Legal Document

547 U.S. 677 (2006) EMPIRE HEALTHCHOICE ASSURANCE, INC., DBA BLUE CROSS SHIELD v. McVEIGH, AS ADMINISTRATRIX OF THE ESTATE McVEIGH No. 05-200. Supreme Court of United States. Argued April 25, 2006. Decided June 15, *682 Anthony F. Shelley argued the cause for petitioner. With him on briefs were Alan I. Horowitz, Laura G. Ferguson, Kathleen M. Sullivan, Roger Wilson, Paul Brown, and William A. Breskin. Sri Srinivasan States as amicus curiae urging reversal. On brief Solicitor General Clement, Assistant Attorney Keisler, Deputy Kneedler, James Feldman, Mark B. Stern, Alisa Klein, Robbins, S. Green. Thomas J. Stock respondent. Harry Raptakis Victor Carr.[*] JUSTICE GINSBURG delivered opinion Court. The Federal Employees Health Benefits Act 1959 (FEHBA), 5 C. § 8901 et seq. (2000 ed. Supp. III), establishes a comprehensive program health insurance federal employees. authorizes Office Personnel Management (OPM) to contract with private carriers offer employees an array health-care plans. See 8902(a) ed.). Largest plans which OPM has contracted, annually since 1960, is Blue Cross Shield Service Benefit Plan (Plan), administered by local companies. This case concerns proper forum reimbursement claims when beneficiary, injured in accident, whose medical bills have been paid administrator, recovers damages (unaided carrier-administrator) state-court tort action against third party alleged caused accident. *683 FEHBA contains preemption clause, 8902(m)(1), displacing state law issues relating "coverage or benefits" afforded no provision addressing subrogation rights carriers. Successive annual contracts between Association (BCBSA) obligated carrier make "a reasonable effort" recoup amounts care. App. 95, 125. statement benefits distributed alerts enrollees that all recoveries they receive "must be used reimburse paid." Id., at 132; see also id., 146, 152. instant originated administrator beneficiary's estate pursued litigation court parties injuries. had notice action, but took part it. When terminated settlement, filed suit seeking full amount it question presented whether 28 1331 (authorizing jurisdiction over "civil actions arising under . laws States") encompasses carrier's action. We hold does not. itself provides federal-court only Congress could decide provide kind here involved warrant exercise jurisdiction. But this genre, recovery from proceeds litigation, are sort ordinarily resolved courts. courts should await clear signal before treating such auxiliary "arising under" I assigns responsibility negotiating regulating health-benefits *684 8902(a). carriers, instructs, "shall contain detailed offered shall include maximums, limitations, exclusions, other definitions [OPM] considers necessary desirable." 8902(d). Pursuant FEHBA, entered into 1960 BCBSA establish nationwide fee-for-service plan, terms renegotiated annually. As prescribes, Government pays about 75% premiums; enrollee rest. 8906(b). Premiums thus shared deposited special Treasury Fund, 8909(a). Carriers draw Fund pay covered benefits. Ibid.; 48 CFR 1632.170(b) (2005). provides: "By enrolling accepting services contract, [enrollees their eligible dependents] terms, conditions, provisions contract." 90. An appended brochure sets out provide, 89, rights, 100. Each enrollee, directs, receives conveying information Plan's coverage conditions. 8907(b). Concerning subrogation, matters not address, reads part: "If another person entity causes you suffer injury illness, if we must agree following: "All obtain (whether lawsuit, otherwise), matter how described designated, us paid. Our share any extends will or, applicable, your heirs, administrators, successors, assignees. ..... *685 do seek illness injury, permit initiate behalf (including right bring name). called subrogation. pursue paid, cooperate doing what reasonably assist us. You take may prejudice our recover." 165.[1] If participant voluntarily Plan, requires "reasonable effort entitled recover cases brought its attention." OPMBCBSA master reimbursements obtained returned Fund. 92, 118-119. provision, originally provided: "The chapter relate nature extent payments respect benefits) supersede preempt State law, regulation issued thereunder, relates inconsistent contractual provisions." 8902(m)(1) (1994 *686 To ensure uniform negotiates employees, H. R. Rep. 95-282, p. 1 (1977), preempted "State regulations specify types care, providers benefits, family members, age limits coverage," 4-5 (noting some mandated included plans, example, chiropractic services). In 1998, amended deleting words "to Thus, now reads, lawwhether consistent plan provisionsis displaced benefits." one addressed federalcourt That vests district "original jurisdiction, concurrent Claims, civil claim founded chapter." 8912. purpose provisionevident reference Claimswas carve exception statutory rule exceeding $10,000 originate Claims. 1346(a)(2) (establishing courts' exceed $10,000); 1654, 83d Cong., 2d Sess., (1954) (commenting, identical Employees' Group Life Insurance Act, 8715, "would extend above limitation effect"). Under 1995 regulation, suits contesting final denying subcontractors." 890.107(c) While channels *687 disputes designating agency sole defendant, opens beneficiaries tortfeasors. Cf. 29 1132(e)(1) (provision Employee Retirement Income Security (ERISA) vesting "exclusive subchapter"). And nothing FEHBA's text prescribes decision insured tortfeasor II Petitioner Empire HealthChoice Assurance, Inc., business (Empire), administers applies New York State. Respondent Denise Finn McVeigh (McVeigh) Joseph E. (Decedent), former Plan. Decedent was accident 1997. care he received 1997 his death 2001 amounted $157,309. McVeigh, herself, Decedent, minor child, commenced Decedent's learning agreed settle claims, sought $157,309 care.[2] Of $3,175,000 settlement provided, response Empire's asserted right, place $100,000 escrow. then District Southern York, alleging *688 breach relief, demanded $157,309, offset attorney's fees costs incurred pursuing settlement. moved dismiss various grounds, among them, lack subject-matter 396 F.3d 136, 139 (CA2 2005). Answering McVeigh's motion, urged because common governed claim. alternative, constituted law. F.3d, 140. rejected both arguments granted motion want Ibid. A divided panel Appeals Second Circuit affirmed, holding "Empire's clai[m] arise[s] law." 150. text, observed, authorization vindicate [in court] [against enrollees] FEHBAauthorized contracts"; therefore, concluded, "federal exists dispute governs claims." Quoting Boyle Technologies Corp., 487 500, 507, 508 (1988), appeals stated create "the operation would (1) `significant[ly] conflict' (2) `uniquely interest[s].'" maintained contract-derived implicated "`uniquely interest[s],'" directly affects cost providing employees; expressed interest maintaining uniformity health-plan 141. acknowledged distinctly interests, found identified "specific ways indeed *689 general application, conflict materially policies underlying circumstances presented." 150 (Sack, J., concurring); 142. next considered argument independently conferred 145-149. limited clause trigger." 145. Unlike 8912, "authoriz[es] FEHBA-related `against States,'" noted, "makes [in] [over]" issue. 145, n. 7. Judge Raggi dissented. 151. her view, calls application complaint. certiorari, 546 1085 (2005), resolve lower concerning asserts. Compare & Ill. Cruz, 793, 799-800 (CA7 2005) (upholding jurisdiction), Caudill N. C., 999 F.2d 74, 77 (CA4 1993) (same), Medcenters Care Ochs, 854 589, 593, 3 (Minn. aff'd, 26 865 (CA8 1994), Goepel National Postal Mail Handlers Union, 36 306, 314-315 (CA3 1994) (rejecting (decision below) (same). III Title jurisdiction" "all Constitution, laws, treaties States." *690 "aris[es] within meaning 1331, said, well-pleaded complaint either creates plaintiff's relief necessarily depends resolution substantial Franchise Tax Bd. Cal. Construction Laborers Vacation Trust Cal., 463 1, 27-28 (1983). States, curiae, present two principal support federal-question Emphasizing Jackson Transit Authority 457 22 (1982), cited therein, urge raises seeks contemplated statute, intended nature. Brief 14-31; 12-23. contend, demonstrates Congress' intent regard. argues, alternatively, there here, demonstrated recent Grable Sons Metal Products, Inc. Darue Engineering Mfg., 545 308 element [Empire's] claim." 25; accord 41, 5. address these turn. first, respond dissent's view engaged unnecessary labor, Clearfield Co. 318 363 (1943), basis case. Post, 702. pathmarking precedent authority fashion national concern. Friendly, Praise Erieand Common Law, 39 Y. U. L. Rev. 383, 409-410 (1964). dissent mistaken supposing doctrine covers *691 bank check payee's name forged. U.S., 365. Because plaintiff, solidly grounded. ibid. ("This instituted. ., being invoked pursuant 24(1) Judicial Code, 41(1)," contained §§ 1332, 1345, 1359). vertical choice-of-law issue: Did Erie Tompkins, 304 64 (1938), court-fashioned (federal law) determine merits controversy? held "[t]he duties commercial paper rather than [state] 366. post-Clearfield decisions, benefit enlightened commentary, see, e. g., supra, 410, "made need applied questions government even involving contracts," Fallon, D. Meltzer, Shapiro, Hart Wechsler's Courts System 700 (5th 2003) (hereinafter Wechsler).[3] "[T]he prudent course," recognized, often adopt readymade body *692 until strikes different accommodation." Kimbell Foods, 440 715, 740 (1979). Later, Boyle, telescoped appropriate inquiry, focusing straightforward relevant warrants displacement 3. Referring simply law," recognized prior treated discretely competence formulate decision, appropriateness declaring borrowing, incorporating, adopting point. preferred more modest terminology," questioning distinction law's incorporation ever makes practical difference." made further observations significant. First, explained, involvement "an area uniquely interest. necessary, sufficient, condition 507. Second, cases, "entire law" therefore require replacement. 508. others, confined, "only particular elements superseded." describes pervasively federal, post, 702, [as] just few scattered islands sea provisions," 709. "scattered" OPM-BCBSA contract. 684-685. Those linked together depend upon conditions infra, 698.[4] *693 Appeals, review, trained reimbursement, not, does, FEHBA-authorized large. So focused, determined "significant identifiable policy concurring) (quoting S., 507); 140-141. Unless showing made, displace much less lodge court. B up Transit-derived argument, is, essentially, tailored variation theme sounded dissent. It undisputed expressly created enabling like sue enforce FEHBA. nevertheless argue that, 1982 Transit, BCBSA, "states claim" stemming nature." Amicus Curiae 12; 18-29. persuaded argument. reliance placed surprising, suit. statute involved, 13(c) Urban Mass Transportation 1964 (UMTA), 78 Stat. 307 (then codified 49 1609(c) (1976 ed.)), conditioned governmental unit's receipt funds acquire privately owned transit company preservation collective-bargaining enjoyed acquired company's 17-18. city Jackson, Tennessee, financial assistance, failing bus *694 turned public entity, Authority. 18. satisfy aid, "§ agreement" union represented Secretary Labor certified agreement "fair equitable." (internal quotation marks omitted). For several years thereafter, unionized workers series agreements. Eventually, however, notified longer adhere undertakings. 19. latest agreement. did arise instead "governed [to be] cour[t]." 29. "on occasions [we had] plaintiff sued set forth statutes, [even though] statutes lacked express creating action." (emphasis added) (citing Machinists Central Airlines, 372 682 (1963) (union airline-adjustment-board award Railway Act); Norfolk Western Nemitz, 404 37 (1971) (railroad's assurances railroad secure Interstate Commerce Commission approval consolidation Transamerica Mortgage Advisors, Lewis, 444 11, 18-19 (1979) (permitting rescission declared void Investment Advisers 1940)). "d[id] dictate result [the Transit] case," each case, critical factor" determining scope *695 remedies congressional behind issue." 22. "In ways," UMTA "seem[ed] agreements creatures 23. regard, "demand[ed] `fair equitable arrangements' prerequisites aid; require[d] those arrangements; specifie[d] five varieties protective incorporate[d] arrangements grant recipient Government." ed.)). countervailing considerations. observed "labor relations governments subject longstanding exemption Relations Act." "Section 13(c)," continued, "evince[d] upset [NLRA] govern relationships entities unions representing employees." 23-24. Legislative history corroborative. "A theme," found, "[ran] throughout consideration 13(c): labor controlled 24. come wrong forum. provided Court's judgment, union's recourse enforcement *696 Measured discussion arises "creatur[e] True, interests involved. Principally, credited fund, nature" negotiated 683-684. But, considerations control. Among question, predicated prescription 684. And, prime importance, "Congress jurisdictional enacting FEHBA[,] confer[ring] where so." district-court door "against 686. OPM's instructs who challenge denials proceed "and Read together, prescriptions "ensur[e] denial land court." Had further, particular, encompass workers, easy enough say so. 1132(a)(3) "by participant, fiduciary" pension ERISA gain redress violations "this subchapter plan"). expand judicial decree." Kokkonen Guardian Ins. America, 511 375, 377 (1994). *697 points out, referred decisions "demonstrat[ing] statutes." 15. involves statute. reiterated, while Nor read prescription, 685-686, jurisdiction-conferring provision. unusual renders preemptive enacted Congress. 143-145; 151 concurring). order cautious interpretation. Section puzzling measure, open construction, seems precisely Reading "benefits" employee, ranked "[contract] relat[ing] "payments benefits," falling 8902(m)(1)'s compass. 20; Reply 8-9. hand, long after "coverage" resolved, corresponding insured. refer entitlement (or thereof) payment certain healthcare she received, postpayments reimbursement. Julia Cruz 10, 11. *698 choose plausible constructions. contract-based clearly exist. reaches sufficiently broad confer intends instruction completely applicable thereby, expected atypical intention clear. Columbus Ours Garage Wrecker Service, 536 424, 432-433 (2002) Wisconsin Public Intervenor Mortier, 501 597, 605 (1991)). done so here. purport render inoperative way bear employee-benefit 1144(a) (portions "supersede insofar hereafter employee 697, given declares preemptive, instead, reading order. Furthermore, asserts stems personal-injury recovery, plainly prepared say, based presentations term every places recovery. earlier links allows carrier, once insured's expenses, responsible *699 illness. 16 Couch, Cyclopedia Law 61:1 (2d 1982). taken course, access right. tortfeasors' liability, insurer, tortfeasors strangers, sway. sum, fail leaves room potentially bearing general, carrier-reimbursement particular. Accordingly, extract C turn finally claim, qualify "cause purposes, [carrier's] relief." 25-26 Grable, 312, Jones Donnelley Co., 541 369, 376 (2004)). satisfied, fit small category first describe identifies exemplary,[5] explain why resemble one. real property belonging (Grable), Internal Revenue (IRS) seized tax deficiency. 310. seizure mail IRS sold Manufacturing (Darue). Five later, *700 quiet title. Darue's record title invalid conveyed improperly. 311. governing 6335(a), "notice writing owner left usual abode ." 6335(a) required personal service, service mail. removed Alleging Grable's depended interpretation i. e., 1331. affirmed determinations removal proper. provision," "is important issue sensibly belongs 315. Whether adequate essential [Grable's] claim"; indeed, "it appear[ed] only. contested case." poles apart Grable. 27. centered compatibility qualified "substantial," dispositive controlling numerous cases. 313. Here, triggered, department, agency, launched court, 687-688, bottom-line properly payable Empire. nearly "pure "that settled thereafter sale cases." Wechsler 65 (2005 Supp.). contrast, *701 Vecounsel without contradiction, fact-bound situation-specific. contends overcharges duplicative charges providers, attributed injuries rendered reason unrelated Tr. Oral Arg. 44, 53. observes involve "[the] extent, any, account expended recovery." Indeed may. hardly apparent "federal-state balance," 28, nonstatutory complete governance lodged competent apply relevant, seem best positioned lawyer's obtaining, fair in, doubt "has overwhelming attracting able workforce," "in welfare whom relies carry functions." 10. persuaded, turning discrete costly case" insurer's reimbursed worker's state-court-initiated litigation. emphasized takes `arising under' door." cannot squeezed slim exemplifies. * reasons stated, judgment Affirmed. *702 BREYER, KENNEDY, SOUTER, ALITO join, dissenting. details covering 8 million find believe can. (1943). There little federal. III). families. today approximately retirees, dependents, total $22 billion year. 2. implement (OPM), enters handful major These agency/carrier follow standard form 38,000 words, carrier. 8902(d) ed.) (requiring plan); Program Standard Contract (CR2003) online http://www.opm.gov/insure/carriers/samplecontract.doc (sample contract) (as visited 7, 2006, available Clerk file). lists, enroll. patient's bill *703 rights. Government, premiums specifies administer forth, adjustable fee. states, [enrollees] requires, 8907(b), send enrolled explains "describes [p]lan carrier's] agency], authorized [federal statute]." 158. incorporated 89. distributes seal attached front stating, "Authorized distribution Service." 155. largely funded Government. More specifically, fund Treasury. typically withdraws money services, ibid.; fund's belongs, program. After surplus can agency's discretion reduce premiums, increase refund enrollees. 8909(b); 890.503(c)(2) risk. Rather, earns profit, difference charge directly. *704 employee's coverage. 890.105(a)(1); 8902(j) concludes contract). judicially reviewable Administrative Procedure 890.107 program's working country, costs, payments. role scheme exchange fixed charge. largest plan's Shield's brochure, binds abide (and pay) compensation illness). provisions. "mak[e] 95. "under single, nation-wide treatment Any recovered goes *705 Treasury, spent agency. 703. enrollee's obligation circumstances. Carrier [enrollee] suit, otherwise insurer says "[c]arrier's procedures policies, including accordance agreed-upon text." (which appear appendix tell enrollee: through act omission, "We unless reduction, attorneys' fees." 165. requirements because, explained above, tells beneficiary program, agreeing [plan] agency/carrier] detail *706 understood, brings well purposes Merrell Dow Pharmaceuticals Thompson, 478 804, 808 (1986); American Well Works Layne Bowler 241 257, 260 (1916) (opinion Holmes, J.) (A "suit action"). 1331's "statutory `jurisdiction origin.'" Farmers Union Cos. Crow Tribe, 471 845, 850 (1985); Illinois Milwaukee, 406 91 (1972); 19 Wright, Miller, Cooper, Practice 4514, 455 1996) ("A presents original courts"). "[f]ederal articulated rules fashioned `laws' 1331." Farmers, 850. me petitioner's consistently "obligations exclusively 504 (1988). principle dates back least far Trust, 366, "rights [federal] paper," namely paycheck, "are reasoned "[w]hen disburses *707 debts, exercising constitutional function power," power dependent Pennsylvania state." "[i]n [the] absence 367. principle, embodied sorts. See, West Virginia 479 305, 308-309 (1987) (contract regarding disaster efforts); 726 (contractual liens loan programs); Little Lake Misere Land 412 580, 592 (1973) (agreements conservation program); Seckinger, 397 203, 209 (1970) (Government construction contracts); County Allegheny, 322 174, 183 (1944) procurement contracts). written acting At bottom, then, similarly contracts. Downey Farm Fire Casualty 266 675, 680-681 2001) (Easterbrook, (National Flood Almond Capital Properties, 212 20, 22-24 (CA1 2000) (Boudin, (Federal Railroad Administration *708 contract); Price Pierce, 823 1114, 1119-1120 1987) (Posner, (Dept. Housing Development What might contrary? too absolute claiming (for purposes) all, (except cases), party, fact independent 1346(a)(2), 1491(a)(1). was, "choice-of-law issue" only, ante, 691, consequently concluded decided (cited 707 page) solely 682, 693, 17 (1963), finding it, noting although "did such," "they suggestive" "since determinative assume means intends. 367 ("In according own standards" added)). so, strong *709 courts, following nominal petitioner depositing managed proceeding rest contracts." 504. system resolves services. Given role, Government's great. spread Nation unfairness similar differently, employees' equally brochure. (applying "desirability plain"); Bank America Nat. Sav. Assn. Parnell, 352 29, 33, 34 (1956) ("[L]itigation paper. parties" "be [common] presence interest"). suggests doors disputes. Third, discussed provisions, interpret *710 (when reviewing benefits). context, wanted treat differently? convincing answer. Regardless, majority possible indication contrary intent. They statute's argues formally party. gives According majority, extended 8912 cover them. Ante, 696. failure write reflect inadvertence. Or belief regardless. Either way, all? coveredcontract "founded on" programwould (if my correct) fallen section, expanding claims? answer, 686, wrote section transfer (claims $10,000) (the Claims) others courts). *711 progeny, though say" claims. itself, relying 707; standards"). "governing adds spite character dispute, "`significant conflict. law.'" 693. 708-709, interests: obtaining legal rules. undermined varies past sufficient ("[W]here rule, *712 entire conflicts replaced rules"); 728 ("Undoubtedly, programs `by Nation' necessitate formulation "application exceptional uncertainty" lead great diversity results making transactions vagaries states," desirability plain"). correct "`[t]he course'" "`to accommodation,'" 691-692 740), still clear, "as decision" 728, 21 ("`Whether problem relationship going program'" added)); choice occasionally selected ("[T]he current approach, reflected [Kimbell supra], governs, incorporate decision"); 4518, 572-573 years, put increasing emphasis notion content *713 adopted absent good it" added; citing supra)). inquiry questions: claim; whether, "`federal decision,'" 692 added). 727 (deciding controls" concluding "content rule"); 593-594 (The "first step analysis" "`the "next analysis whether" "`borro[w]' law"); 410 (1964) ("Clearfield two. conversion decision. second having opportunity, (footnote omitted)). Therefore, determines Finally, footnote overrule ("If *714 difference, case"). respect, NOTES [*] Clinton Krislov Michael Karnuth representative Jose affirmance. [1] "You promptly for, obtain, lien ourselves pay. request assign injury. delay processing assignment. "Note: excess made." [2] oral counsel respondent "most [reimbursement claims] th[is] magnitude"; "[m]ost [amounts like] $5,500 $6,500." 52. [3] 707, times cites 174 (1944), 26, "necessarily present[s] `federal State,'" 183). Allegheny stretch widely suggests. concerned belonged and, incidence contractor. 181-183, 186-189. Neither nor scarcely resembles controversy Allegheny. [4] nowhere uniform, court-declared tortfeasor. provisionsreimbursement subrogationshould decoupled. [5] classic example centrality Smith Kansas City 255 180 (1921).

Classification Label: 8