Nevils v. Grp. Health Plan, Inc.

492 S.W.3d 918

Jodie Nevils, Appellant,

v.Group Health Plan, Inc., and ACS Recovery Services, Inc., Respondents.

No. SC 93134

Supreme Court of Missouri, en banc .

Opinion issued May 3, 2016

Nevils was represented by Jon Campbell, Erich Vieth and Alicia Campbell of Campbell Law LLC in St. Louis, (314) 588-8101; Mitchell L. Burgess, Keith C. Lamb and Blake P. Green of Burgess & Lamb PC in Kansas City, (816) 471-1700; Ralph K. Phalen of Ralph K. Phalen Attorney at Law in Kansas City, (816) 589-0753; and Don P. Saxton of the Saxton Law Firm LLC in Kansas City, (816) 471-1700.

Group Health Plan (now Coventry) was represented by Thomas N. Sterchi and David M. Eisenberg of Baker Sterchi Cowden & Rice LLC in Kansas City, (816) 471-2121; Thomas M. Dee, Melissa Z. Baris, Mark G. Arnold and Elizabeth A. Mushill of Husch Blackwell LLP in St. Louis, (314) 480-1500; and Miguel A. Estrada and Jonathan C. Bond of Gibson, Dunn and Crutcher LLP in Washington, D.C., (202) 955-8500. ACS was represented by Winthrop B. Reed III, Steven D. Hall, Richard A. Ahrens, Neal F. Perryman and Ronald B. Ziegler of Lewis Rice LLC in St. Louis, (314) 444-7600.

Two organizations filed briefs as friends of the Court. The United States of America was represented by Nicholas P. Llewellyn of the United States attorney's office in St. Louis, (314) 539-7637, and Henry C. Whitaker of the United States Department of Justice in Washington, D.C., (202) 514-3180. The Association of Federal Health Organizations was represented by Christopher O. Bauman of Blitz, Bardgett & Deutsch LC in St. Louis, (314) 863-1500; and David Ermer of the Ermer Law Group PLLC in Washington, D.C., (202) 833-3400.

Richard B. Teitelman, Judge

In Nevils v. Group Health Plan, Inc ., 418 S.W.3d 451, 457 (Mo. banc 2014), this Court held that 5 U.S.C. section 8902(m)(1) of the Federal Employee Health Benefits Act (FEHBA) did not preempt Missouri law prohibiting subrogation of personal injury claims. The United States Supreme Court granted certiorari, vacated this Court's decision in Nevils, and remanded the case for this Court to determine whether a new regulation promulgated by the Office of Personnel Management (OPM) establishes that FEHBA preempts Missouri's anti-subrogation law. Group Health Plan Inc., v. Nevils , ––– U.S. ––––, 135 S.Ct. 2886, 192 L.Ed.2d 918 (2015).

The United States Supreme Court has never held that a regulation promulgated by an executive branch administrative agency determines the scope of Congress' exercise of its legislative prerogative to expressly preempt state law. Instead, the Court has held consistently that courts should presume that there is no preemption and that a federal statute preempts state law only if it demonstrates Congress' clear and manifest intent to preempt state law. The text of the FEHBA preemption clause has not changed, and the OPM regulation does not overcome the presumption against preemption and demonstrate Congress' clear and manifest intent to preempt state law. Therefore, this Court holds that the OPM regulation does not establish that FEHBA preempts Missouri law prohibiting the subrogation of personal injury claims.

Background

Jodie Nevils (Appellant) was a federal employee with a health insurance plan governed by FEHBA. FEHBA expressly preempts state law as follows:

The terms of any contract under this chapter which relate to the nature, provision, or extent of coverage or benefits (including 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.

5 U.S.C. section 8902(m)(1).

Appellant filed suit against Group Health Plan, Inc.,¹ and ACS Recovery Services, Inc., after Coventry and ACS enforced a subrogation lien against the proceeds from Appellant's settlement of a personal injury claim. Appellant alleged that the subrogation lien violated Missouri law prohibiting the subrogation of personal injury claims. The trial court entered summary judgment in favor of Coventry and ACS on grounds that FEHBA preempts Missouri anti-subrogation law.

This Court reversed the summary judgment and held that the FEHBA preemption clause did not preempt Missouri anti-subrogation law because the subrogation of a personal injury claim does not clearly “relate to the nature, provision, or extent of coverage or benefits.” Nevils , 418 S.W.3d at 455. This Court's analysis began with the principle that the “historic police powers of the States” are generally preempted only when the federal statute at issue indicates that preemption is the “clear and manifest purpose of Congress.” Id. at 454 (quoting Cipollone v. Liggett Group, Inc ., 505 U.S. 504, 112 S.Ct. 2608, 120 L.Ed.2d 407 (1992) ). “[W]hen two plausible readings of a statute are possible, ‘we would nevertheless have a duty to accept the reading that dis-favors preemption.’ ” Id. (quoting Bates v. Dow Agrosciences, L.L.C. , 544 U.S. 431, 449, 125 S.Ct. 1788, 161 L.Ed.2d 687 (2005) ). The FEHBA preemption clause is ambiguous because it is subject to plausible, alternate interpretations. Id. at 454 (citing Empire Healthchoice Assurance, Inc. v. McVeigh , 547 U.S. 677, 697, 126 S.Ct. 2121, 165 L.Ed.2d 131 (2006) ). Specifically, the FEHBA preemption clause does not address the subrogation or reimbursement rights of insurance providers, id. at 455 (citing Empire , 547 U.S. at 683, 126 S.Ct. 2121 ), and “there is no indication that Congress delegated to the OPM the authority to make binding interpretations of the scope of the FEHBA preemption clause,” id. at 457 n. 2. In addition to the presumption against preemption, this Court noted that a “cautious” reading of the FEHBA preemption clause was further warranted because the statute takes the unusual step of providing that the terms of a privately negotiated contract preempt state law. Id. at 455. Consequently, this Court held that the plain language of the FEHBA preemption clause does not establish a clear and manifest congressional intent to preempt state anti-subrogation law. Id. at 457.

Following this Court's opinion in Nevils, the OPM promulgated a formal rule providing that:

A carrier's rights and responsibilities pertaining to subrogation and reimbursement under any FEHB contract relate to the nature, provision, and extent of coverage or benefits (including payments with respect to benefits) within the meaning of 5 U.S.C. § 8902(m)(1). These rights and responsibilities are therefore effective notwithstanding any state or local law, or any regulation issued thereunder, which relates to health insurance or plans.

5 C.F.R. § 890.106(h). The United States Supreme Court granted certiorari, vacated this Court's decision in Nevils, and remanded the case to this Court to determine whether the foregoing rule establishes that FEHBA preempts Missouri's anti-subrogation law.

Analysis

Coventry argues that the OPM's new rule providing that FEHBA preempts state anti-subrogation law is dispositive and requires this Court to hold that FEBHA preempts Missouri's anti-subrogation law. Coventry asserts that the OPM rule is entitled to deference pursuant to Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc ., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). Chevron held that when resolving statutory ambiguities, courts should defer to an executive administrative agency's interpretation of the statute through formally promulgated administrative rules. Id. 842–43, 104 S.Ct. 2778.² “Chevron deference” is typically applied “[w]here an agency rule sets forth important rights and duties, where the agency focuses fully and directly on the issue, where the agency uses notice-and-comment procedures to promulgate a rule, [and] where the resulting rule falls within the statutory grant of authority.” Long Island Care at Home, Ltd. v. Coke , 551 U.S. 158, 173, 127 S.Ct. 2339, 168 L.Ed.2d 54 (2007).

The OPM rule at issue was promulgated formally pursuant to notice and comment rulemaking. The text of the FEHBA preemption clause, however, remains unchanged. To reverse course from the holding in Nevils, this Court would have to hold that the OPM's rule is dispositive as to Congress' intent to preempt state law. While Chevron has been applied repeatedly to determine the substantive meaning of a statute, the United States Supreme Court has never held expressly that Chevron deference applies to resolve ambiguities in a preemption clause. Absent binding precedent requiring such deference, this Court declines to afford dispositive deference to an executive agency's interpretation of a statutory preemption clause.

The Supremacy Clause of the United States Constitution provides that state laws and constitutional provisions are preempted when in conflict with federal laws. See Johnson v. State , 366 S.W.3d 11, 26–27 (Mo. banc 2012). “In determining whether a state statute is pre-empted by federal law and therefore invalid under the Supremacy Clause of the Constitution, our sole task is to ascertain the intent of Congress.” California Fed. Sav. & Loan Ass'n v. Guerra , 479 U.S. 272, 280, 107 S.Ct. 683, 93 L.Ed.2d 613 (1987). “Accordingly, ‘the purpose of Congress is the ultimate touchstone of pre-emption analysis.’ ” Cipollone , 505 U.S. 504 at 516, 112 S.Ct. 2608, 120 L.Ed.2d 407 (1992) (quoting Malone v. White Motor Corp ., 435 U.S. 497, 504, 98 S.Ct. 1185, 55 L.Ed.2d 443 (1978) ); see also Medtronic, Inc. v. Lohr , 518 U.S. 470, 485, 116 S.Ct. 2240, 135 L.Ed.2d 700 (1996) (Congress' purpose is the “ultimate touchstone” for determining the existence and reach of preemption).

While Congress' intent and purpose are the determinative factors, preemption analysis “starts with the basic assumption that Congress did not intend to displace state law.” Maryland v. Louisiana , 451 U.S. 725, 746, 101 S.Ct. 2114, 68 L.Ed.2d 576 (1981) ; see also Cipollone , 505 U.S. at 516, 112 S.Ct. 2608 (preemption analysis “starts with the assumption that the historic police powers of the States [are] not to...