Opinion ID: 3049625
Heading Depth: 3
Heading Rank: 1

Heading: Displacement of Remedies

Text: [1] By its terms, FEHBA’s administrative dispute mechanism applies to disputes between “covered individuals” and carriers over “claims filed under the plan.” 5 C.F.R. § 890.105(a)(1). A “covered individual” is defined as “an enrollee or a covered family member.” Id. § 890.101(a). A “claim” is defined as a request for “payment of a healthrelated bill” or “provision of a health-related service or supply.” Id. All claims must be submitted first to the carrier. See id. § 890.105(a)(1). If the carrier denies the claim in whole or in part, the covered individual may ask the carrier for reconsideration. See id. §§ 890.105(a)(1), 890.105(b). If the carrier affirms its denial of the claim, the covered individual may ask OPM to review the claim. See id. §§ 890.105(a)(1), 890.105(e). FEHBA’s implementing regulations impose an express exhaustion requirement, pursuant to which the covered individual “must exhaust both the carrier and OPM review processes . . . before seeking judicial review of the denied claim.” Id. §§ 890.105(a)(1), 890.107(d)(1). [2] This preemption mechanism was not designed for, nor available to resolve, contractual disputes between carriers and health care providers. By the express terms of FEHBA’s implementing regulations, the administrative process is confined to requests for “payment of a health-related bill” or “provision of a health-related service or supply” that are “filed under the plan.” Id. §§ 890.101(a), 890.105(a)(1). A provider’s contractual claim against a carrier does not constitute a request for “payment of a health-related bill” within the meaning of this provision. And even if it did, it would not be a claim “under the plan,” because it is predicated not on the plan but on the contract between the carrier and the medical services provider. CEDARS-SINAI v. NAT’L LEAGUE OF POSTMASTERS 9637 Moreover, FEHBA’s implementing regulations make clear that OPM has created a remedial mechanism solely for the claims of “covered individuals,” not for the claims of providers. A “covered individual” is an enrollee or a covered family member. Id. § 890.101. The regulations provide that “the covered individual may ask the carrier to reconsider its denial” of a claim and that “[t]he covered individual has 6 months” to seek reconsideration. Id. §§ 890.105(a)(1), 890.105(b)(1) (emphasis added). Thereafter, “the covered individual may ask OPM to review the claim” following a denial by the carrier. Id. § 890.105(a)(1) (emphasis added); see also id. § 890.105(b)(3) (“The covered individual may write to OPM and request that OPM review the carrier’s decision”) (emphasis added). Finally, “a covered individual may seek judicial review of OPM’s final action on the denial of a health benefits claim.” Id. § 890.107(c) (emphasis added). [3] FEHBA’s implementing regulations do permit “other individuals or entities” to pursue a claim administratively if they are “acting on behalf of a covered individual and . . . have the covered individual’s specific written consent to pursue payment of the disputed claim.” Id. § 890.105(a)(2). Neither party contends that Cedars-Sinai has S.M.’s specific written consent to pursue payment of a disputed claim. Where, as here, a health care provider seeks to recover money on its own behalf pursuant to its contract with a carrier, it is not “acting on behalf of a covered individual.” Thus, CedarsSinai cannot invoke the administrative review process, even if it were pursuing a “claim filed under the plan.”1 1 We note that if Cedars-Sinai’s contractual claims against PBP Health are held to be subject to FEHBA’s administrative scheme, the result would not only be that Cedars-Sinai cannot sue PBP Health now, but that CedarsSinai can never sue PBP Health. This is because the implementing regulations provide that a suit seeking judicial review of a denied claim “must be brought against OPM and not against the carrier . . . .” 5 C.F.R. § 890.107(c). Thus, if the district court’s view of the regulatory scheme were accepted, exhaustion of FEHBA’s administrative remedies would lead not to a suit by Cedars-Sinai against PBP Health, but instead to a suit by Cedars-Sinai against OPM — a suit to which PBP Health (whose rights and obligations under its contract with Cedars-Sinai are at issue) would not be a party. 9638 CEDARS-SINAI v. NAT’L LEAGUE OF POSTMASTERS