Opinion ID: 3150721
Heading Depth: 2
Heading Rank: 2

Heading: The Preemption Provision

Text: 2 The 2013 contract includes additional language: “The Carrier’s subrogation rights, procedures and policies, including recovery rights, for payments with respect to benefits shall be in accordance with the provisions of the agreed upon brochure text.” Id. at 104 (emphasis added). 6 FEHBA’s preemption provision, 5 U.S.C. § 8902(m)(1), states: “The terms of any contract under this chapter which relate to the nature, provision, or extent of coverage or benefits (including payments with respect to benefits) shall supersede and preempt any State or local law, or any regulation issued thereunder, which relates to health insurance or plans.” In June 2012, OPM issued a letter to all FEHBA carriers expressing its position that contractual rights to reimbursement and subrogation fall within the purview of § 8902(m)(1) and thus override state laws that relate to health insurance or plans. On January 7, 2015, OPM published in the Federal Register a proposed rule addressing the preemption of state laws limiting subrogation and reimbursement. See 80 Fed. Reg. 931. After notice and comment, OPM promulgated the final rule on May 21, 2015 (while this litigation was pending). See id. at 29,203. The rule states, “All health benefit plan contracts shall provide that the Federal Employees Health Benefits (FEHB) carrier is entitled to pursue subrogation and reimbursement recoveries, and shall have a policy to pursue such recoveries in accordance with the terms of this section.” Id. at 29,204 (codified at 5 C.F.R. § 890.106(a)). The rule also requires that contracts containing subrogation or reimbursement clauses “provide that benefits and benefit payments are extended to a covered individual on the condition that the FEHB carrier may pursue and receive subrogation and reimbursement recoveries pursuant to the contract.” Id. (codified at 5 C.F.R. § 890.106(b)(2)). Finally, the rule declares that state laws limiting subrogation and reimbursement are preempted under § 8902(m)(1): 7 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. Id. at 29,205 (codified at 5 C.F.R. § 890.106(h)).