Every time a federal agency thinks the scope of a preemption clause in federal law is too narrow may it just write a regulation expanding it? That is the heart of the matter in Coventry Health Care of Missouri v. Nevils.
The question of most interest to state and local governments in this case, more technically, is whether Chevron deference applies to an agency’s regulation construing the scope of a statute’s express-preemption provision.
In Chevron v. NRDC (1984) the Supreme Court held that courts should defer to reasonable agency interpretations of ambiguous statutes. States and local governments generally prefer that courts not defer to federal agency regulations because this deference gives federal agencies a lot of power.
Jodie Nevils received a settlement for a personal injury claim which her health insurance company then tried to collect. Missouri has an anti-subrogation law which disallows insurance companies from taking recoveries from such settlements.
The Federal Employees Health Benefits Act (FEHBA) governs federal employee health insurance benefits and authorizes the Office of Personnel Management (OPM) to enter into contracts with private health insurance companies to administer benefit plans. FEHBA preempts state law relating to the “nature, provision, or extent of coverage or benefits.” Based on this language, Coventry Heath Care argues that FEHBA preempts Missouri’s anti-subrogation law.
The Missouri Supreme Court disagreed reasoning that Missouri’s anti-subrogation law does not clearly “relate to the nature, provision, or extent of coverage or benefits.” In 2015 the U.S. Supreme Court vacated and remanded the Missouri Supreme Court’s decision after OMP promulgated a rule saying that an insurance carrier’s rights and responsibilities pertaining to subrogation “relate to the nature, provision, or extent of coverage or benefits.”
The Missouri Supreme Court again ruled that FEBHA doesn’t preempt Missouri’s anti-subrogation law. Coventry argued OPM’s rule should receive Chevron deference. The Missouri Supreme Court refused to apply Chevron reasoning “no binding precedent requiring courts to afford dispositive deference to an agency rule defining the scope of an express preemption clause.”
The U.S. Supreme Court again agreed to decide whether FEBHA preempts Missouri’s anti-subrogation law. Implicit in that question is whether Chevron deference applies to an agency’s regulation construing the scope of a statute’s express-preemption provision.
In a one-paragraph concurring opinion a majority of the Missouri Supreme Court concluded the section of FEHBA in question is unconstitutional per the Supremacy Clause because it attempts “to give preemptive effect to the provisions of a contract between the federal government and a private party,” here a health insurance company. The Supreme Court will also review this question.