## United Services Automobile Association v. Perry

[Major Guillermo R. Carranza]{.smallcaps}[^1]

# **I. INTRODUCTION**

For over 50 years the federal government has continually expanded its
right to recover the cost of military medical and hospital care from
non-federal sources.[^2] Initial efforts pursuant to the Federal Medical
Care Recovery Act (hereinafter FMCRA) focused on third-party
tortfeasors.[^3] The driving force behind these efforts was primarily
fiscal.[^4] However, public policy also dictated that tortfeasors,
insurance companies and injured parties should not "receive a windfall
at the \[g\]overnment's expense"[^5] because the Federal government
fortuitously pays for the medical care of military personnel and their
family members.[^6]

This "windfall" justification was later used to expand government
recovery from uninsured motorist and medical payments coverage
(hereinafter Medpay) in the injured parties' own insurance coverage;
recovery of which was not contingent on a finding of tort liability.[^7]
The theory was that insurance companies would normally have paid a
civilian hospital for medical care in these instances and should not get
a windfall just because the covered individual(s) were entitled to free
medical care. Insurance companies, however, started fighting against
expanded government recovery using new no-fault insurance laws,[^8] and
by specifically excluding the government from direct contractual
recovery.[^9] Congress responded by expanding the government\'s recovery
rights under 10 U.S.C. § 1095.[^10] This comment presents a historical
overview of federal recovery efforts and focuses on one of the most
recent battles against expanded government recoveries: *United Services
Automobile Ass\'n v.* *Perry* (hereinafter *Perry)*.[^11] Finally, this
comment places the *Perry* decision into a historical perspective in the
war over government recoveries under section 1095.[^12]

**II. THE PERRY DECISION**

The facts in *Perry* were undisputed.[^13] Twelve individuals were
injured in separate, unrelated automobile accidents. Each individual was
insured under an individual automobile insurance policy issued by United
Services Automobile Association (hereinafter USAA). All of their
policies \"contained liability coverage, uninsured motorist coverage,
coverage for damage to the insured's vehicle and medical payments
coverage . . . which covered the insureds for medical costs arising from
automobile accidents."[^14] The Medpay provision was an optional item
providing medical coverage for the insured regardless of fault for any
automobile accident. These individuals received treatment for their
injuries "at Army medical facilities in Georgia, Missouri, California
and Alabama and Air Force facilities in Arkansas, Illinois and
Ohio."[^15] Because free treatment was sought at military hospitals,
"USAA incurred no obligation to reimburse the insureds for their
costs."[^16] However, Department of Defense (hereinafter DoD) agencies
filed claims against USAA seeking reimbursement for the value of medical
care rendered in these cases pursuant to 10 U.S.C. § 1095.[^17] USAA
filed for declaratory judgement against the United States and both
parties moved for summary judgement.

The District Court in San Antonio framed the issue as follows:

> The issue before this Court is whether the amended definition of
> third-party payer includes an automobile insurer who has provided
> voluntary first-party coverage for a military-related insured's
> medical expenses for injuries sustained in an auto accident which is
> neither mandated by state law nor designed to replace tort liability .
> . . .[^18]

USAA took the position that it was not a "third-party payer" as defined
by the statute.[^19] Essentially, USAA's position was that the
government mischaracterized the attributes of medical payments coverage
by likening it to automobile liability insurance and no-fault insurance.

> Under USAA's interpretation of the amended statute, "three key
> characteristics" distinguish its insurance from automobile liability
> insurance and no fault insurance:

1.  USAA's coverage is "first party" insurance, meaning that the insured
    obtains benefits directly from USAA. Automobile liability insurance
    is "third party" coverage obligating the insurance company to pay
    for damages incurred by a person injured by the insured;

2.  USAA's coverage is not no fault insurance because it is not designed
    to replace tort liability; and

3.  USAA's coverage is voluntary add-on insurance, meaning that USAA is
    not mandated by statute to provide the insurance. No fault insurance
    is, by definition, mandated by statute.[^20]

USAA also argued that DoD implementing regulations promulgated in
1992,[^21] defining Medpay benefits as no-fault insurance, were an
impermissible agency action because they exceeded the scope of the
statute.[^22]

The United States, of course, took the opposite position and argued a
two-pronged approach. With regard to the statutory language, the
government noted Congress' definition of a third-party payer was written
to encompass "an automobile liability insurance or no fault insurance
*carrier*."[^23] According to the government's argument, inclusion of
the word "carrier" indicates Congress intended the statute apply to the
insurer, in this case the entity known as USAA, rather than just the
type of insurance coverage.[^24] The government also took the position
that use of the term "insurance" in the statute has broad meaning and,
therefore, makes the statute applicable to all automobile insurance
plans, including first-party medical payments coverage.[^25]
Additionally, the government asserted Congress used the phrase
"including an automobile liability insurance or no-fault insurance
carrier" in section 1095(h)(1) merely to give "examples of types of
insurance covered by the statute" rather than intending it to be an
exhaustive list.[^26] The government's second approach asserted that
regulations promulgated by DoD, which included medical payments coverage
in the definition of no-fault insurance, were entitled to
deference.[^27] Since the definition of no-fault insurance in the DoD
regulation included Medpay coverage, judicial deference to this
regulation would have made recovery from Medpay a foregone conclusion.

The District Court granted summary judgement in favor of USAA relying on
several factors. First, it dismissed the government's arguments
regarding statutory language by indicating the sole issue before it was
"\[w\]hether the first-party Medpay coverage insurance is encompassed by
section 1095 . . . ."[^28] The court then noted:

> Because Congress wrote the \[1990\] amendment to apply to specific
> categories of plans, . . . including two types of automobile
> insurance, it can be inferred that Congress did not intend to include
> other genres of insurance . . . . Had it desired, Congress could have
> easily included all first-party coverage in the amendment.[^29]

Concluding that Congress did not intend section 1095 to apply to all
forms of automobile insurance plans, but rather only to those
specifically enumerated in the statute, the court then went on to
consider whether Medpay coverage could be classified as either
automobile liability insurance or no-fault insurance.

With regard to automobile liability insurance, the court simply held
that first-party insurance which reimburses an insured for medical
expenses after an automobile accident was different from third-party
automobile liability insurance that "indemnifies the insured from
liability to others."[^30] The court opined automobile liability
insurance requires evidence of a tortious act before a "legal liability"
requiring payment arises. "Because Medpay coverage does not require
evidence of a tortious act, circumstances of liability are not
implicated."[^31] Simply put, without a requirement of tortious
liability, Medpay coverage could not be classified as "automobile
liability insurance."

The real battle in the District Court, however, came over the issue of
Medpay coverage being included in the definition of no-fault insurance
by DoD in the implementing regulations. The court declined to defer to
DoD's definition of no-fault insurance, citing the proposition that "a
\[f\]ederal agency is . . . not entitled to expand a statute beyond its
intended scope under the guise of interpretation."[^32] However, before
it could reach this conclusion, the court had to distinguish Medpay
coverage from no-fault insurance.

Referring to several treatises,[^33] the meaning of no-fault contained
in the legislative history of the FMCRA,[^34] and a proposed federal
no-fault insurance law,[^35] the court rejected a government argument
that "Congress intended to generically refer to any type of automobile
insurance where there is 'no' requirement of 'fault' \[in section
1095\]."[^36] The District Court specifically found the phrase "no fault
insurance" to be a term of art meaning "first party automobile insurance
provided pursuant to state law that places limits on tort
recovery."[^37] Given that Medpay coverage is not required by state
statute and that it does not limit tort recovery, the court held Medpay
coverage is not no-fault insurance. Once the court had concluded that
Congress intended to limit the scope of section 1095 to two narrowly
defined types of automobile insurance, it logically followed that no
agency regulation extending the definition of no-fault insurance to
Medpay coverage could, or would, be granted deference.[^38] This is the
issue the Fifth Circuit Court of Appeals undertook to resolve on appeal.

In its review, the Fifth Circuit narrowed the issue to one question.
Relying on *Chevron U.S.A., Inc. v. Natural Resources Defense Council,
Inc*.,[^39] the court stated the only issue before it was whether the
agency regulations, classifying Medpay coverage as a form of no-fault
insurance, were a permissible construction of the statute.[^40] The
court noted *Chevron* established the following two-part test:

> First, always, is the question whether Congress has directly spoken to
> the precise question at issue . . . If . . . the court determines
> Congress has not directly addressed the precise question at issue, the
> court does not simply impose its own construction, as would be
> necessary in the absence of administrative interpretation. Rather if
> the statute is silent or ambiguous with respect to the specific issue,
> the question for the court is whether the agency's answer is based on
> *a permissible construction* of the statute.[^41]

With this in mind the court went on to define the term "no-fault
insurance." It found this was a term of art that could have two distinct
meanings. One meaning, advocated by the government, was that "no-fault"
refers to a *type of insurance policy* that pays regardless of fault.
This would make any policy that pays benefits regardless of fault a
"no-fault" policy from which the government could recover under section
1095. The other definition, advocated by USAA, was that "no-fault" is a
*state system*, not an insurance policy that required payment regardless
of fault. This would mean a policy not mandated by a statutory
"no-fault" system would not be amenable to collection under section
1095. Each definition was plausible, and depending on the one applied to
this situation, the term would either bring USAA's Medpay coverage
within reach of the government's recovery efforts or exempt it from the
paying the government for medical care rendered to DoD beneficiaries.

It was this very ambiguity that led the court to conclude that DoD's
definition of Medpay coverage as "no-fault insurance" was a permissible
interpretation of the statute, ultimately settling the issue:

> We have no difficulty concluding \[DoD's construction of the term is a
> permissible one\]. DoD's construction is consistent with the language
> of the statute, dictionaries, and insurance treatises. It is not, of
> course, the only permissible construction, but it is one permissible
> construction, and that is enough. We are *Chevron*-bound to conclude
> that Medpay is a form of no-fault insurance within the meaning of
> \[section\] 1095, and USAA is liable to the government for
> reimbursement of medical expenses.[^42]

Based on this interpretation of C*hevron*, so long as the government can
choose one of at least two permissible interpretations of statutory
language, its interpretation will stand.[^43]

# **III. HISTORICAL PERSPECTIVE**

Efforts to recover the cost of military medical care began as early as
the World War II era. In 1948 the War Department amended existing Army
regulations to authorize collection of medical and related expenses in
cases where servicemembers were injured by the tortious acts of third
parties.[^44] The legal theory underpinning recovery efforts, which was
later successfully challenged in *United States v. Standard Oil Co. of
California*, *et al.*[^45] was one of *per quod servitium amisit*.[^46]
This common law doctrine essentially permits a master to recover damages
related to the loss of his servant.[^47] In *Standard Oil*, the
government persuaded the District Court that this principle should apply
to the state-soldier relationship.[^48] However, the Ninth Circuit Court
of Appeals rejected this analysis.[^49] Affirming the Ninth Circuit's
decision, the United States Supreme Court held that state law did not
govern the federal government's right to recover, and that in the
absence of a federally sanctioned cause of action, the government simply
could not pursue this type of recovery.[^50]

**A. Federal Medical Care Recovery Act**

One significant part of the Supreme Court's rationale in rejecting the
government's position in *Standard Oil* was that Congress is in the best
position to decide matters of federal fiscal policy.[^51] It was
precisely this fiscal purpose which finally prompted Congress to act
some 15 years later.[^52] The impetus was a 1960 report by the
Comptroller General which revealed to Congress that this lack of
statutory authority was preventing the government from recovering
millions of dollars each year from individuals who negligently injured
servicemembers.[^53] In 1962, Congress passed legislation authorizing
the federal government to recover the reasonable value of medical care
and treatment furnished to DoD beneficiaries in cases where injuries
were the result of a tortious act by a third person.[^54]

Recovery pursuant to the FMCRA was conditioned on finding tort
liability.[^55] However, Congress did not intend to create a new form of
federal tort liability with the FMCRA.

> \[W\]hen Congress acted to create a right of recoupment in the
> Government by passage of the FMCRA, it did so not by creating a new
> tort, but merely by conferring a right that arises when a beneficiary
> is injured by conduct that would have been deemed tortious prior to
> passage of the act . . . . The cause of action created by the act,
> therefore, is simply one where rights under state tort law become
> material to the application of a Federal statute . . . . Local law
> determines the legal relations, and the latter, in turn create
> liability under the pertinent Federal statute. [^56]

This means, "the \[g\]overnment acquires no greater rights with the
respect to third party tort liability than those possessed by the
injured party."[^57] This reliance on state law to establish a viable
cause of action foreshadowed a significant problem that would arise when
states passed no-fault insurance laws beginning in 1970.

> This language, which predates enactment of any no-fault insurance
> statute, limits the right of recovery to situations where state law
> imposes tort liability upon some negligent person. Thus, the right of
> recovery granted in the literal language of the Federal Medical Care
> Recovery Act is not triggered when there is no tort liability imposed
> by state law.[^58]

This created a significant problem for the DoD recovery effort since the
overwhelming majority of FMCRA claims arise from motor vehicle
accidents.[^59] To some extent, DoD's eroding ability to collect
reimbursement in the late 1970s and early 1980s was masked by the
government's ability to "recover significant sums of money as a third
party beneficiary to automobile insurance policies."[^60] Recovery
efforts pursuant to this contract theory simply allowed the federal
government to take advantage of broadly worded third-party beneficiary
clauses in automobile insurance policies. Given that recovery is based
on a specific contract's language, there was no need for proof of an
underlying tort as would have been required by the FMCRA.[^61] By the
early 1980s, however, Congress noted many insurers were putting
exclusionary clauses into policies that specifically barred federal
agencies from reimbursement.[^62] At a time of rapidly increasing
budgetary pressure, this combination of diminished recoveries due to the
spread of no-fault insurance laws and increasingly successful exclusion
of the federal government from a contractual right of recovery led to
calls for enactment of legislation improving the government's ability to
seek reimbursement for the cost of medical care.[^63]

**B. 10 U.S.C. § 1095**

Contemporaneous with the events outlined above, Congress passed
additional medical care recovery legislation for the Veterans'
Administration (hereinafter VA) targeting workers' compensation plans
and no-fault automobile insurance coverage.[^64] Then in 1982, President
Reagan created the President's Private Sector Survey on Cost Control,
also known as the Grace Commission.[^65] One of the Grace Commission's
2,478 recommendations was "that the VA and the Department of Justice
actively pursue legislation to eliminate exclusionary clauses."[^66]
Much of this effort, however, was aimed at increasing recoveries from
private health insurers, rather than automobile insurance carriers. This
occurred because the VA, rather than the DoD, was leading the effort to
legislate exclusionary clauses out of existence and the VA already had
legislation on the books which allowed it to recover from workers'
compensation and no-fault insurance coverage.[^67] The end result was an
amendment to 38 U.S.C. § 1729 and creation of 10 U.S.C. § 1095
authorizing the VA and the DoD to recover medical and hospital costs
from private health insurance.

Similar to the VA's version of the law, the original enactment of
section 1095 was aimed exclusively at collecting reimbursement from
private health insurers.[^68] Therefore, it did nothing to improve
recovery from automobile insurers that excluded the federal government
from recovering medical and hospital costs or in states where FMCRA
recovery was limited by no-fault insurance laws. It was not until 1990
that provisions similar to 38 U.S.C. § 1729 were enacted permitting
recovery from automobile insurance carriers.[^69] It was the wording of
these provisions that was eventually questioned in the *Perry*
litigation. Only in September 1996 did Congress amend the statute
settling this issue once and for all.[^70]

# **IV. CONCLUSIONS**

The key issue in the *Perry* litigation was the intent of Congress when
it enacted the 1990 amendments to section 1095. Although the Fifth
Circuit decided the case in the government's favor, it did so on a very
narrow rule of statutory interpretation.[^71] This leaves the question
of Congressional intent largely unanswered by the courts.[^72] However,
it is clear from the whole history of federal medical care recovery
legislation, including subsequent amendments to section 1095, that
Congress has always intended to authorize broad recovery efforts in this
area. In fact it has done just that with each piece of VA and DoD
legislation in this area. The District Court's inference that Congress
did not intend to include a broad category of automobile insurance in
its recovery effort, because "\[h\]ad it desired, Congress could have
easily included all first-party coverage in the \[1990\] amendment \[to
section 1095\],"[^73] simply failed to take into account the historical
trend evident throughout the history of medical care recovery
legislation.

Fiscal concerns have been, and are, clearly the catalyst for much of
this legislation. Given the history of medical care recovery
legislation, it is also clear public policy trends do not favor
permitting insurers to charge policyholders full rates for Medpay
coverage and then refuse to reimburse the government when the federal
government has paid for all or most of the medical and hospital
care.[^74]

[^1]: ^\*^ *Major Carranza (B.A., Tulane University; J.D., Tulane Law
    School) is an Instructor, Civil Law Division, Air Force Judge
    Advocate General School, Maxwell AFB, Alabama.*

[^2]: Major Bruce E. Kasold, *Medical Care Recovery--An Analysis of the
    Government's Right to Recover its Medical Expenses*, 108 MIL. L.
    REV. 161, 163 (1985) (citing U.S. Dept. of the Army, Reg. No.
    25-220, Claims in Favor of the United States (13 May 1943)).

[^3]: Federal Medical Care Recovery Act, Pub. L. No. 87-693, § 1, 76
    Stat. 593 (1962) (codified as amended at 42 U.S.C.A. §§ 2651-53
    (West 1994 & Supp. 1997)).

[^4]: *See* S. REP. No. 1945, *reprinted in*, 1962 U.S.C.C.A.N. 2637,
    2639-40. *See also* Kasold, *supra* note 1, at 163 n.10
    (approximately 450 potential claims had been identified between 1943
    and 1946, with 40 new cases being reported monthly by 1946). *See
    also* Comment, *The Right and Remedies of the United States under
    the Federal Medical Care Recovery Act*, 74 DICK. L. REV. 115, 116
    (1969-70).

[^5]: Joseph C. Long, *The Federal Medical Care Recovery Act: A Case
    Study in the Creation of Federal Common Law*, 18 VILL. L. REV. 353,
    369 (1973).

    > Whether the tortfeasor or injured party would receive the windfall
    > depended on whether the injured party could recover medical costs
    > which he had not incurred. If the jurisdiction recognized the
    > collateral source rule, then he could recover; if not then the
    > windfall went to the tortfeasor.

    *Id.* at 353 n.6 (citation omitted). The same concern was raised
    during drafting of the FMCRA. The Department of Health, Education
    and Welfare argued that tortfeasors in states which did not
    recognize the collateral source rule would receive a windfall if the
    original statutory language was not amended, giving the United
    States an independent right of action rather than just one of
    subrogation. *See Id.* at 369 (citing DEPT. OF HEALTH EDUCATION AND
    WELFARE REPORT ON H.R. 298, *reprinted in*, 1962 U.S.C.C.A.N. 2637,
    2646-47). *But see* Heusle v. Nat\'l Mut. Ins. Co., 628 F.2d 833,
    838 (3^rd^ Cir. 1980) (explaining the concept of windfall is
    misleading because one large group \[taxpayers\] or another
    \[policyholders\] must ultimately shoulder the costs). Under the
    collateral source rule, compensation received by an injured person
    from an independent third party is not deducted from the damages he
    or she would otherwise collect from the tortfeasor. BLACK\'S LAW
    DICTIONARY 262 (6^th^ ed. 1990).

[^6]: Active duty military personnel are entitled to free medical and
    dental care. Active duty dependents, retired members of the armed
    forces, and their dependents may receive free medical care at a
    military medical treatment facility or subsidized medical care
    outside a military facility \[individuals entitled to the various
    forms of military medical care are hereinafter referred to as
    Department of Defense or DoD beneficiaries\]. 10 U.S.C.A. §§
    1071-1106 (West 1983 & Supp. 1997).

[^7]: *See* United States v. Gov\'t Employees Ins. Co., 461 F.2d 58, 60
    (4^th^ Cir. 1972); United States v. State Farm Mut. Ins., 455 F.2d
    789, 791-92 (10^th^ Cir. 1972); United States v. Allstate Insurance
    Co., 910 F.2d 1281, 1282-84 (5^th^ Cir. 1990). *See also* Captain
    Dominique Dillenseger and Captain Milo H. Hawley, *Sources of
    Medical Care Recovery in Automobile Accident Cases*, ARMY LAW.,
    October 1991, at 54-56. *See generally* Kasold, *supra* note 1, at
    191 n.207; John C. Cruden, *Government Recovery:* *Federal Medical
    Care Recovery Act, Automobile Insurance and Workmen's Compensation*,
    13 [Santa Clara L. Rev.]{.smallcaps} 720, 736 (1973); Joseph C.
    Long, *Government Recovery Beyond the Federal Medical Care Recovery
    Act*, 14 S.D. L. REV. 20 (1969). *But see* United States v. Metro.
    Life Ins., 683 F.2d 1250,1251 (9^th^ Cir. 1982).

[^8]: *See infra* notes 57-58, and accompanying text.

[^9]: *See infra* note 61.

[^10]: *See* Comprehensive Omnibus Budget Reconciliation Act of 1986,
    Pub. L. 99-272, § 2001, 100 Stat. 100 (1986) (codified as amended at
    10 U.S.C.A. § 1095 (West Supp. 1997)). *See also infra* note 18.

[^11]: United Services Auto. Ass\'n v. Perry, 886 F. Supp. 596 (W.D.Tex.
    1995), *rev'd*, 102 F.3d 144 (5^th^ Cir. 1996), *reh'g & reh'g en
    banc denied*, 108 F.3d 335 (5^th^ Cir. 1997).

[^12]: The current regulatory authority for DoD third party collections
    is [U. S. Department OF Defense, Dir. 6010.15]{.smallcaps}, THIRD
    PARTY COLLECTION (TPC) PROGRAM (March 10, 1993) (on file with
    author). Service implementing regulations are as follows: Army:
    Legal Proceedings Initiated by the United States Medical Care and
    Property Claims, 32 C.F.R. pt. 516, Subpart E; Navy: Coordination of
    Benefits-Third Party Payers, 32 C.F.R. pt. 728, Subpart D and
    Medical Care Recovery Act (MCRA) Claims, 32 C.F.R. pt. 757, Subpart
    B; and Air Force: Hospital Recovery Claims, 32 C.F.R. pt. 842,
    Subpart N. For a discussion of Air Force procedural guidelines see
    Timothy J. McGrath, *Medical Care Recovery Claims: A Working Guide
    for Claims Officers*, 33 A.F. L. REV. 163 (1990). For a discussion
    of Army procedural guidelines see U.S. DEPT. OF THE ARMY,
    HEADQUARTERS, U.S. ARMY HEALTH SERVICES COMMAND, REG. 27-1, LEGAL
    SERVICES: THIRD PARTY COLLECTION PROGRAM DISPUTED CLAIMS (April 15,
    1994) (on file with author).

[^13]: 886 F. Supp. at 597.

[^14]: 102 F.3d at 145.

[^15]: 886 F. Supp. at 597.

[^16]: *Id*. *See generally* *supra* note 5.

[^17]: The pertinent clause reads as follows:

    > (a)(1) In the case of a person who is a covered beneficiary, the
    > United States shall have the right to collect from a third-party
    > payer the reasonable costs of health care services incurred by the
    > United States on behalf of such person through a facility of the
    > uniformed services to the extent that the person would be eligible
    > to receive reimbursement or indemnification from the third-party
    > payer if the person were to incur such costs on the person's own
    > behalf.

    10 U.S.C.A. § 1095(a)(1) (West Supp. 1997).

[^18]: 886 F. Supp. at 598.

[^19]: 886 F. Supp. at 598. The 1990 version of the code section reads
    as follows:

    > \(h\) In this section:
    >
    > \(1\) The term "third-party payer" means an entity that provides
    > insurance, medical service, or health plan by contract or
    > agreement, including *an automobile liability insurance or no
    > fault insurance carrier*.

    10 U.S.C.A. § 1095(h)(1) (emphasis added). Prior to November 1990,
    the statute did not contain language defining automobile liability
    insurance or no fault insurance carriers as "third-party payers."
    *See* U.S. v. United Services Auto. Ass'n, 5 F.3d 204 (7^th^ Cir.
    1993). In this Seventh Circuit case, the United States sought to
    recover the costs of medical care, rendered before November 1990, to
    five individuals injured in unrelated automobile accidents and who
    were subsequently treated in military hospitals. The court found
    that prior to the 1990 statutory amendments USAA was not a
    "third-party payer" within the meaning of the law because the
    initial legislative effort was limited to health and medical
    insurance plans. *Id.* at 207-208. *See also infra* note 67, and
    accompanying text. For later codification of the statute see *infra*
    note 69.

[^20]: 886 F. Supp. at 598.

[^21]: Collection from Third Party Payers of Reasonable Costs of
    Healthcare Services, 57 Fed. Reg. 41,103 (1992) (codified as amended
    at 32 C.F.R. pt. 220).

[^22]: 866 F. Supp. at 598. The pertinent regulatory clause read as
    follows:

    > \(i\) No-fault insurance. No-fault insurance means an insurance
    > contract providing compensation for health and medical expenses
    > relating to personal injury arising from the operation of a motor
    > vehicle in which the compensation is not premised on who may have
    > been responsible for causing such injury. No-fault insurance
    > includes personal injury protection and medical payments benefits
    > in cases involving personal injuries from operation of a motor
    > vehicle.

    32 C.F.R. § 220.12(i) (1994). This section has not since been
    amended.

[^23]: 886 F. Supp. at 599 (citing 10 U.S.C. § 1095(h)(1) (emphasis
    added)).

[^24]: 886 F. Supp. at 600*.*

[^25]: *Id.*

[^26]: *Id.*

[^27]: *Id*. at 605.

[^28]: *Id*. at 600.

[^29]: *Id*. (citing Quarles v. St. Clair, 711 F.2d 691, 699 n.22 (5^th^
    Cir. 1983), which noted that when Congress says one "thing" it "does
    not mean something else." (citation omitted)).

[^30]: 886 F. Supp. at 601.

[^31]: *Id.*

[^32]: *Id.* at 606 (citing Brown v. Gardner, 513 U.S. 115 (1994)).

[^33]: *See* R. LONG, THE LAW OF LIABILITY INSURANCE § 27.01, at 27-3
    (Matthew Bender 1994); COUCH CYCLOPEDIA OF INSURANCE LAW 2d §
    45.661, at 246 (1981); I. MEHR & E. CAMMACK, PRINCIPLES OF INSURANCE
    323 (7^th^ ED. 1980); W. ROKES, NO-FAULT INSURANCE 5 (1971).

[^34]: 42 U.S.C.A. §§ 2651-53 (West 1994 & Supp. 1997).

[^35]: *See* S. 354, 93^rd^ Cong. §§ 104, 105, 206; *see also* S. REP.
    No. 382, 93^rd^ Cong. 68, 70, 104 (1974).

[^36]: 886 F. Supp. at 602.

[^37]: *Id.*

[^38]: *Id.* at 606 (citing Chevron U.S.A., Inc. v. Natural Resources
    Defense Council, Inc., 467 U.S. 837 (1984)).

[^39]: Chevron, 467 U.S. at 843.

[^40]: 102 F.3d at 146.

[^41]: *Id.* (emphasis added).

[^42]: *Id*. at 148.

[^43]: *But see* 102 F.3d at 148 n.1 (DeMoss, J., dissenting).

[^44]: Kasold, *supra* note 1, at 163. For a discussion of earlier
    federal recovery efforts, *see* Long, *supra* note 4, at 358-59.

[^45]: United States v. Standard Oil Co. of Cal. et al., 332 U.S. 301
    (1947).

[^46]: "Whereby he lost the service of his servant." BLACK\'S LAW
    DICTIONARY 1141 (6^th^ ed. 1990).

[^47]: Kasold, *supra* note 1, at 164. *See generally* Long, *supra*
    note 4, at 355-59, 360-62.

[^48]: United States v. Standard Oil Co. of Cal. et al., 60 F. Supp.
    807, 810 (S.D. Cal. 1945). Kasold notes the District Court never
    actually mentions this particular cause of action, but that it is
    clear from the Supreme Court's discussion this was the cause of
    action the government sought to have applied to its case. Kasold,
    *supra* note 1, at 164 n.16 (citing Standard Oil, 322 U.S. at
    312-314).

[^49]: Standard Oil Co. of Cal. et al. v. United States, 153 F.2d 958,
    960-61 (9^th^ Cir. 1946). The Ninth Circuit's decision noted the
    absence of federal law authorizing such a cause of action, but
    differed from the Supreme Court's ruling in that it looked to state
    law to determine whether or not this action was cognizable. It later
    found the state-soldier relationship was not authorized by the
    California statute codifying this particular cause of action. *See*
    Kasold, *supra* note 1, at 164.

[^50]: 322 U.S. at 305-308.

[^51]: *Id.* at 310-311.

[^52]: S. REP. No. 1945, *reprinted in*, 1962 U.S.C.C.A.N. 2637,
    2639-40. S. REP. No. 1945 *supra* note 3, at 2640.

[^53]: It was estimated that \$10.5 million was spent annually providing
    hospital and medical care to military personnel injured in private
    automobile accidents. This study showed that in one 30 month period
    \$4.2 million was spent as a result of 5,400 accidents where injured
    military personnel were passengers or pedestrians and an additional
    \$6.3 million was spent in 8,100 cases were the injured person was
    the vehicle driver. While the Comptroller General could not tell how
    many of these cases involved negligent third parties, it was assumed
    that it was a significant number of incidents. *Id.* *See*
    COMPTROLLER GENERAL OF THE UNITED STATES, REVIEW OF THE GOVERNMENT'S
    RIGHTS AND PRACTICES CONCERNING RECOVERY OF THE COSTS OF HOSPITAL
    AND MEDICAL SERVICES IN NEGLIGENT THIRD PARTY CASES (1960)
    \[hereinafter *Review of Government's Rights and Practices*\]. By
    1983, calculated collections by the three branches of the armed
    forces, the Veterans' Administration and the Public Health Service
    stood at nearly \$30 million annually. Kasold, *supra* note 1, at
    161 n.1.

[^54]: 42 U.S.C.A. §§ 2651-53 (West 1994 & Supp. 1997).

[^55]: *Id.* at § 2651(a).

[^56]: Eli P. Bernzwieg, *Public Law 87-693: An Analysis and
    Interpretation of the Federal Medical Care Recovery Act*, 64 COLUM.
    L. REV. 1257, 1262-63 (1964).

[^57]: *Id.* at 1265-66. *See* United States v. Neal, 433 F. Supp. 1307
    (D. Neb. 1978) (denying Government recovery because existing tort
    liability could not be enforced due to a state family immunity
    statute and because the state guest statute required a finding of
    gross negligence, which was not present in the case, in order to
    establish an alternative cause of action). *See also* Kasold,
    *supra* note 1, at 174-75.

[^58]: Note, *The Federal Medical Care Recovery Act in No-Fault
    Automobile Insurance Jurisdictions: Extension of the Federal Right
    of Reimbursement Against No-Fault Insurers*, 21 B.C. L. REV. 623,
    624 (1980). This note provides an excellent summary of the different
    types of no-fault insurance laws in force at the time:

    *Pure no-fault* -- These statutory schemes theoretically would
    abolish all tort liability and rely solely on no-fault benefits to
    compensate injured persons. Although no state has gone as far as
    complete abrogation of tort liability for automobile drivers, the
    use of highly restrictive thresholds in Michigan has severely
    limited the right to sue in tort for automobile accident injuries.
    Michigan grants a right to sue in tort only if a narrative threshold
    is satisfied (a narrative threshold describes the type of injury
    that must be sustained before the right to sue arises): "noneconomic
    loss if the injured person suffered death, serious impairment of
    body function or permanent serious disfigurement." MICH. STAT. ANN.
    § 24.13135 (Supp. 1979). Along with severe limitation on the right
    to sue, the statute provides for unlimited no-fault benefits for
    medical expense. MICH. STAT. ANN. § 24.13107 (Supp. 1979). Severe or
    complete abrogation of tort liability and generous benefits are
    characteristic of a pure no-fault system.

    *Modified no-fault* -- These statutory schemes usually modify the
    right to sue in tort through the use of less restrictive thresholds.
    The statutory threshold is either a dollar threshold stating a
    minimum out-of-pocket loss necessary to sue in tort, a narrative
    threshold describing the types and extent of injury, or a
    combination of the two. Modified no-fault plans provide a range of
    medical benefits from \$2,000 to unlimited liability for no-fault
    insurers.

    *Add-on no-fault* -- These statutory schemes typically provide
    no-fault benefits in addition to usual liability insurance found in
    fault based jurisdictions. Such a scheme is not a no-fault system in
    the true sense because there is no limitation on the right to sue in
    tort. Instead, such systems are more like a fault based system with
    an expanded form of medical payments insurance. Medical payments
    insurance, operative in every fault based jurisdiction, pays medical
    expense of injured parties without regard to fault. Add-on plans
    typically result in higher insurance premiums since 1) they provide
    larger benefits for injured persons than medical payments insurance
    in fault based states, and 2) the insurer must continue to charge
    the usual premiums for liability insurance since there is no
    abrogation of tort liability.

    *Id.* at 623, n.2. *See also* Note, *No-Fault Automobile Insurance:
    An Exhaustive Survey*, 30 RUTGERS L. REV. 909 (1977). By 1990, 21
    states, the District of Columbia and Puerto Rico had some version of
    no-fault insurance laws. The impact of these laws varied, but DoD's
    recovery efforts were particularly stymied in six states. *See*
    GENERAL ACCOUNTING OFFICE (GAO), MILITARY HEALTH CARE, RECOVERY OF
    MEDICAL COSTS FROM LIABLE THIRD PARTIES CAN BE IMPROVED 31 (1990)
    \[hereinafter *Recovery of Medical Costs Can be Improved*\].

[^59]: *See* *Recovery of Medical Costs can be Improved*, *supra* note
    57, at 11 (GAO estimates "\[a\]pproximately 90% of all third party
    liability recoveries involve injuries sustained as a result of motor
    vehicle accidents.").

[^60]: Kasold, *supra* note 1, at 184. The author notes that in 1983 the
    Air Force alone recovered \$3.6 million dollars, or approximately 47
    percent of it collections from the contractual or statutory
    obligations of third parties. *Id.* at 162 n.4.

[^61]: *Id*. at 185 (citing Dugan v. United States, 16 U.S. (3 Wheat)
    172 (1818) (rejecting contention that the federal government could
    not enforce its rights under an existing contract without a statute
    specifically authorizing that purpose)). *See also* United Services
    Auto. Ass\'n v. Perry, 102 F.3d at 150 n.2 ("In some circumstances,
    the government can recover under state law as a third party
    beneficiary to the insurance contract . . .This is separate from the
    FMCRA and \[section\] 1095....\"). *See generally* Kasold, *supra*
    note 1, at 184-193.

[^62]: CONGRESSIONAL BUDGET OFFICE (CBO), OPTIONS FOR CHANGE IN MILITARY
    MEDICAL CARE 23 (1984) \[hereinafter *Options for Change*\].
    Exclusionary clauses in automobile insurance policies mirrored those
    found in many health insurance policies. Exclusionary clauses in
    insurance contracts were first recognized as viable in United States
    v. St. Paul Mercury Indem. Co., 133 F. Supp. 726 (D. Neb. 1955). As
    the Comptroller General noted:

    > \[The\] U.S. District Court ruled that an insurance carrier was
    > not liable for payment to VA for treatment furnished to a veteran
    > policyholder since the insurance policy insured against expenses
    > actually incurred by the insured veteran, and the veteran incurred
    > no medical or hospital expenses while being treated in a VA
    > hospital. Since then, most health insurance policies have had
    > exclusionary clauses which state that they will not pay the
    > Federal government for medical care when it was provided at a
    > government facility, a Federal agency provided such care at no
    > charge, or the policyholder had no legal obligation to pay for the
    > care.

    COMPTROLLER GENERAL OF THE UNITED STATES (GAO), LEGISLATION TO
    AUTHORIZE VA RECOVERIES FROM PRIVATE HEALTH INSURANCE WOULD RESULT
    IN SUBSTANTIAL SAVINGS 4 (1985) \[hereinafter *Legislation to
    Authorize VA Recoveries*\]. For a discussion regarding exclusionary
    clauses in automobile insurance policies, see United States v.
    Allstate, 306 F. Supp. 1214 (N.D. Fla. 1969). *See also* United
    States v. Commercial Union Ins. Group, 294 F. Supp. 768, 771
    (S.D.N.Y. 1969); Kasold, *supra* note 1, at 187-88.

[^63]: *Options for Change,* *supra* note 61, at 23. The Congressional
    Budget Office estimated it could save approximately \$190 million in
    1984 and an additional \$1.4 billion dollars between 1985 and 1989
    if military medical costs could be recovered from insurers of
    patients with private health insurance. This amounted to
    approximately 8 percent of the direct hospital costs and 4 percent
    of direct outpatients costs for the period under consideration
    (direct costs were defined as pay for medical personnel and
    operations and maintenance). *Id*. at 21-22.

[^64]: Veterans Health Care, Training, and Small Business Loan Act of
    1981, Pub. L. No. 97-72, § 106, 95 Stat. 1047, 1050-51 (1981)
    (current version at 38 U.S.C.A. § 1729 (West 1991 & Supp. 1997)).

[^65]: Exec. Order No. 12,369, 47 Fed. Reg. 28,899 (1982).

[^66]: *Legislation to Authorize VA Recoveries*, *supra* note 59, at 7.

[^67]: 38 U.S.C. § 1729. The General Accounting Office had been
    recommending legislation eliminating exclusionary clauses and
    authorizing recovery from health insurers since 1970. Nine years
    later, S. 759, 96^th^ Cong. (1979) was introduced in Congress, at
    the VA's request, and parts of the bill authorizing recovery from
    workers' compensation and no-fault insurance eventually became part
    of the Veterans Health Care, Training, and Small Business Loan Act,
    *supra* note 63. However, "provisions relating to recoveries from
    private health insurance were excluded because of concerns raised
    during Senate hearings on the bill." *See Legislation to Authorize
    VA Recoveries*, *supra* note 59, at 5 (citations omitted).

[^68]: H.R. REP. No. 99-300, *reprinted in*, 1986 U.S.C.C.A.N. 756, 763.

[^69]: National Defense Authorization Act for Fiscal Year 1991, Pub. L.
    No. 101-510, § 713, 104 Stat. 1485, 1583-84 (1990) (codified at 10
    U.S.C.A. § 1095(h)(1)). *See supra* note 18 and accompanying text.
    When creation of section 1095 was being considered in H.R. 441,
    99^th^ Cong. (1985), the removal of the tort requirement from the
    FMCRA was considered, but this bill was never enacted. By 1990, the
    GAO was advising that revision of section 1095, giving the DoD
    statutory authority comparable to those of other government
    agencies, could accomplish much the same purpose. *See* *Recovery of
    Medical Costs can be Improved*, *supra* note 57, at 31-32.

[^70]: The pertinent provision reads as follows:

    > \(h\) In this section:
    >
    > \(2\) The term "insurance, medical service, or health plan"
    > includes a preferred provider organization, an insurance plan
    > described as Medicare supplemental insurance, *and a personal
    > injury protection plan or medical payments benefit plan for
    > personal injuries resulting from the operation of a motor
    > vehicle*.

    National Defense Authorization Act for Fiscal Year 1997, Pub. L.
    104-201, § 735, 110 Stat. 2599 (1996) (codified as 10 U.S.C.A. §
    1095(h)(2) (emphasis added)). As part of the same Act, Congress also
    moved to enhance government recovery rights under the FMCRA in
    states with no-fault insurance laws. This amendment deems the United
    States a third party beneficiary to insurance contracts, regardless
    of any exclusionary clauses, so long as the state has \"a system of
    compensation or reimbursement for expenses of hospital, medical,
    surgical, or dental care and treatment or for lost pay pursuant to a
    policy of insurance, contract, medical, or hospital service
    agreement, or similar arrangement. . . .\" *Id*. at § 1075, 110
    Stat. at 2422 (codified as 42 U.S.C.A. § 2651(c)(1)).

[^71]: 102 F.3d at 148.

[^72]: 102 F.3d at 148 n.1 (DeMoss, J., dissenting).

[^73]: 886 F. Supp. at 600.

[^74]: *See* Kasold, *supra* note 1, at 191 n.207. *See also* Cruden,
    *supra* note 6, at 733-38.