Court Opinion

ID: 78143
Source: CourtListenerOpinion
Date Created: 2010-04-27 04:01:11+00
Date Added: 2024-06-11T17:20:35.234858
License: Public Domain

[ PUBLISH]

               IN THE UNITED STATES COURT OF APPEALS

                        FOR THE ELEVENTH CIRCUIT                     FILED
                              _____________               U.S. COURT OF APPEALS
                                                            ELEVENTH CIRCUIT
                                                               September 5, 2008
                                 No. 07-10956
                                                             THOMAS K. KAHN
                                _____________                       CLERK

                       D.C. Docket No. 05-00039-CV-JTC-3

BLUE CROSS BLUE SHIELD HEALTH CARE
PLAN OF GEORGIA, INC.,

                                                       Plaintiff-Appellant,

                                     versus

BRIAN GUNTER,

                                                       Defendant-Appellee.
                                 ____________

                  Appeal from the United States District Court
                     for the Northern District of Georgia
                                ____________
                             (September 5, 2008)

Before TJOFLAT, ANDERSON and HILL, Circuit Judges.

HILL, Circuit Judge:

      Blue Cross Blue Shield Health Care Plan of Georgia, Inc. (“Blue Cross”),
sued Brian Gunter seeking reimbursement of insurance benefits paid to him from

his settlement with a third party. On defendant’s motion, the district court

dismissed the case for lack of federal question jurisdiction under the authority of

Empire Health Choice Assurance, Inc. v. McVeigh, 547 U.S. 677, 126 S. Ct. 2121,

2127 (2006). Blue Cross brought this appeal. We review the district court’s

determination of its subject matter jurisdiction de novo. United States v. Al-Arian,

514 F.3d 1184, 1189 (11th Cir. 2008).

                                          I.

      The Federal Employees Health Benefits Act of 1959, 5 U.S.C. § 8901 et

seq. (“FEHBA”) establishes a comprehensive, nationwide program of health

benefits for federal employees. The statute authorizes the Office of Personnel

Management (the “OPM”) to contract with insurance carriers to offer federal

employees a range of health care plans. Largest among these plans is the Service

Benefit Plan (the “Plan”), which is administered by local Blue Cross companies.

Brian Gunter was enrolled in the Service Benefit Plan in Georgia.

      Under the Plan, Brian Gunter received insurance funds from Blue Cross for

medical expenses resulting from injuries he received in an automobile accident.

Subsequently, he also obtained a settlement on his personal injury claim against

the third party responsible for the accident.

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      The Plan contains a provision requiring that it be reimbursed in the event of

the insured’s third-party recovery. After Gunter received his settlement proceeds

from the third-party, Blue Cross requested reimbursement for the benefits it paid

Gunter in connection with the accident. Gunter refused and Blue Cross filed this

action against him in federal court.

      Gunter moved to dismiss, arguing that the district court did not have subject

matter jurisdiction over this claim. The district court held the motion in abeyance

pending the Supreme Court’s decision in Empire Health Choice Assurance, Inc. v.

McVeigh, which raised the issue of the proper forum for litigation of

reimbursement claims brought by FEHBA plans. Upon release of that decision,

the district court granted the motion to dismiss.

                                          II.

      Blue Cross claims that federal jurisdiction exists pursuant to 28 U.S.C. §

1331, which grants federal district courts original jurisdiction over “all civil

actions arising under the Constitution, laws, or treaties of the United States.” Blue

Cross concedes, however, that, in McVeigh, the Supreme Court clearly held that

“claims of this genre, seeking recovery from the proceeds of state-court litigation,

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are the sort ordinarily resolved in state courts.” Id.1 Blue Cross does not contend

that its complaint can escape the Court’s determination that reimbursement claims,

in general, are not entitled to federal jurisdiction.

       Blue Cross argues, rather, that the Court recognized an exception to this rule

– where a “significant conflict” exists between state law and the federal interests at

stake in the federal law – and that this exception applies to this case, conferring

federal jurisdiction.2 We disagree for two reasons.

       First, Blue Cross argues that Georgia’s complete compensation rule

conflicts with the federal policies underlying the FEHBA. Under the complete

compensation rule, “an insurer is prohibited from obtaining reimbursement for

amounts paid under medical payments coverage unless and until the insured has

been completely compensated for her loss.” Thurman v. State Farm Mut. Auto.

Ins. Co., 598 S.E. 2d 448, 450 (Ga. 2004) (citing O.C.G.A. § 33-24-56.1(b)). In

contrast, FEHBA contract terms provide that, absent express agreement in writing

       1
         The Court held that since the FEHBA does not provide a federal statutory cause of action
for insurance carriers to vindicate their rights under FEHBA-authorized contracts, and federal
common law may only govern where the operation of state law would significantly conflict with
uniquely federal interests, the absence of any such a conflict between New York law and the
federal interests at stake in that case required its dismissal.
       2
         Gunter argues that, after McVeigh, there is no instance in which federal jurisdiction over
a reimbursement claim under the FEHBA is appropriate. We do not decide this issue, inasmuch
as we hold that, even if McVeigh recognizes exceptions to the general rule of no federal
jurisdiction, such exceptions are not applicable here.

                                                 4
to a reduction, the plan’s “share of the recovery will not be reduced because [the

insured] do[es] not receive the full amount of damages claimed.” Therefore, Blue

Cross concludes that the application of Georgia’s complete compensation rule in a

Georgia court would conflict with the federal policy of full reimbursement.

      This is not so, however, for in Thurman, the Georgia Supreme Court

expressly held that the complete compensation rule is not applied when FEHBA is

applicable. 598 S.E. 2d at 451. Thus, there is no conflict between Georgia state

law and FEHBA because the law of Georgia is that, where the FEHBA is

applicable, the Georgia statute is displaced. Id.

      Second, Blue Cross argues that Georgia’s common fund doctrine conflicts

with federal policies underlying the FEHBA. This doctrine provides that “a

person who at his own expense and for the benefit of persons in addition to

himself, maintains a successful action for the preservation, protection or creation

of a common fund in which others may share with him is entitled to reasonable

attorney fees from the fund as a whole.” Georgia v. Private Truck Council of Am.,

Inc., 371 S.E. 2d 378, 381 (Ga. 1988). FEHBA, on the other hand, provides that

“[a]ny reduction of [the insurer’s] claim for payment of attorney’s fees or costs

associated with the claim is subject to prior approval . . . .”

      We find this argument equally unavailing. The Supreme Court recognized

                                           5
in McVeigh that “a claim for reimbursement may also involve as an issue ‘[the]

extent, if any, to which the reimbursement should take account of attorney’s fees

expended . . . to obtain the tort recovery.’” 126 S. Ct. at 2137 (citation omitted).

The Court specifically rejected such a basis for federal jurisdiction, saying:

       [I]t is hardly apparent why a proper “federal-state balance” would
       place such a nonstatutory issue under the complete governance of
       federal law, to be declared in a federal forum. The state court in
       which their personal-injury suit was lodged is competent to apply
       federal law, to the extent it is relevant, and would seem best
       positioned to determine the lawyer’s part in obtaining, and his or her
       fair share in, the tort recovery.

Id. (internal citation omitted). The state courts are not only able to apply federal

law when that is required; they are constitutionally bound to do so. Accordingly,

we find that the existence of the Georgia common fund doctrine does not prevent

the Georgia courts from applying federal law where appropriate. Indeed, state

courts correctly apply federal law every day.3

                                              III.

       In conclusion, we agree with the district court that Blue Cross has failed to

establish that this case is not governed by the general rule of McVeigh.

Accordingly, we

       AFFIRM.

       3
        Nor do we find significant that the court in which Gunter obtained his damage settlement
was a federal court, rather than a state court. The underlying action between Blue Cross and
Gunter arises out of a state law contract dispute.

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