Facts
- A federal employee enrolled in a health plan governed by the Federal Employees Health Benefits Act of 1959 (FEHBA) received medical benefits paid by a private carrier administering a nationwide plan.
- The plan contract required the carrier to make reasonable efforts to recover benefits paid when an enrollee obtained a third-party recovery, and it stated that such recoveries must reimburse the plan.
- After the enrollee was injured in an accident, the carrier paid approximately $157,309 in medical benefits.
- After the enrollee’s death, the estate pursued state-court tort claims against alleged tortfeasors and settled for about $3.175 million.
- The carrier asserted a lien and demanded reimbursement of the medical benefits from the settlement proceeds, without deducting attorneys’ fees or litigation costs.
- When the estate did not reimburse, the carrier sued in federal district court seeking reimbursement, asserting federal-question jurisdiction under 28 U.S.C. § 1331.
Issues
- Whether a FEHBA plan carrier’s suit against an enrollee’s estate to obtain reimbursement from state-court tort settlement proceeds “arises under” federal law for purposes of 28 U.S.C. § 1331.
- Whether FEHBA’s preemption clause or federal common law supplies a basis for federal jurisdiction over such reimbursement actions between private parties.
Decision
- The Supreme Court affirmed dismissal for lack of subject-matter jurisdiction in a 5–4 decision authored by Justice Ginsburg.
- The Court held that the reimbursement claim did not arise under federal law within the meaning of 28 U.S.C. § 1331.
- The Court concluded that FEHBA provides federal jurisdiction for suits “against the United States,” but not for suits by carriers seeking reimbursement from beneficiaries or their estates.
- The Court rejected reliance on federal common law to create § 1331 jurisdiction, finding no sufficiently strong federal interest requiring displacement of state law in this private reimbursement dispute.
- The Court held that FEHBA’s preemption clause did not create federal jurisdiction and did not operate as complete preemption of state-law causes of action in this setting.
- The proper forum for the carrier’s reimbursement action was state court.
Legal Principles
- A federal statutory program and federally regulated contract terms do not, without a congressional jurisdictional grant or federal cause of action, convert a private reimbursement claim into a federal-question case under 28 U.S.C. § 1331.
- FEHBA’s express jurisdictional provision grants federal jurisdiction over civil actions or claims against the United States; it does not extend federal jurisdiction to carrier-initiated reimbursement suits against beneficiaries.
- Ordinary preemption (even if broad) is distinct from federal-question jurisdiction; a preemption clause does not itself authorize removal or confer original federal jurisdiction over private disputes.
- Federal common law is exceptional and requires a significant conflict between identifiable federal interests and the use of state law; routine reimbursement disputes between private parties generally remain governed by state law absent contrary congressional direction.
- Complete preemption requires a federal statute to supply a comparable federal cause of action and jurisdictional scheme; FEHBA lacks such a mechanism for carrier reimbursement actions.
Conclusion
The Court held that a FEHBA carrier’s claim to recoup medical payments from an enrollee’s tort settlement is a private reimbursement dispute that does not arise under federal law, and federal courts therefore lack § 1331 jurisdiction absent a specific congressional authorization.