This article has been published in “The Advocate”, a monthly publication of the Arizona Association for Justice/Arizona Trial Lawyers Association, May – June 2014 issue, @2014 by Steven J. Bruzonsky, Esq.
May/June 2014 Lien Updates
FEHBA Liens – At This Time Cleary Invalid and Unenforceable in Arizona:
As discussed in my March-April 2014 article, on September 5, 2013, the Arizona Court of Appeals, Division One, held that the FEHBA and its Section 902’s preemption clause does not preempt Arizona anti-subrogation case law governing contract-based subrogation rights. Kobold v. Aetna Life Ins. Co., 309 P.3d 924, 233 Ariz. 190 (App. 2013). The Arizona Supreme Court has denied review of the Kobold case. Kobold v. Aetna Life Ins. Co., 309 P.3d 924, 233 Ariz. 100 (App. 2013), review denied (March 21, 2014).We assume that Aetna will file a petition for writ of certiorari with the United States Supreme Court. However, at this time Kobold’s holding that FEHBA liens are in violation of Arizona anti-subrogation case law is the law of the land here in Arizona, and FEHBA liens are invalid and unenforceable.
Recently, FEHBA subrogation collectors have been relying upon FEHB Program Carrier Letter No. 2012-18, dated June 18, 2012, which details the federal government’s position that the FEHBA preempts state laws prohibiting or limiting subrogation and reimbursement and that such funds received by the FEHBA carriers are required to be credited to the Employees Health Benefits Fund established by 5 U.S.C. §909. However, the Missouri Supreme Court recently held that FEHBA liens were invalid and unenforceable in violation of Missouri anti-subrogation law, relying on the Kobold decision, inNevils v. Group Health Plan, Inc., 418 S.W.3d 451 (Mo. 2014).[This decision overrides a contrary ruling in Nevils v. Group Health Plan, Inc. and ACS Recovery Services, Inc., No. SC93134 Missouri Supreme Court, 2-4-2014.)] In Footnote 2 of the Nevils opinion, the Missouri Supreme court rejects application of the FEHB Program Carrier Letter, stating: “The OPM carrier letter is recent, informal and was drafted in response to litigation challenging the subrogation provision in its contract. While informal agency interpretations of statutes are relevant, there is no indication that Congress delegated to the OPM the authority to make binding interpretations of the scope of the FEHBA preemption clause. The OPM letter is not entitled to the deference described in Chevron and does not establish that FEHBA preempts state anti-subrogation law. See Kobold, 309 P.3d at 929.”