Opinion analysis: Justices reject Missouris push to expand insurance benefits for federal employees

No surprises in this mornings opinion in Coventry Health Care v. Nevils. The argument suggested a bench of justices that took this case for the purpose of reversing the Missouri Supreme Court, and the opinion (handed down less than six weeks after the argument) of Justice Ruth Bader Ginsburg for a unanimous court suggests that nothing in the briefs or argument slowed that impulse.

The case involves a question of pre-emption, specifically whether federal law pre-empts the application of a Missouri consumer-protection statute that is inconsistent with the insurance policies that the federal Office of Personnel Management prescribes for federal employees. The specific question involves subrogation clauses, which authorize insurers to recover funds their insureds obtain from third parties with regard to covered claims: If I have an automobile accident and my insurer pays my medical bills, the subrogation clause obligates me to reimburse the insurer if I recover the cost of those bills from the other driver.

What makes the case so easy is the combination of a pretty clear statute and a topic on which Congresss top-level intent could hardly be plainer: Can anyone think that Congress wants federal employee benefits to differ from state to state based on the state law of the employees residence? So the brevity of Ginsburgs opinion is to be expected. The relevant statute pre-empts any state law that relates to health insurance or plans if it also relates to the nature, provision, or extent of coverage or benefits, including payments with respect to benefits. All agree that Missouris statute relates to health insurance, so the only textual dispute before the court is whether the statute also relates to payments with respect to benefits. On that point, it is enough for the opinion to state that the statute does relate to payments because subrogation and reimbursement rights yield just such payments. When a carrier exercises its right to either reimbursement or subrogation, it receives from either the beneficiary or a third party payment respecting the benefits the carrier had previously paid. It seems almost superfluous for the opinion to offer a few citations noting the courts traditionally broad understanding of pre-emption clauses (like the one in the Employee Retirement Income Security Act of 1974) that reach laws that relate to the specified subject, and to note that these provisions produce more than $100 million a year in recoveries related to federal employee policies.

Notably, the courts conclusion that the statutes text necessarily extends to the Missouri statute allows the court to skip over several of the interesting topics that appeared in the briefing the extent of any presumption against pre-emption or the propriety of deference to the OPM regulation construing the statute to pre-empt state law. Rather, the only point left for the court to address is the odd idea that the supremacy clause itself invalidates the statute. Here, judges on the Missouri court pointed to the particular language of the federal statute, which states that the terms of any contract supersede and preempt state laws; the state judges argued that under the supremacy clause pre-emption must come from Laws of the United States, not a mere contract of the Office of Personal Management. The court swept that argument aside in a brief paragraph characterizing it as elevat[ing] semantics over substance and pointing out that the statute itself manifests the intent to preempt state law. Because we do not require Congress to employ a particular linguistic formulation when preempting state law, Nevils Supremacy Clause challenge fails.

As I suggested above, the courts unanimous decision for the insurer cannot really come as a surprise to any informed observer. There was some possibility, though, that the opinion might say something derogatory about a supposed presumption against pre-emption or comment on the ability of a federal agency to alter the pre-emption analysis by issuing a regulation in the face of litigation. By resting the opinion on the text alone admittedly not all that tendentious a reading the court more or less ensured that this opinion will sink without a trace into the relevant volume of the United States Reports.