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NEGRON v. PATEL

May 7, 1998

PETER NEGRON, et al., Plaintiffs,
v.
NILESH PATEL, M.D., et al., Defendants.



The opinion of the court was delivered by: POLLAK

OPINION

 May 7, 1998

 In this diversity case, plaintiffs *fn1" have filed a complaint against a number of doctors, a professional association, a hospital, and a health maintenance organization group, Aetna U.S. Healthcare ("the HMO"). Plaintiffs allege that the defendants provided Peter Negron--who was covered at all relevant times by a health plan that is within the ambit of the Federal Employees Health Benefits Act ("FEHBA")--with inadequate care when he was taken to Montgomery Hospital on several occasions complaining of serious gastrointestinal problems. According to the complaint, these problems were ultimately determined to have been caused by salmonella poisoning. Plaintiffs allege that the defendants' inadequate medical care resulted in Negron's condition worsening severely, resulting in, inter alia, brain damage, the partial amputation of one foot, and paralysis. The complaint raises numerous tort, contract, and statutory theories for relief. The HMO moved to dismiss all counts against it. On April 21, 1998, I heard oral argument on this motion. Upon consideration of counsels' briefs and arguments, and for the reasons set forth below, the HMO's motion will be granted in part and denied in part.

 Discussion

 The HMO argues that all of the state-law claims plaintiffs have raised against the HMO, which make up Counts XIX-XXVIII of the complaint, are preempted under the Federal Employees Health Benefits Act (FEHBA), 5 U.S.C. § 8902(m)(1). FEHBA was enacted in 1959 to provide health insurance coverage for federal employees and their dependents. The statute sets forth basic requirements for health benefit plans and authorizes the Office of Personnel Management (OPM) to contract with carriers to provide health insurance to federal employees, with the requirement that the carriers provide to FEHBA plan participants the same benefits for the same premium with respect to a given plan. 5 U.S.C. § 8902(a)-(l).

 Congress enacted FEHBA's preemption provision (now codified at 5 U.S.C. § 8902(m)(1)) in 1978, out of concern that the application of state insurance regulations would result in a FEHB carrier providing disuniform benefits under a single plan, as between states with differing insurance schemes. See S. Rep. No. 903, 95th Cong., 2d Sess. 1978, reprinted in 1978 U.S.C.C.A.N. 1413; H.R. Rep. No. 282, 95th Cong. 1st Sess. (1977). FEHBA's preemption provision reads:

 
The provisions of any contract under this chapter which relate to the nature 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 to the extent that such law or regulation is inconsistent with such contractual provisions.

 5 U.S.C. § 8902(m)(1). Accordingly, the statute contemplates a two-step inquiry: (1) whether the state law at issue "relates to health insurance or plans," and, if so, (2) whether the state law is inconsistent with the provisions of the FEHBA contract at issue. The HMO argues that all of plaintiffs' claims against it "relate[] to health insurance or plans" and are "inconsistent with" the contract. Specifically, the HMO points to the following contractual provision:

 
Federal law exclusively governs all claims for relief in a lawsuit related to this plan's benefits or coverage or payment with respect to those benefits. As provided under the agreement between this plan and the Office of Personnel Management, judicial action on such claims for relief is limited to a review of OPM's final decision to determine if it is arbitrary and capricious under the terms of this statement of benefits. Damages recoverable in such lawsuits are limited to the amount of this Plan's contract benefits in dispute, plus simple prejudgmnet interest . . . and court costs.

 According to the HMO, all of the claims relate to "health insurance or plans" because they implicate the plan and because the HMO would not be involved in this lawsuit but for the insurance plan that covered Peter Negron. The HMO further argues that all of plaintiffs' claims against it are inconsistent with the contract--in particular with the provision quoted above--because plaintiffs are seeking damages other than the simple contract damages provided for in the contract.

 The extent of FEHBA's preemptive reach is an unsettled question within this circuit. See Goepel v. National Postal Mail Handlers Union, 36 F.3d 306 (3d Cir. 1994) (holding that the FEHBA does not confer removal jurisdiction under the "complete preemption" doctrine but leaving open the question of FEHBA's "conflicts preemption"). Case law on conflicts preemption under § 8902(m)(1) within this circuit is sparse; my researches have yielded only one case: Furey v. U.S. Healthcare, 1991 U.S. Dist. LEXIS 14273, No. 91-1072 (E.D. Pa. 1991)(holding state-law tort and contract claims not preempted on the ground that "defendant has not shown how they are inconsistent with the contract").

 Some courts outside this circuit have announced FEHBA preemption principles that sweep very broadly. See, e.g., Burkey v. Government Employees Hospital Ass'n, 983 F.2d 656, 660 (5th Cir. 1993)("claims 'relate to' the plan under § 8902(m)(1) as long as they have a connection with or refer to the plan. All appellants' state law claims refer to the plan, and therefore fall under the preemption clause."); Hayes v. Prudential Ins. of America, 819 F.2d 921, 926 (9th Cir. 1987)(same); Fink v. Delaware Valley HMO, 417 Pa. Super. 287, 612 A.2d 485 (Pa. Super. Ct. 1992)(plaintiff's tort claims preempted under FEHBA). However, the authorities do not speak with one voice. See, e.g., Eidler v. Blue Cross and Blue Shield, 671 F. Supp. 1213 (E.D. Wis. 1987) (bad faith tort claim not preempted by FEHBA); Kincade v. Group Health Servs. of Oklahoma, 1997 OK 88, 945 P.2d 485 (Ok. 1997) (FEHBA does not preempt state-law tort action for bad faith refusal to pay valid claim).

 Certain state laws are more clearly preempted than others. State laws regulating insurance, which can reasonably be expected to provide coverage or benefits different from those provided for in a FEHBA contract, are apt cases for FEHBA preemption, falling as they do within the core of the concerns animating Congress when it enacted the preemption provision. Thus, claims under state subrogation statutes, NALC v. Lunsford, 879 F. Supp. 760 (E.D. Mich. 1995), or state laws concerning how unclaimed benefits would be distributed, Blue Cross and Blue Shield v. Department of Banking and Finance, 791 F.2d 1501 (11th Cir. 1986), present relatively easy cases for preemption.

 However, because not all state claims that implicate a FEHBA contract necessarily "relate[] to health insurance or plans" and impose inconsistent benefit obligations on a given plan, it is necessary to inquire into the legal bases for each of plaintiffs' claims against the HMO in deciding whether they fall within the preemptive reach of the statute. Because preemption is fundamentally a question of congressional intent, Cipollone v. Liggett Group, Inc., 505 U.S. 504, 516, 120 L. Ed. 2d 407, 112 S. Ct. 2608 (1992), it is appropriate to consider the purposes of the statute's preemption provision, viz., to ensure uniform benefits under FEHBA plans from state to state. See S. Rep. No. 903, 95th Cong., 2d Sess. 1978, reprinted in 1978 U.S.C.C.A.N. 1413; H.R. Rep. No. 282, 95th Cong. 1st Sess. (1977). Thus, although the HMO argues for an undifferentiated approach to plaintiffs' claims, broadly holding all of them preempted, a more discriminating approach is in order. To read the preemption provision in the statute so expansively would run contrary to the principle that preemption of claims is not lightly to be presumed, and that doubts be resolved against preemption. See New York State Conf. of Blue Cross and Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 655, 131 L. Ed. 2d 695, 115 S. Ct. 1671 (1995). Plaintiffs raise ten causes of action against the HMO, arising under ...


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