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Apr 19, 2017

Baker Sterchi scores U.S. Supreme Court win in preemption case

Baker Sterchi’s health insurer client was sued in Missouri state court in 2011, by a plaintiff who suffered injuries in a car accident. Plaintiff was a federal government employee, whose insurance program fell under the Federal Employees Health Benefits Act (FEHBA), a statute with a seemingly clear provision preempting state laws that prohibited subrogation or reimbursement of claims, for insurers of covered employees who had recovered money for medical expenses from the tortfeasor who caused the injury.  Our client paid Plaintiff’s medical expenses, and asserted a lien against the part of the settlement Plaintiff had recovered from the driver who caused his injuries.  Plaintiff, citing the Missouri anti-subrogation statute, nonetheless filed a class action claiming that FEHBA did not preempt Missouri law, and that our client was barred from seeking such recovery.

After victories for our client in the lower courts, the Missouri Supreme Court reversed, and held our client could not seek subrogation from Plaintiff.  The U.S. Supreme Court granted certiorari, reversed, and remanded to the Missouri Supreme Court, directing the Missouri Supreme Court to consider, among other things, the impact of recent federal agency regulations that concurred with our position that FEHBA preempted Missouri’s anti-subrogation law. On remand, the Missouri Supreme Court did not take the hint, and adhered to its earlier ruling in Plaintiff’s favor.

The U.S. Supreme Court again granted certiorari, and in an 8-0 decision authored by Justice Ginsburg (with Justice Thomas concurring), held that it was clear both from the statute’s express language and from its purpose, that FEHBA preempted Missouri state law, and that our client could seek reimbursement from Plaintiff.

Baker Sterchi worked with the client’s national counsel, Gibson Dunn & Crutcher, on this case.