverage”; describes plan’s ambiguities will Statutory under efits legislate: can con requirements; scope of rea- resolved, the bounds of within be nature, pro they “relate that cludes courts interpretation, sonable coverage or benefits vision, extent administering agency. by the but to bene respect (including payments — -, FCC, U.S. Arlington v. City of of 5 U.S.C. fits) meaning within - — 1863, 1868, L.Ed.2d 29,204-05. 8902(m)(1).” Fed.Reg. (2013) (citation quotation and internal January rule, published proposed omitted). noted that The Court marks interpretation that explained says that explicitly opinions [its] “[o]ne goal of 8902(m)(1) Congress’s furthers §of the normal deferen exception no exists subro- costs reducing health-care jurisdictional tial standard review recoveries tend gation and coverage of concerning the legal questions 70% of which premiums, to lower to lead (brackets and internal an Act.” ad government; by the federal paid are omitted). regard to With uni in national federal interest vances the wrote, have “We the Court preemption, and administration benefits formity in that to the FCC’s assertion deferred even uncertainty, litigation, order avoid authority extends regulatory its broad enrollees; and is treatment of disparate Id. state rules.” conflicting pre-empting understanding that with OPM’s consistent Court, applied “we have “And,” said reim subrogation and right to a carrier’s agency where concerns about Chevron recovery is “a condition bursement are at their self-aggrandizement to re eligible apogee: that enrollees payments con 932; agency’s expansive where in eases an Fed.Reg. at ceive for benefits.” power own of the extent (“Supplementary Fed.Reg. at struction see Rule). change a fundamental wrought Final have preceding would Information” at 1872. Id. regulatory scheme.” argue States Blue Cross United Chevron to the contention response In interpreta to OPM’s defer that we must matters of encroaching on deference U.S.A., 8902(m)(1) Chevron tion of under said, concern, the Court local traditional Coun Resources Inc. v. Natural Defense with federal nothing to do case has “[T]his cil, Inc., of the Tele applicable ism. [The (1984). correct. They may be L.Ed.2d supplants explicitly Act] communications Court, empha Supreme ago years Two zoning author requiring authority by Chevron, holding that sized the breadth a reason ‘within to render a decision ities statutory provisions even to applied time,’ meaning of and the period of able It jurisdictional. be considered could question of indisputably phrase wrote: Rather, “[t]his at 1873. law.” pre- background is rooted in Chevron whether bottom, is, about debate name- intent: congressional sumption own their allowed do will be the States ambiguity it left ly, Congress, when it will be whether about thing, but agency, administered a statute that draw the federal courts [agency] be ambiguity that the understood hew.” 133 they must foremost, the lines which by the resolved, first and

1109 (internal S.Ct. at quotation 1873 marks Strong stuff. One could easily infer omitted). Moreover, the delegation language that Chevron applies to an agency interpretation general authority of a promulgate regula- provision in a statute it And, administers. tions extends to all matters “within indeed, the Court has applied Chevron in agency’s substantive field.” Id. at 1874. just that situation. See Cuomo v. Clearing Because “the whole includes all of its Ass’n, House 519, 557 525, U.S. 129 S.Ct. parts,” courts try need to discern 2710, (2009) (but 174 L.Ed.2d 464 finding particular whether “the issue was commit- agency’s construction improper because ted to agency discretion.” Id. The Court statute’s ambiguity far). did not stretch so concluded: Given the ambiguity §in 8902(m)(1), appli Congress Where cation Chevron has established a clear deference would require us to line, adopt agency OPM’s reasonable it; cannot view. go beyond Congress where established hand, On the other Arlington made no line, ambiguous the agency can go no mention of the Court’s repeated state- than further ambiguity ments fairly years will recent it will merely give some weight allow. But to an agency’s rigorously applying the view on preemption,11 although rule, latter we note court need pause only two cases did the reject puzzle over whether the interpretive (which agency position in neither case had question presented jurisdictional. If appeared in a regulation promulgated by the agency’s answer is based on per- agency)12. But we need not decide statute, missible construction of the whether beyond deference weight” “some is the end of the matter. required, because even under the less (internal Id. at 1874-75 quotation marks deferential standard would adopt we omitted). OPM’s conclusion. As stated in Wyeth, PLIVA, 11. See Mensing, -U.S.-, Inc. v. ence seemingly be degree at issue—the 2567, 3, 131 S.Ct. n. 180 L.Ed.2d 580 might of deference be reduced the fact that (2011) (“Although we defer to the agency’s agency’s position earlier was different.” interpretation regulations, of its we do not (citation omitted)); Geier, 529 U.S. at defer to an agency’s ultimate conclusion (“We place S.Ct. 1913 weight upon some about whether pre-empt- law should be Department [the Transportation’s] interpre- ed.”); Am., Williamson v. Motor Mazda tation regulation’s] [the objectives and its Inc., 323, 335, 562 U.S. 131 S.Ct. conclusion, as set forth Government's (2011) (“the L.Ed.2d 75 agency's own views brief, that a tort suit such as this one would (internal should make a quotation difference” stand as an obstacle to accomplishment omitted)); Wyeth, 555 U.S. at objectives.” execution of those (original ("In cases, prior S.Ct. 1187 given we have brackets and internal marks omit- weight' 'some agency's to an about views ted)); Medtronic, Lohr, Inc. v. impact of tort law objectives on federal when 116 S.Ct. 135 L.Ed.2d 700 subject 'the matter is technica[l] the rele (“our interpretation pre-emption stat- history vant background complex ute substantially regula- informed those ”); Medtronic, Inc., Riegel extensive.' tions”). 312, 326, U.S. 169 L.Ed.2d 892 (2008) ("We have it unnecessary found rely PLIVA, upon agency S.Ct. at (rejecting 2575 n. 3 view because think we brief); view speaks statute clearly itself U.S. amicus point Br. for If, however, PLIVA, issue. Amicus Supporting Resp’ts, we had Curiae found the statute ambiguous 09-993, and had Mensing, accorded Inc. v. agency’s Nos. 09-1039 09-& deference, position (U.S. current 2011); dissent is cor Wyeth, Mar. 555 U.S. at rect that —inasmuch as mere Skidmore defer- rule). (preamble benefits,’ coverage or vision, of extent or unique under- have ... [AJgencies ’ preempt and supersede law shall they administer statutes the standing of in-, any regulation or local any State to make ability attendant and to health thereunder, relates which issued how state about determinations formed 5 U.S.C. plans.’ insurance to an obstacle may pose requirements e 8902(m)(1).... Th § of the and execution accomplishment the com may be federal state preempting Congress. objectives of purposes full provisions FEHBA statute or the mon law ex- agency’s the accord weight we con law—not themselves, it must be but de- scheme the planation event, terms.”). Ms. any because In tract consistency, thoroughness, its on pends below argument raise this Helfrich did persuasiveness. review plain-error argued and has not (citation it. See address need not appeal, we on omitted). As and internal Inc., F.3d Grp., Ernest Richison FEHBA negotiated that has agency the Cir.2011). (10th Helf- Ms. 1123, 1130-31 years, employees for federal contracts argu the did not forfeit says that she rich impact knowledge of the deep OPM court’s the district “[i]t provi of contractual interrelationships 8902(m)(1) the pits § that interpretation persuasively longstanding Its sions. provision text of FEHBA’s and reim subrogation Clause,” view that so the explained Supremacy the to directly tied “only provisions provision constitutionality bursement the rejected advance court benefits the district health arose employee when urged ... below.” interpretation served narrow purposes congressional disagree. Br. at 25 n. 8. We view, Reply 8902(m)(1) is, Aplt. of sufficient our § in that argued below Cross When Blue its agree to us persuade weight anti- 8902(m)(1) the Kansas preempted § preemption. regarding conclusion had Ms. Helfrich regulation, the dis contends that Ms. Helfrich 8902(m)(l) § argue opportunity con serious implicates ruling trict court’s no need There was unconstitutional. Suprema because the concerns stitutional interpreta court’s the district to wait for contractual permit cy does Clause possible arguments party A with two tion. laws, as preempt terms one cannot hold support position skeptical 8902(m)(l) We are provides. only after appeal raise reserve and con The effect argument. of this Wolford, Price v. losing on the other. See than no greater here is provision tractual Cir.2010) (“A D.O., F.3d in the specification design the effect arguments before make its party must Supreme Boyle, where contract in its keep an arrow It cannot court rules. could specification held that reserve, judge in case the for use quiver law. See state tort override all the contest says at the end note And we 108 S.Ct. 2510. mark.”). arrows missed expended Sotomayor said Judge then-Circuit III. CONCLUSION McVeigh opinion Circuit

Second avoid reasons, be construed could we AFFIRM foregoing For the problem. court. of the district judgment constitutional (“[W]e reasonably construe can at 144-45 concurring. LUCERO, Judge, Circuit that, 8902(m)(1) in cases requiring I II.B. majority part as to join under I the ‘terms involving disagree- my express separately nature, write pro- which relate [FEHBA] my colleagues’ with application of consistent with Boyle, where the court es- federal common law preemption. sentially granted 2680(a) tort immunity contractors. See Boyle, 487 majority primarily rests its analysis U.S. at (Brennan, J., Boyle on v. United Technologies Corp., 487 dissenting) (stating that U.S. decision is 101 L.Ed.2d 442 “premised on the (1988). proposition that any tort Under Boyle, federal liability indirectly absorbed (1) preempts Govern- state if: the area of law ment so governmental burdens uniquely concerns federal functions interests; as to (2) compel us to act significant Congress “a when conflict exists between an added)). not” (emphasis Because identifiable federal policy or test interest and Boyle enunciated is operation limited to state actions or applica- .in tort, I would apply tion it state law contract frustrate specific claim in this objectives case. of federal legislation.” Id. at 504-505, 507, (citations 108 S.Ct. 2510 Moreover, if even we were to apply the omitted). Because I agree that FEHB Boyle to a claim, test contract the majority terms present uniquely federal does not properly engage the test’s second interests, question relevant concerns prong. The majority opinion does not de- Boyle’s second prong, “significant con- fine “significant conflict”; spends instead it flict” requirement.1 several pages fortifying its conclusions

A significant conflict with a interest in federal in- this case—the terest government’s exists if a claim is based system-wide on desire for “the uni- performance or formity exercise or the failure to cost significant, control—is perform or exercise a and that discretionary func- conflict with state law is duty part of a 1099.) “stark.” agen- (Majority Op. But Boyle cy or employee an rejected of the Government.” the proposition a “stark” con- (quotation flict S.Ct. omit- with state law is sufficient to support ted). This rule stems from provision preemption. a Boyle, 487 U.S. at the Federal Tort (even Claims preserving Act S.Ct. 2510 if state law is “precisely government immunity against claims contrary impli- to the duty imposed by the Gov- cating agency discretion. Id. (citing 28 ..., ernment contract it would be unrea- 2680(a)). U.S.C. The purpose of that say sonable to that there always a signif- provision was to “prevent judicial ‘second- icant conflict between the state law and a guessing’ legislative interest”). administrative policy The majority decisions ... through the medium ignores aspect Boyle and instead action in tort.” United States v. S.A. reads the case as affirming that “a state Empresa de Viacao Aerea Rio regulation Grandense that directly conflicts with fed- Airlines), (Varig 797, 814, 104 eral interests be displaced.” must (Major- S.Ct. 81 L.Ed.2d 660 (empha- 1103.) ity Op. added).

sis I agree. cannot A “significant conflict” Extending the rule to a contract claim must arise from an act based on federal unmoors from purpose. Declining to agency Boyle, discretion. 487 U.S. at extend the rule to actions in contracts is 108 S.Ct. 2510. Courts struggled to have 1. The prong analysis second is limited to general BA’s provision to which “significant requirement conflict” the federal common law analysis inapplica- there legislation is no federal concerning given ble holding our express- the statute terms, FEHB ly aside preempts FEH- anti-subrogation laws. in, uniformity is under- ment’s of this discretion. boundaries enunciate require do not contracts FEHB mined 467 U.S. at Empresa, S.A. to, or to pursue insurers ... (“[I]t impossible con- But the subrogation. recover under every contour precision define signifi- the insurer grants issue tract at But it exception”). function discretionary It remedies. both pursuing cant role the entire limit, lest it swallow have must must make insurer provides Boyle, the Act. In Claims Tort Federal recovery of to effort seek “reasonable deci- government that a concluded to recover it is entitled to which amounts involved discretionary because it sion are in which subrogation] cases [through judg- analysis but engineering merely “not But, the insurer brought to attention.” many techni- balancing as any recover required to not be “shall consider- social and even cal, military, under party]” any [third from amounts trade-off

ations, including specifically case, the if, this as in And subrogation. com- greater and safety greater between from directly reimbursement seeks insurer U.S. at bat effectiveness.” contract employee, federal case, the insured gov- present In the insur- require not does complex. permits as not decision —the ernment —but major- contrary to the recovery, to in er seek clauses subrogation to include Whether Thus, insurer retains reading.2 ity’s uniformity and implicates contracts FEHB determining when discretion significant impli- not concerns, does but cost-savings full possesses considerations, subrogation, and forego to military cate technical when, to if, and how deciding discretion between tradeoffs analyses, engineering re- FEHB The reimbursement. pursue effec- combat greater safety greater uni- employees with provide gime In- does comparable. anything tiveness, or can decide insurers form results a cost-benefit involves stead, simply it recover, thereby allowing some they will of additional the value analysis weighing re- third-party keep to employees that of federal coffer in the funds them pay to forcing others while em- coveries ability of in the an increase higher pay thus employees Federal This back. costs. healthcare to recover ployees recoveries double support just premiums may involve some decision discretion — subject to insurers’ policyholders some decision every government nearly as some states whims, they do when just as falls well short balancing act does—but subroga- own citizens exempt their exercised discretion level of through democratic provisions Boyle. process. importance minimal understand To cost-savings afforded case, amount of in this exercised discretion likewise and reimbursement subrogation impact to consider is instructive government that the suggests party) from a third (recovery subrogation (most of states Across all directly significant. (recovery reimbursement clauses), sub- total subrogation insured) which allow goals of the asserted from the. approxi- amount recoveries rogation govern- uniformity cost. The recov- effort to seek making a reasonable required to insurer that the 2. To conclude 1093.) majority reimbursement, Op. (Majority ery....” to seek efforts use reasonable apply language does not then holds the reference removes majority first en- applies to an subrogation, instead states term that governing reimburse- tirely separate clause to recover Carrier obligation of the "[t]he reading. agree with this I cannot ment. subrogation is limited through amounts mately 0.3% of the premiums paid into damages in the recoveries that [she] re Moreover, FEHB. explained above, ceive[s].” Helfrieh alleges that the recov government leaves the decision of when to ery from BCBS and from the offending pursue cost-savings to the insurers. If the driver’s insurance together $30,000 left government interests signifi- were truly her medical bills unaddressed. Accepting cant, one expect it to obligate insur- this well-pled allegation as true and con ers pursue reimbursement and to recov- struing it light most favorable to the er through subrogation. plaintiff, Estes v. Wyoming Dep’t of Transp.,

To conclude that Cir. inter- 2002), Helfrieh did not ests in receive a the case at double- bar deserve much recovery. She did not weight, the even majority cover her analogizes FEHB in- costs. The military provisions surers to Boyle, contractors in over-inclusive, as they observes that it allow makes little sense to more than just recoveries, double insulate government under-inclusive, liability because produces may where it insurers equipment decide not directly but to collect even if where it the insured production. contracts for did receive a double- 1100-01.) (Majority recovery. Op. To the extent analogy This that preventing merely question: double-recovery raises the is a agency limiting would principle, it discretion has no application shield the government from fi- this case. nancial liability if government issued The majority’s reasoning exempt insurance directly, and not through priyate federal contracts from the contours of 2680(a) insurers? Not under state law anytime finds the claim does not sound in tort. And that law economically inconvenient. We did, even if it impact of allowing subro- should not grant such broad authority to gation terms FEHB contracts does not agencies. Instead, we should limit

rise to the level of import of the decisions our preemption analysis to the relevant in Boyle. issue statute and the agency’s implementing majority regulations. also reasons, errs For attempt these I do not distinguish join O’Melveny FDIC, & Myers majority’s v. federal common law 79, 114 2048, 129 discussion. L.Ed.2d 67 (1994). In O’Melveny the Court concluded the government’s general desire to

avoid foregoing any money might ac

crue to a federal fund insufficient to support preemption without some limiting America, UNITED STATES principle. 114 S.Ct. 2048. The Plaintiff-Appellee, majority states that FEHB reimbursement provisions are “limited to recovering funds prevent Robert SPERRAZZA, B. boon of double Defendant- recoveries for some 1102.) Appellant. enrollees.” (Majority Op. But, if this is the limiting principle, it has No. 14-11972. no teeth. The contract terms are not lim United States Appeals, Court of

ited to those cases involving double-recov Eleventh Circuit. ery. To the contrary, the official state Aug. ment of benefits expressly provides that may insurer recover “even if in [the sured] not ‘made whole’ for all of [her]

Case Details

Case Name: Helfrich v. Blue Cross & Blue Shield Assoc

Court Name: Court of Appeals for the Tenth Circuit

Date Published: Oct 29, 2015

Citation: 804 F.3d 1090

Docket Number: 14-3179

Court Abbreviation: 10th Cir.