Updates to our Terms of Use

We are updating our Terms of Use. Please carefully review the updated Terms before proceeding to our website.

Wednesday, April 24, 2024 | Back issues
Courthouse News Service Courthouse News Service

High Court Takes Up Settlement-Liens Spat

WASHINGTON (CN) — The U.S. Supreme Court agreed Friday to decide whether federal employees should face liens on their personal-injury settlement proceeds.

Jodi Nevils brought the class action against Group Health Plan, now Coventry Health Care of Missouri, five years ago in St. Louis County. The complaint accused the insurer of asserting liens against personal-injury settlements and "routinely" asserting reimbursement rights that are paid through the Federal Employee Health Benefits Act.

The FEHBA provides federal employees and retirees and eligible family members with subsidized health care benefits.

"For instance, occasionally an individual is injured in an auto accident and that individual's health care benefits are covered through a FEHBA plan," the complaint states. "If that individual pursues legal action against the tortfeasor for his/her injuries, the defendant unlawfully assert a lien for repayment of the health care benefits paid for such treatment."

Nevils claims that Missouri law prohibits such reimbursement.

"Despite the fact that any reimbursement/subrogation rights are controlled by Missouri state law that prohibits such subrogation, defendant routinely asserts liens on personal injury recoveries of Missouri citizens and subrogate for repayment of health benefits paid out on personal injury claims on Missouri citizens," the complaint states.

"Defendant pursues such course of conduct despite being informed repeatedly that they are not entitled to reimbursement of such funds under Missouri law."

Though a finding of federal pre-emption soon doomed the challenge, the Missouri Supreme Court reversed.

The federal office of professional management subsequently put a formal rule into effect, providing that an insurer's rights and responsibilities pertaining to subrogation under any contract under the federal act are effective notwithstanding any state law relating to health insurance or plans.

In light of those regulations, the U.S. Supreme Court vacated the Missouri Supreme Court's decision in June 2015.

Considering the new rule on remand, the Missouri Supreme Court ruled this past May that it did not alter the fact that Congress gave clear and manifest intent to pre-empt Missouri's anti-subrogation law.

Coventry petitioned for a writ of certiorari, and the U.S. Supreme Court took up the case late Friday. The court will consider whether FEHBA pre-empts state laws that prevent carriers from seeking subrogation or reimbursement pursuant to their FEHBA contracts. It will also decide whether FEHBA's express-preemption provision violates the supremacy clause.

Follow @@joeharris_stl
Categories / Uncategorized

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.