Justia Insurance Law Opinion SummariesArticles Posted in U.S. Supreme Court
Coventry Health Care of Missouri, Inc. v. Nevils
The Federal Employees Health Benefits Act (FEHBA) authorizes the Office of Personnel Management to contract with private carriers for federal employees’ health insurance; 5 U.S.C. 8902(m)(1) states that 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 . . . which relates to health insurance.” OPM’s regulations make a carrier’s “right to pursue and receive subrogation and reimbursement recoveries" a condition of the provision of benefits under the plan’s coverage. In 2015, OPM confirmed that subrogation and reimbursement rights and responsibilities “relate to the nature, provision, and extent of coverage or benefits” under section 8902(m)(1). Nevils, insured under a FEHBA plan offered by Coventry, was injured in an automobile accident. Coventry paid his medical expenses and asserted a lien against the settlement Nevils recovered from the driver who caused his injuries. Nevils satisfied the lien, then filed a state court class action, citing Missouri law, which does not permit subrogation or reimbursement in this context. The Missouri Supreme Court ruled in favor of Nevils. The Supreme Court reversed. Because contractual subrogation and reimbursement prescriptions plainly “relate to . . . payments with respect to benefits,” they override state laws barring subrogation and reimbursement. When a carrier exercises its right to reimbursement or subrogation, it receives from either the beneficiary or a third party “payment” respecting the benefits it previously paid. The carrier’s very provision of benefits triggers that right to payment. Strong and “distinctly federal interests are involved,” in uniform administration of the FEHBA program, free from state interference, particularly concerning coverage, benefits, and payments. The regime is compatible with the Supremacy Clause. The statute, not a contract, strips overrides state law View "Coventry Health Care of Missouri, Inc. v. Nevils" on Justia Law
Zubik v. Burwell
Employers must cover certain contraceptives as part of their health plans unless the employer submits a form to their insurer or to the federal government, stating that they object on religious grounds to providing contraceptive coverage. The plaintiff-employers alleged that submitting this notice substantially burdened the exercise of their religion, in violation of the Religious Freedom Restoration Act of 1993,, 42 U.S.C. 2000bb. In supplemental briefing, the parties acknowledged that contraceptive coverage could be provided to employees, through insurance companies, without such notice. Plaintiffs “need to do nothing more than contract for a plan that does not include coverage for some or all forms of contraception,” and employees could receive cost-free contraceptive coverage from the same insurance company, seamlessly, with the rest of their coverage. Based on these stipulations, the Supreme Court vacated the judgments below and remanded to determine an approach that will accommodate the employers’ religious exercise while ensuring that women covered by their health plans “receive full and equal health coverage, including contraceptive coverage.” The Court did not decide whether the employers’ religious exercise has been substantially burdened, whether the government has a compelling interest, or whether the current regulations are the least restrictive means of serving that interest. View "Zubik v. Burwell" on Justia Law
Gobeille v. Liberty Mut. Ins. Co.
Vermont law requires certain entities, including health insurers, to report payments and other information relating to health care claims and services for compilation in a state health care database. Liberty Mutual’s health plan, which provides benefits in all 50 states, is an “employee welfare benefit plan” under the Employee Retirement Income Security Act (ERISA); its third-party administrator, Blue Cross, is subject to the statute. Concerned that the disclosure of confidential information might violate its fiduciary duties, the Plan instructed Blue Cross not to comply and sought a declaration that ERISA preempts application of Vermont’s statute. The Second Circuit reversed summary judgment in favor of the state. The Supreme Court affirmed. ERISA expressly preempts “any and all State laws insofar as they may now or hereafter relate to any employee benefit plan,” 29 U.S.C. 1144(a) and, therefore, preempts a state law that has an impermissible “connection with” ERISA plans. ERISA mandates certain oversight systems and other standard procedures; Vermont’s law also governs plan reporting, disclosure, and recordkeeping. Preemption is necessary to prevent multiple jurisdictions from imposing differing, or even parallel, regulations, creating wasteful administrative costs and threatening to subject plans to wide-ranging liability. ERISA’s uniform rule design makes clear that the Secretary of Labor, not the states, decides whether to exempt plans from ERISA reporting requirements or to require ERISA plans to report data such as sought by Vermont. View "Gobeille v. Liberty Mut. Ins. Co." on Justia Law
Montanile v. Bd. of Trs. of Nat’l Elevator Indus. Health Benefit Plan
Employee benefits plans regulated by the Employee Retirement Income Security Act (ERISA) often contain subrogation clauses requiring participants to reimburse the plan for medical expenses if they later recover money from a third party. Montanile was seriously injured by a drunk driver. His ERISA plan paid more than $120,000 for his medical expenses. Montanile sued the drunk driver, obtaining a $500,000 settlement. The plan administrator sought reimbursement from the settlement. Montanile’s attorney refused and indicated that the funds would be transferred from a trust account to Montanile unless the administrator objected. The administrator did not respond. Montanile received the settlement. Six months later, the administrator sued under ERISA 502(a)(3), which authorizes plan fiduciaries to file suit “to obtain . . . appropriate equitable relief . . . to enforce . . . the plan.” 29 U.S.C. 1132(a)(3). The district court rejected Montanile’s arguments, The Eleventh Circuit affirmed, holding that even if Montanile had completely dissipated the fund, the plan was entitled to reimbursement from Montanile’s general assets. The Supreme Court reversed and remanded for determination of whether Montanile had dissipated the settlement. When an ERISA-plan participant wholly dissipates a third-party settlement on nontraceable items, the plan fiduciary may not bring suit under section 502(a)(3) to attach the participant’s separate assets. Historical equity practice does not support enforcement of an equitable lien against general assets. View "Montanile v. Bd. of Trs. of Nat'l Elevator Indus. Health Benefit Plan" on Justia Law
Burwell v. Hobby Lobby Stores, Inc.
Department of Health and Human Services (HHS) regulations implementing the 2010 Patient Protection and Affordable Care Act (ACA) require that employers’ group health plans furnish preventive care and screenings for women without cost sharing requirements, 42 U.S.C. 300gg–13(a)(4). Nonexempt employers must provide coverage for 20 FDA-approved contraceptive methods, including four that may have the effect of preventing a fertilized egg from developing. Religious employers, such as churches, are exempt from the contraceptive mandate. HHS has effectively exempted religious nonprofit organizations; an insurer must exclude contraceptive coverage from such an employer’s plan and provide participants with separate payments for contraceptive services. Closely held for-profit corporations sought an injunction under the 1993 Religious Freedom Restoration Act (RFRA), which prohibits the government from substantially burdening a person’s exercise of religion even by a rule of general applicability unless it demonstrates that imposing the burden is the least restrictive means of furthering a compelling governmental interest, 42 U.S.C. 2000bb–1(a), (b). As amended by the Religious Land Use and Institutionalized Persons Act of 2000 (RLUIPA), RFRA covers “any exercise of religion, whether or not compelled by, or central to, a system of religious belief.” The Third Circuit held that a for-profit corporation could not “engage in religious exercise” under RFRA and that the mandate imposed no requirements on corporate owners in their personal capacity. The Tenth Circuit held that the businesses are “persons” under RFRA; that the contraceptive mandate substantially burdened their religious exercise; and that HHS had not demonstrated that the mandate was the “least restrictive means” of furthering a compelling governmental interest.The Supreme Court ruled in favor of the businesses, holding that RFRA applies to regulations that govern the activities of closely held for-profit corporations. The Court declined to “leave merchants with a difficult choice” of giving up the right to seek judicial protection of their religious liberty or forgoing the benefits of operating as corporations. Nothing in RFRA suggests intent to depart from the Dictionary Act definition of “person,” which includes corporations, 1 U.S.C.1; no definition of “person” includes natural persons and nonprofit corporations, but excludes for-profit corporations. “Any suggestion that for-profit corporations are incapable of exercising religion because their purpose is simply to make money flies in the face of modern corporate law.” The Court rejected arguments based on the difficulty of ascertaining the “beliefs” of large, publicly traded corporations and that the mandate itself requires only insurance coverage. If the plaintiff companies refuse to provide contraceptive coverage, they face severe economic consequences; the government failed to show that the contraceptive mandate is the least restrictive means of furthering a compelling interest in guaranteeing cost-free access to the four challenged contraceptive methods. The government could assume the cost of providing the four contraceptives or could extend the accommodation already established for religious nonprofit organizations. The Court noted that its decision concerns only the contraceptive mandate, not all insurance-coverage mandates, e.g., for vaccinations or blood transfusions. View "Burwell v. Hobby Lobby Stores, Inc." on Justia Law
Heimeshoff v. Hartford Life & Accident Ins. Co.
Hartford is the administrator of Wal-Mart’s Group Disability Plan, which is covered by the Employee Retirement Income Security Act. The policy requires any suit to recover benefits pursuant to ERISA, 29 U. S. C. 1132(a)(1)(B), to be filed within three years after “proof of loss” is due. Heimeshoff filed a claim for long-term disability benefits. Following mandatory administrative review process, Hartford issued a final denial. Almost three years after the final denial but more than three years after proof of loss was due, Heimeshoff sought judicial review under ERISA. The district court dismissed, reasoning that while ERISA does not provide a statute of limitations, the contractual limitations period was enforceable under state law and Circuit precedent. The Second Circuit affirmed. The Supreme Court affirmed, finding the limitations provision enforceable. A participant’s ERISA cause of action does not accrue until the plan issues a final denial, but it does not follow that a plan and its participants cannot agree to commence the limitations period before that time. The Court noted that contractual limitations provisions should ordinarily be enforced as written. The period at issue is not unreasonably short and does not undermine ERISA’s two-tiered remedial scheme by causing participants to shortchange the internal review process. If administrators attempt to prevent judicial review by delaying the resolution of claims in bad faith, the penalty for failure to meet regulatory deadlines is immediate access to judicial review for the participant and courts can apply waiver or estoppel. Plans offering appeals beyond what is contemplated in the internal review regulations must agree to toll the limitations provision during that time, 29 CFR 2560.503–1(c)(3)(ii). View "Heimeshoff v. Hartford Life & Accident Ins. Co." on Justia Law
Hillman v. Maretta
The Federal Employees’ Group Life Insurance Act (FEGLIA) permits an employee to name a beneficiary of life insurance proceeds, and specifies an “order of precedence” providing that an employee’s death benefits accrue first to that beneficiary ahead of other potential recipients, 5 U.S.C. 8705(a). A Virginia statute revokes a beneficiary designation in any contract that provides a death benefit to a former spouse where there has been a change in the decedent’s marital status, Va. Code 20–111.1(A). When the provision is preempted by federal law, Section D of that law provides a cause of action rendering the former spouse liable for the proceeds to the party who would have received them were Section A not preempted. Hillman named then-spouse, Maretta, as beneficiary of his FEGLI policy. After their divorce, he married Jacqueline but never changed his named FEGLI beneficiary. After Hillman’s death, Maretta, still the named beneficiary,collected the FEGLI proceeds. A Virginia Circuit Court found Maretta liable to Jacqueline under Section D for the FEGLI policy proceeds. The Virginia Supreme Court reversed, concluding that Section D is preempted by FEGLIA because it conflicts with the purposes and objectives of Congress. The Supreme Court affirmed. FEGLIA creates a scheme that gives highest priority to an insured’s designated beneficiary and underscores that the employee’s “right” of designation “cannot be waived or restricted.” Section D interferes with this scheme, because it directs that the proceeds actually belong to someone other than the named beneficiary by creating a cause of action for their recovery by a third party. FEGLIA establishes a clear and predictable procedure for an employee to indicate who the intended beneficiary shall be and evinces Congress’ decision to accord federal employees an unfettered freedom of choice in selecting a beneficiary and to ensure the proceeds actually belong to that beneficiary. View "Hillman v. Maretta" on Justia Law
US Airways, Inc. v. McCutchen
The US Airways health benefits plan paid $66,866 in medical expenses for injuries suffered by McCutchen, its employee, in a car accident caused by a third party. The plan entitled US Airways to reimbursement if McCutchen recovered money from the third party. McCutchen’s attorneys secured $110,000 in payments, and McCutchen received $66,000 after deducting the contingency fee. US Air¬ways demanded reimbursement of the full $66,866 and filed suit under section 502(a)(3) of the Employee Retirement Income Security Act, which authorizes health-plan administrators to bring a civil action “to obtain ... appropriate equitable relief ... to enforce .. the plan.” The district court granted US Airways summary judgment. The Third Circuit vacated, reasoning that equitable doctrines and defenses overrode the reimbursement clause, which would leave McCutchen with less than full payment for his medical bills and give US Airways a windfall. The Supreme Court vacated and remanded, holding that the plan’s terms govern. An administrator can use section 502(a)(3) to obtain funds that its beneficiaries promised to turn over. ERISA focuses on what a plan provides; section 502(a)(3) does not authorize “appropriate equitable relief” at large,” but only relief necessary to enforce “the terms of the plan” or the statute. While equitable rules cannot trump a reimbursement provision, they may aid in construing it. The plan is silent on allocation of attorney’s fees, and the common¬fund doctrine provides the appropriate default rule. View "US Airways, Inc. v. McCutchen" on Justia Law
Nat’l Fed’n of Indep. Bus. v. Sebelius
In a 5-4 ruling, the Supreme Court has upheld the 2010 Patient Protection and Affordable Care Act. While only four Justices found its requirement that certain individuals pay a financial penalty for not obtaining health insurance (26 U.S.C. 5000A) constitutional under the Commerce Clause, Chief Justice Roberts found it constitutional by reasonably characterizing it as a tax. Chief Justice Roberts wrote: “it is not our role to forbid it, or to pass upon its wisdom or fairness." The penalty is to be paid to the IRS, along with the individual’s income taxes. In a limited ruling, the Court held that the Act’s “Medicaid expansion” is unconstitutional in threatening states with loss of existing Medicaid funding if they decline to comply, but that the penalty provision is severable (which means that failure of that provision does not cause the entire Act to fail). The Act requires that state programs provide Medicaid coverage by 2014 to adults with incomes up to 133 percent of the federal poverty level, (many states now cover adults with children only if their income is considerably lower, and do not cover childless adults at all) and increases federal funding to cover states’ costs, 42 U.S.C. 1396d(y)(1). The decision leaves intact less controversial provisions, protecting individuals with preexisting conditions, allowing children to be covered by parents’ insurance until age 26, and prohibiting higher costs for insuring women. View "Nat'l Fed'n of Indep. Bus. v. Sebelius" on Justia Law
CIGNA Corp. v. Amara et al.
Respondents, on behalf of beneficiaries of the CIGNA Corporation's ("CIGNA") Pension Plan, challenged the new plan's adoption, claiming that CIGNA's notice of the changes was improper, particularly because the new plan in certain respects provided them with less generous benefits. At issue was whether the district court applied the correct legal standard, namely, a "likely harm" standard, in determining that CIGNA's notice violations caused its employees sufficient injury to warrant legal relief. The Court held that although section 502(a)(1)(B) of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. 1022(a), 1024(b), 1054(h), did not give the district court authority to reform CIGNA's plan, relief was authorized by section 502(a)(3), which allowed a participant, beneficiary, or fiduciary "to obtain other appropriate relief" to redress violations of ERISA "or the [plan's] terms." The Court also held that, because section 502(a)(3) authorized "appropriate equitable relief" for violations of ERISA, the relevant standard of harm would depend on the equitable theory by which the district court provided relief. Therefore, the Court vacated and remanded for further proceedings.