Court Opinion

ID: 2814616
Source: CourtListenerOpinion
Date Created: 2015-07-06 15:12:20.755669+00
Date Added: 2024-06-11T09:13:47.541296
License: Public Domain

STATE OF MINNESOTA
                               IN COURT OF APPEALS
                                     A14-1462

              In the Matter of the Consolidated Hospital Surcharge Appeals of
                Gillette Children’s Specialty Healthcare, St. Luke’s Hospital,
                   North Memorial Health Care, HealthEast Care System,
                  Park Nicollet Health Services, Fairview Health Services,
                     and Children’s Hospitals and Clinics of Minnesota.

                                    Filed July 6, 2015
                                        Affirmed
                                     Johnson, Judge

                        Minnesota Department of Human Services
                            OAH Docket No. 8-1800-30119

Salvatore G. Rotella, Jr. (pro hac vice), Reed Smith LLP, Philadelphia, Pennsylvania; and

Thomas R. Muck, Samuel D. Orbovich, Sten-Erik Hoidal, Fredrikson & Byron, P.A.,
Minneapolis, Minnesota (for appellants Gillette Children’s Specialty Healthcare, St.
Luke’s Hospital, North Memorial Health Care, HealthEast Care System, Park Nicollet
Health Services, Fairview Health Services, and Children’s Hospitals and Clinics of
Minnesota)

Lori Swanson, Attorney General, Barry R. Greller, Patricia A. Sonnenberg, Assistant
Attorneys General, St. Paul, Minnesota (for respondent Minnesota Department of Human
Services)

         Considered and decided by Peterson, Presiding Judge; Ross, Judge; and Johnson,

Judge.

                                     SYLLABUS

         Minnesota Statutes section 256.9657, subdivision 2, which directs the Minnesota

Department of Human Services to assess and collect from hospitals a 1.56-percent

surcharge on net patient revenues, is not preempted by the Federal Employee Health

Benefits Act or by the federal statute authorizing the TRICARE program.
                                      OPINION

JOHNSON, Judge

        We are asked to decide whether the State of Minnesota may, without encroaching

on federal law, assess and collect a surcharge on the revenues that Minnesota hospitals

receive for providing health-care services to persons who are insured by group health-

insurance plans that cover employees of the federal government. We conclude that the

applicable federal statutes do not preempt the applicable state statute. Therefore, we

affirm the decision of the commissioner of human services.

                                         FACTS

        In Minnesota, hospitals must pay a 1.56-percent surcharge on “net patient

revenues.” Minn. Stat. § 256.9657, subd. 2 (2014). The surcharge is assessed and

collected by the Minnesota Department of Human Services (DHS) and deposited into the

state general fund. Minn. Stat. § 256.9656 (2014).

        The Federal Employees Health Benefits Act (FEHBA) authorizes the federal

government to provide health insurance to employees of the federal government. See

generally 5 U.S.C. §§ 8901-14 (2012). The act directs the federal Office of Personnel

Management (OPM) to enter into group health-insurance contracts with insurance

carriers. 5 U.S.C. § 8902(a). The act includes a provision that preempts certain state

laws:

                     (1)    No tax, fee, or other monetary payment may be
              imposed, directly or indirectly, on a carrier or an underwriting
              or plan administration subcontractor of an approved health
              benefits plan by any State, the District of Columbia, or the
              Commonwealth of Puerto Rico, or by any political

                                             2
             subdivision or other governmental authority thereof, with
             respect to any payment made from the Fund.

                    (2)    Paragraph (1) shall not be construed to exempt
             any carrier or underwriting or plan administration
             subcontractor of an approved health benefits plan from the
             imposition, payment, or collection of a tax, fee, or other
             monetary payment on the net income or profit accruing to or
             realized by such carrier or underwriting or plan
             administration subcontractor from business conducted under
             this chapter, if that tax, fee, or payment is applicable to a
             broad range of business activity.

5 U.S.C. § 8909(f).

      Similarly, the federal TRICARE program provides health-insurance plans to

uniformed service members of the United States armed forces. 10 U.S.C. §§ 1071,

1072(7) (2012). In a manner similar to FEHBA, the statute authorizing the TRICARE

program directs the Secretary of Defense to enter into group health-insurance contracts

with insurance carriers. See 10 U.S.C. §§ 1071, 1073(a) (2012). The statute authorizing

the TRICARE program also preempts certain state laws. 10 U.S.C. § 1103 (2012). The

language of the TRICARE preemption provision is different from the language of the

FEHBA preemption provision, but a federal regulation promulgated by the Department of

Defense states that the scope of the TRICARE preemption provision is the same as that

of the FEHBA preemption provision. See 32 C.F.R. § 199.17(a)(7)(iii) (2014) (directing

that interpretations of section 1103 “shall be consistent with those applicable to the

Federal Employees Health Benefits Program under 5 U.S.C. 8909(f)”).

      In 2012, seven hospitals operating in Minnesota challenged DHS’s assessments of

the surcharge authorized by section 256.9657, subdivision 2(a), by separately filing

                                          3
administrative appeals. See Minn. Stat. § 256.9657, subd. 6. The sole ground of each

administrative appeal was that FEHBA and the statute creating the TRICARE program

preempt the state statute that authorizes the surcharge. The commissioner of human

services denied the hospitals’ administrative appeals in September 2012.

       The hospitals requested a consolidated contested-case hearing before the office of

administrative hearings, and the commissioner consolidated the hospitals’ administrative

appeals. See Minn. R. 9510.2040, subp. 3 (2013). In November 2013, the parties filed

cross-motions for summary disposition. See Minn. R. 1400.5500(K) (2013). In January

2014, the assigned administrative law judge (ALJ) issued a ten-page order recommending

that DHS’s motion for summary disposition be granted, that the hospitals’ motion for

summary disposition be denied, and that the hospitals’ administrative appeals be

dismissed.

       In July 2014, the commissioner’s delegatee, the director of the appeals office of

the department, issued a seven-page order adopting the ALJ’s recommendation. The

hospitals appeal to this court by way of a writ of certiorari.

                                           ISSUE

       Do the federal statutes authorizing the FEHBA and TRICARE programs preempt

Minnesota Statutes section 256.9657, subdivision 2, which authorizes the department of

human services to assess and collect a surcharge on revenues received by Minnesota

hospitals for health-care services to the extent that revenue is received for services

provided to persons covered by the FEHBA and TRICARE programs?

                                              4
                                         ANALYSIS

       The hospitals argue that the commissioner erred by deciding that Minnesota’s

surcharge on their revenues is not preempted by federal law to the extent that the

hospitals receive revenues for services provided to persons covered by the FEHBA and

TRICARE programs.

       The commissioner’s decision arose from a motion for summary disposition.

“Summary disposition is the administrative equivalent of summary judgment.” Pietsch v.

Board of Chiropractic Exam’rs, 683 N.W.2d 303, 306 (Minn. 2004) (citing Minn. R.

1400.5500(K) (2003)). Accordingly, the commissioner may grant a motion for summary

disposition if there is no genuine issue of material fact and the moving party is entitled to

judgment as a matter of law. In re Rate Appeal of Benedictine Health Ctr., 728 N.W.2d

497, 500-01 n.3 (Minn. 2007). In reviewing an agency’s grant of a motion for summary

disposition, “[t]he scope of our review is governed by the Minnesota Administrative

Procedures Act, Minn. Stat. § 14.63-69.” Hy-Vee Food Stores, Inc. v. Minnesota Dep’t of

Health, 705 N.W.2d 181, 184 (Minn. 2005). The Minnesota Administrative Procedures

Act provides:

                       In a judicial review under sections 14.63 to 14.68, the
                court may affirm the decision of the agency or remand the
                case for further proceedings; or it may reverse or modify the
                decision if the substantial rights of the petitioners may have
                been prejudiced because the administrative finding,
                inferences, conclusion, or decisions are:

                       (a)    in violation of constitutional provisions; or

                        (b)    in excess of          the   statutory authority or
                jurisdiction of the agency; or

                                                 5
                     (c)      made upon unlawful procedure; or

                     (d)      affected by other error of law; or

                     (e)     unsupported by substantial evidence in view of
              the entire record as submitted; or

                     (f)      arbitrary or capricious.

Minn. Stat. § 14.69 (2014).

                                              A.

       We begin our analysis with the source of the federal preemption doctrine, the

Supremacy Clause of the United States Constitution, which provides:

                     This Constitution, and the Laws of the United States
              which shall be made in Pursuance thereof; and all Treaties
              made, or which shall be made, under the Authority of the
              United States, shall be the supreme Law of the Land; and the
              Judges in every State shall be bound thereby, any Thing in the
              Constitution or Laws of any State to the Contrary
              notwithstanding.

U.S. Const. art. VI, § 2. The preemption of state law may operate impliedly, “through the

direct operation of the Supremacy Clause,” either because a federal statute conflicts with

a state statute or because “the scope of a [federal] statute indicates that Congress intended

federal law to occupy a field exclusively.” Kurns v. Railroad Friction Prods. Corp., 132

S. Ct. 1261, 1265-66 (2012) (quotations omitted); see also In re Qwest’s Wholesale Serv.

Quality Standards, 702 N.W.2d 246, 250-51 (Minn. 2005). In addition, Congress may

enact a statute that expressly preempts certain state laws. Kurns, 132 S. Ct. at 1265.

Thus, “Federal law can preempt state law in three ways: through (1) field preemption,

(2) express preemption, and (3) conflict preemption (sometimes called ‘implied conflict

                                               6
preemption’).” Housing & Redevelopment Auth. v. Lee, 852 N.W.2d 683, 687 (Minn.

2014) (citing Fidelity Fed. Sav. & Loan Ass’n v. de la Cuesta, 458 U.S. 141, 152-54, 102

S. Ct. 3014, 3022 (1982)); see also Freightliner Corp. v. Myrick, 514 U.S. 280, 287, 115

S. Ct. 1483, 1487 (1995); In re Estate of Barg, 752 N.W.2d 52, 63-64 (Minn. 2008). In

this case, the parties agree that the issue presented by the hospitals’ appeal is a matter of

express preemption. Accordingly, we focus on the doctrine of express preemption, i.e.,

the power of Congress “to pre-empt state law by so stating in express terms.”

Hillsborough Cnty. v. Automated Med. Labs., Inc., 471 U.S. 707, 713, 105 S. Ct. 2371,

2375 (1985).

       When interpreting the preemption provisions of the FEHBA and TRICARE

statutes, we are mindful of the caselaw concerning the interpretation of federal

preemption statutes. The United States Supreme Court has stated that “‘[t]he purpose of

Congress is the ultimate touchstone’ in every pre-emption case.” Altria Grp., Inc. v.

Good, 555 U.S. 70, 76, 129 S. Ct. 538, 543 (2008) (quoting Medtronic, Inc. v. Lohr, 518

U.S. 470, 485, 116 S. Ct. 2240, 2250 (1996) (plurality opinion) (quoting Retail Clerks v.

Schermerhorn, 375 U.S. 96, 103, 84 S. Ct. 219, 223 (1963))); see also Meyer v. Nwokedi,

777 N.W.2d 218, 222 (Minn. 2010). If a federal statute includes an “express preemption

clause,” we should “‘focus on the plain wording of the clause, which necessarily contains

the best evidence of Congress’ preemptive intent.’” Chamber of Commerce of United

States v. Whiting, 131 S. Ct. 1968, 1977 (2011) (quoting CSX Transp., Inc. v.

Easterwood, 507 U.S. 658, 664, 113 S. Ct. 1732, 1737 (1993)). The Supreme Court also

has recognized an “‘assumption that the historic police powers of the States [are] not to

                                             7
be superseded by the Federal Act unless that was the clear and manifest purpose of

Congress.’” Altria Grp., 555 U.S. at 77, 129 S. Ct. at 543 (quoting Rice v. Santa Fe

Elevator Corp., 331 U.S. 218, 230, 67 S. Ct. 1146, 1152 (1947)); see also Dahl v.

Charles Schwab & Co., Inc., 545 N.W.2d 918, 922 (Minn. 1996). “Thus, when the text

of a pre-emption clause is susceptible of more than one plausible reading, courts

ordinarily ‘accept the reading that disfavors pre-emption.’” Altria Grp., 555 U.S. at 77,

129 S. Ct. at 543 (quoting Bates v. Dow Agrosciences LLC, 544 U.S. 431, 449, 125 S. Ct.

1788, 1801 (2005)); see also Meyer, 777 N.W.2d at 222.

                                              B.

       The preemption provision of FEHBA, which is quoted above in full, states, in

pertinent part, that no state tax “may be imposed, directly or indirectly, on a carrier . . .

with respect to any payment made from the Fund.” 5 U.S.C. § 8909(f)(1). The plain

language of section 8909(f)(1) reveals a clear and manifest intention by Congress to

preempt any state law that imposes a tax on a “carrier” due to the carrier’s receipt of a

payment from the FEHBA fund. See Health Maint. Org. of New Jersey, Inc. v. Whitman,

72 F.3d 1123, 1128, 1133 (3d Cir. 1995) (holding that state tax imposed on carrier is

preempted by FEHBA). But the plain language of section 8909(f)(1) does not speak

directly to the validity of a state law that imposes a tax on a provider that receives

payment from a carrier that receives payment from the FEHBA fund. The parties have

stipulated that the hospitals that are parties to this appeal are health-care providers but not

insurance carriers. The commissioner resolved the hospitals’ administrative appeals in

                                              8
part by reasoning that the surcharge authorized by section 256.9657, subdivision 2, “is

not imposed upon carriers.”

       The hospitals contend that section 8909(f) preempts section 256.9657, subdivision

2, even though they are not carriers. They emphasize the phrase “directly or indirectly.”

See 5 U.S.C. § 8909(f)(1). They contend that section 256.9657, subdivision 2, indirectly

imposes a tax on carriers because the hospitals pass along to carriers the costs of the

surcharge authorized by section 256.9657, subdivision 2. More specifically, the hospitals

contend that when they set their fees for services that are billed to insurance carriers, they

do so in a manner that ensures that they recoup the costs of the surcharge, which

inevitably causes the FEHBA fund to incur higher insurance premiums than would be

incurred without the surcharge.1

       There is no binding precedent on the question whether a state tax such as the

surcharge authorized by section 256.9657, subdivision 2, is preempted by FEHBA.

When interpreting a federal statute, this court is bound by the opinions of the United

States Supreme Court and the opinions of the Minnesota Supreme Court that interpret

and apply federal law. See Citizens for a Balanced City v. Plymouth Congregational

Church, 672 N.W.2d 13, 20 (Minn. App. 2003); Northpointe Plaza v. City of Rochester,

457 N.W.2d 398, 403 (Minn. App. 1990), aff’d, 465 N.W.2d 686 (Minn. 1991); Jendro v.

Honeywell, Inc., 392 N.W.2d 688, 691 n.1 (Minn. App. 1986). Neither the United States

       1
       The hospitals have submitted a thorough factual record to support this assertion.
On appeal of a summary disposition, we view the facts in the light most favorable to the
non-moving party and, thus, assume that the hospitals pass along the costs of the state
surcharge to carriers. See Benedictine Health Ctr., 728 N.W.2d at 500-01 n.3.

                                              9
Supreme Court nor the Minnesota Supreme Court has considered whether section 8909(f)

of FEHBA preempts a state law that imposes a tax or surcharge on health-care providers,

thereby causing the providers to increase the fees paid by carriers, thereby causing the

carriers to increase the premiums paid by the FEHBA fund. It appears that only one

federal court of appeals and only one federal district court have considered that question.

The United States Court of Appeals for the Fourth Circuit, 12 years ago, concluded that

FEHBA does not preempt a West Virginia statute that imposes a tax on health-care

providers, even though the increased costs arising from the state tax may be passed on to

carriers that receive payments from the FEHBA fund. United States v. West Virginia,

339 F.3d 212, 218-19 (4th Cir. 2003). The United States District Court for the District of

Connecticut, five years earlier, held that FEHBA may preempt a state statute that imposes

a tax on health-care providers to the extent that the evidence shows that providers

actually pass on the costs of the tax to carriers. Connecticut v. United States, 1 F. Supp.

2d 147, 153 (D. Conn. 1998).2 It also appears that only one state appellate court has

considered the question. See Mobility Med., Inc. v. Mississippi Dep’t of Revenue, 119 So.

       2
         The commissioner did not cite the Connecticut opinion in her decision, and the
ALJ did not do so in his recommendation. The district court in Connecticut concluded
that the state tax was not preempted because the United States did not submit evidence
that the providers actually passed along the expenses of the tax to FEHBA carriers. See 1
F. Supp. 2d at 153. We do not perceive the Connecticut opinion to be particularly helpful
or persuasive for our purposes because, in reaching its conclusion, the court relied solely
on Travelers Ins. Co. v. Cuomo, 14 F.3d 708 (2d Cir. 1993), rev’d on other grounds by
New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514
U.S. 645, 115 S. Ct. 1671 (1995). Connecticut, 1 F. Supp. 2d at 153. But in Travelers,
the state tax was, in reality, a tax on carriers, although providers were required to collect
the tax from carriers on behalf of the state. See 14 F.3d at 712. In Connecticut, however,
the tax was imposed directly on providers. 1 F. Supp. 2d at 153.

                                             10
3d 1002, 1003 (Miss. 2013) (holding that section 8909(f) does not preempt sales taxes

assessed to medical-equipment retailer that sold equipment to individuals covered by

FEHBA plans), cert. denied, 134 S. Ct. 1541 (2014). We may consider and apply the

reasoning and the results of these opinions to the extent that we believe they are

persuasive. See Plymouth Congregational Church, 672 N.W.2d at 20.

       In the absence of any binding precedent, we resolve this appeal by applying the

general principles concerning the interpretation of express preemption statutes.        To

reiterate, we ask whether the federal statute reveals that preemption “‘was the clear and

manifest purpose of Congress.’” Altria Grp., 555 U.S. at 76, 129 S. Ct. at 543 (quoting

Rice, 331 U.S. at 230, 67 S. Ct. at 1152). In applying that criterion to the FEHBA

preemption provision, we conclude that Congress did not express a “clear and manifest”

purpose to preempt state laws that impose a tax on providers that may have a

consequential economic impact on carriers. If Congress had intended to preempt such a

state law, we must assume that Congress would have used different language or

additional language to make its intention clear. For example, Congress could have added

the following highlighted words to paragraph 1 of section 8909(f), to prohibit a tax

imposed “on a carrier or on a health-care provider to the extent that the provider receives

payments from a carrier . . . .”    Such a statement would clearly reveal Congress’s

intention to preempt state laws that impose a tax on providers if the cost of the tax is

passed on to carriers. But Congress did not make such a statement or any similar

statement. Because we do not discern in section 8909(f) a “clear and manifest” intention

by Congress to preempt a state statute that imposes a tax on a provider, we interpret

                                            11
section 8909(f) of FEHBA to not preempt section 256.9657, subdivision 2, of the

Minnesota Statutes. See id.3

                                           C.

       Before concluding, we must address three additional arguments by the hospitals

that relate to the preemption analysis.

       First, the hospitals contend that the commissioner erred by relying on the Fourth

Circuit’s opinion in West Virginia, which the hospitals assert is flawed in its reasoning.

The commissioner relied on West Virginia only insofar as the Fourth Circuit relied on

United States v. Fresno, 429 U.S. 452, 97 S. Ct. 699 (1977). See West Virginia, 339 F.3d

at 216. In Fresno, the United States Supreme Court considered whether a state could

impose a tax on federal employees’ possessory interests in housing provided by the

       3
        Because Congress’s intent to preempt a tax on providers is not clear and manifest
from the plain language of the FEHBA preemption provision, it is inappropriate to refer
to legislative history. See Chamber of Commerce, 131 S. Ct. at 1980. “Extrinsic
materials have a role in statutory interpretation only to the extent they shed a reliable
light on the enacting Legislature’s understanding of otherwise ambiguous terms.” Exxon
Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 568, 125 S. Ct. 2611, 2626 (2005).
We nonetheless note that the legislative history available to us does not indicate that
Congress clearly intended to preempt a state tax on a provider merely because the tax
would cause providers to charge carriers higher fees. A committee report indicates that
the FEHBA preemption provision was intended to “exempt[] the [Federal Employees
Health Benefits Program] from state premium taxes.” See H.R. Rep. No. 101-881, at 173
(1990), reprinted in 1990 U.S.C.C.A.N. 2017, 2181 (emphasis added). The committee
report also states that the FEHBA preemption provision is “intended to be similar in
nature and application to the existing premium tax exemptions applicable to the
Employees’ Life Insurance Fund.” Id., 1990 U.S.C.C.A.N. at 2184 (citing 5 U.S.C.
§ 8714(c)(1) (2012) (providing that no state tax “may be imposed . . . on, or with respect
to, any premium paid under an insurance policy purchased under this chapter”)).
Because premiums are paid by the FEHBA fund to carriers, the committee report
indicates that the House committee intended to preclude the operation of state taxes only
to the extent that they are imposed on transactions between the FEHBA fund and carriers,
but not on transactions between carriers and providers.

                                           12
federal government on federal land. Id. at 455-56, 97 S. Ct. at 701. The Supreme Court

upheld the state statute, holding that “the economic burden on a federal function of a state

tax imposed on those who deal with the Federal Government does not render the tax

unconstitutional so long as the tax is imposed equally on the other similarly situated

constituents of the State.” Id. at 462, 97 S. Ct. at 705. The Supreme Court in Fresno did

not apply a preemption statute but, rather, a constitutional doctrine, i.e., the federal

government’s “immunity from state taxation inherent in the Supremacy Clause.” See id.

at 453, 97 S. Ct. at 700 (citing McCulloch v. Maryland, 17 U.S. 316, 396 (1819)). The

Fourth Circuit reasoned that Fresno provided a useful analogy. West Virginia, 339 F.3d

at 217. We agree that Fresno is analogous. We also acknowledge that Congress may

choose to preempt any state law, even if the state law is not inherently inconsistent with

the Supremacy Clause. See Jones v. Rath Packing Co., 430 U.S. 519, 525, 97 S. Ct.

1305, 1309 (1977). That acknowledgment begs the question whether Congress intended

to preempt the state statute in this case, and we have resolved that question by applying

the caselaw governing the interpretation of express preemption statutes, and we interpret

the applicable federal statute to not preempt the applicable state statute.

       Second, the hospitals contend that the commissioner erred by not applying a

decision of the Minnesota Tax Court.         In HealthPartners, Inc. v. Commissioner of

Revenue, No. 6925, 1999 WL 123289 (Minn. Tax Ct. Mar. 4, 1999), the tax court

considered whether section 8909(f) of FEHBA preempted the MinnesotaCare tax, which

the commissioner of revenue is authorized to collect from health-care providers based on

gross revenue. See Minn. Stat. § 295.52 (1994). HealthPartners was a “staff model

                                             13
health plan company” that contracted directly with OPM to serve both as an insurance

carrier and a health-care services provider for federal employees. HealthPartners, 1999

WL 123289, at *1-2. The tax court concluded that HealthPartners was a “carrier” and

that the tax was imposed “indirectly . . . with respect to the payment by FEHBA.” Id. at

*6. Thus, the tax court held that FEHBA preempted the MinnesotaCare tax as applied to

OPM’s payments from the FEHBA fund to HealthPartners. Id.

      In this case, the commissioner reasoned that HealthPartners “is neither binding

nor applicable” to the hospital surcharge authorized by section 256.9657, subdivision 2.

The commissioner is correct. The HealthPartners decision is not binding precedent in

this case because the tax court is an executive-branch agency. See Minn. Stat. § 271.01,

subd. 1 (2014). For that reason, tax court decisions have “little, if any, precedential

effect.” Kmart Corp. v. County of Stearns, 710 N.W.2d 761, 769 (Minn. 2006). This

court has said that the tax court itself may not be bound by its own decisions but merely

subject to a duty to provide reasons or explanations for any departure from its prior

decisions. See In re Whitehead, 399 N.W.2d 226, 229 (Minn. App. 1987) (citing Peoples

Natural Gas Co. v. Minnesota Pub. Utilities Comm’n, 342 N.W.2d 348, 352-53 (Minn.

App. 1983), review denied, (Minn. Apr. 24, 1984)). In any event, the HealthPartners

decision is distinguishable because it depended on the fact that HealthPartners was both a

carrier and a provider, while the hospitals in this case are only providers.          See

HealthPartners, 1999 WL 123289, at *6; see also Group Health Co-op. v. City of Seattle,

189 P.3d 216, 223 (Wash. Ct. App. 2008) (noting that city could not avoid preemption of

tax on HMO that served as both carrier and provider under section 8909(f) “by

                                           14
unilaterally recharacterizing” HMO “as a health care ‘provider’ rather than a carrier”).

Thus, the commissioner did not err by not applying or following the tax court’s decision

in HealthPartners.

         Third, the hospitals contend that this court should defer to OPM’s position

concerning the scope of the FEHBA preemption provision. The hospitals contend that

OPM has maintained a “consistently broad interpretation” of section 8909(f) and that this

court should defer to OPM’s interpretation pursuant to Chevron U.S.A., Inc. v. Natural

Resources Defense Council, Inc., 467 U.S. 837, 104 S. Ct. 2778 (1984). Under Chevron,

if a federal statute is ambiguous, a court “must give effect to an agency’s regulation

containing a reasonable interpretation” of the federal statute. Christensen v. Harris Cnty.,

529 U.S. 576, 586-87, 120 S. Ct. 1655, 1662 (2000) (emphasis added) (citing Chevron,

467 U.S. at 842-44, 104 S. Ct. at 2781-82).          OPM has promulgated a regulation

concerning section 8909(f), but that regulation does not answer the question before this

court.    See 48 C.F.R. § 1631.205-41 (implementing section 8909(f)).         Accordingly,

Chevron does not apply.

         If an agency has not promulgated a regulation on a particular issue, courts should

give the agency’s position a lesser form of deference. Skidmore v. Swift & Co., 323 U.S.

134, 139-40, 65 S. Ct. 161, 164 (1944). Under Skidmore, a court should consider several

factors in determining the degree of deference owed to an agency’s interpretation of a

federal statute, such as “the thoroughness evident in its consideration, the validity of its

reasoning, its consistency with earlier and later pronouncements, and all those factors that

give it power to persuade.” Young v. United Parcel Serv., Inc., 135 S. Ct. 1338, 1352

                                             15
(2015) (quoting Skidmore, 323 U.S. at 140, 65 S. Ct. at 164).           The hospitals rely

primarily on a 2004 letter opinion, which OPM issued after the Fourth Circuit’s decision

in West Virginia. That letter states merely that section 8909(f) “does not preempt the

West Virginia Health Care Provider Tax Act of 1993” and that OPM “will evaluate

whether 5 U.S.C. § 8909(f) preempts taxes in other states in the Fourth Circuit in

accordance with the rationale set forth in” the West Virginia opinion. See Office of Pers.

Mgmt., FEHBA Program Carrier Letter No. 2004-12 (Oct. 4, 2004), available at

http://www.opm.gov/healthcare-insurance/healthcare/carriers/2004/2004-12.pdf.            The

letter is not meaningful for purposes of this case because the letter does not state a

position with respect to the laws of states located outside the Fourth Circuit. Because

OPM’s opinion letter does not reveal a clear statement about the scope of the FEHBA

preemption provision, there is nothing to which we can defer. See Young, 135 S. Ct. at

1352   (considering   multiple   factors,   including   “thoroughness     evident   in    its

consideration”).

       In sum, the hospitals’ additional arguments do not alter our interpretation of the

FEHBA preemption provision. Therefore, we conclude that Minnesota Statutes section

256.9657, subdivision 2, is not preempted by FEHBA or by the statute authorizing the

TRICARE program.

                                    DECISION

       The commissioner did not err by adopting the recommendation of the ALJ and

granting the department’s motion for summary disposition.

       Affirmed.

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