Supreme Court Rules Against Federal Worker In Health Benefits Case

In Coventry Health Care of Mo., Inc. v. Nevils, the Supreme Court in a unanimous decision found that an express preemption clause in the government’s contracts with private insurers under the Federal Employees Health Benefits Act (FEHBA) trumps state laws that prohibit insurers from demanding the beneficiaries reimburse them.

The SCOTUS reversed the Missouri Supreme Court decision, which had held Missouri law does not permit insurers to claim subrogation or reimbursement from third-party settlements or verdicts. But with the April 18 decision federal employees will be precluded from recovering twice for the same injury.

Notably, the court recognized several other federal laws, including the Employee Retirement Income Security Act, preempt state law in the same way, “leaving the context-specific scope of preemption to contractual terms.”

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