Employee Benefits

Thomas R. Brous, Esquire

Eastern District Courts of Appeals refuses to overturn prior decision holding that a health plan for federal employees may enforce a subrogation clause against a plan participant who recovers from a third party tortfeasor because Missouri’s anti-subrogation law is preempted by The Federal Employee Health Benefits Act (“FEHBA”). Nevils v. Group Health Plan, Inc., No. 98538 (Mo. App. E.D., December 26, 2012), Sullivan, J.

Nevils, a federal employee, was injured in an automobile accident. He had medical coverage through Group Health Plan, Inc. (“GHP”). GHP paid for Nevils’ medical bills resulting from treatment of his injuries. Nevils sued the third party tortfeasor responsible for the accident and recovered a settlement. GHP asserted a lien against Nevils’ settlement in the amount of $6,592.24 seeking reimbursement or subrogation for its payment of Nevils’ medical bills. Nevils paid the $6,592.24 to GHP, and then filed suit against GHP alleging that Missouri law does not permit the subrogation of tort claims.

GHP filed a motion for summary judgment based on the court’s prior decision in Buatte v. Gencare Health Systems, Inc., 939 S.W. 2d 440 (Mo. App. E.D. 1996), which held that Missouri’s anti-subrogation rule was preempted by the FEHBA. The trial court granted GHP’s motion based on preemption of the Missouri anti-subrogation rule, and Nevils appealed.

Although a subrogation provision would normally be deemed to be invalid by Missouri courts, the FEHBA preempts any state law prohibiting subrogation in the manner affected by GHP against Nevils’ settlement award. As noted above, the court had previously so held in the Buatte case. Nevertheless, Nevils argued that the preemption clause in the FEHBA should not be applied in this case because the right to subrogation of medical bill payments “do [es] not relate to the ‘nature, provision or extent of coverage or benefits’.” [Quoted language is from the FEHBA preemption clause]. The court held that the doctrine of the stare decisis requires that Nevils’ argument be rejected; the court had already decide the principle in Buatte contrary to Nevils’ assertion. Moreover, the court found “no compelling reason to change course from the general dictates of the doctrine of stare decisis and … [the] holding in Buatte.” Furthermore, the court found that GHP’s right to subrogation of medical bill payments does indeed relate “to the nature, provision or extent of benefits provided by the insurer to its federal employee insureds …” (emphasis added).

The judgment of the trial court was affirmed.