WASHINGTON — The U.S. Supreme Court has overturned a decision of a Missouri court, ruling that a health insurance company has the right to use a lien on client’s funds.
The case in question involved respondent Jodie Nevils who was insured with Coventry Health Care of Missouri through the Federal Employees Health Benefits Act (FEHBA).
After Nevils was injured in a car crash, Coventry Health paid his medical bills. However, when Nevils received a settlement from the other driver in the collision and Coventry put a lien on some of the funds.
After he had satisfied the lien, Nevils filed a lawsuit in Missouri state court against Coventry, claiming the state did not permit “subrogation or reimbursement.”
“Coventry had unlawfully obtained reimbursement,” court documents said.
Coventry Health responded by claiming that §8902(m)(1) of the FEHBA overruled any other laws. The section itself states that it preempts any state or local law when it comes to health insurance plans.
“The terms of any contract under this chapter which relate to the nature, provision, or extent of coverage or benefits (including payments with respect to benefits) shall supersede and preempt any State or local law, or any regulation issued thereunder, which relates to health insurance or plans," court documents state.
Congress has given the right for the Office of Personnel Management to contract federal employees’ health insurance with private carriers. These contracts provide for subrogation and reimbursement, according to the court document.
A trial court granted a summary judgement that was in favor of Coventry Health. Upon appeal, a the Missouri Court of Appeals also ruled in favor of Coventry Health.
The Missouri Supreme Court reversed the decision and found the clause was “susceptible to diverse plausible readings, the court invoked a ‘presumption against preemption’ to conclude that the federal statute’s preemptive scope excluded subrogation and reimbursement,” court documents said.
However, the judgment of the Supreme Court of Missouri was reversed by the U.S. Supreme Court.
“Because we do not require Congress to employ a particular linguistic formulation when preempting state law, Nevils’ Supremacy Clause challenge fails," the court said.