The U.S. Supreme Court ruled Tuesday that Coventry Health Care can recover costs for federal employee health plans by placing liens on planholder settlements.
In a unanimous decision, the eight justices who considered the case reversed a Missouri Supreme Court decision that said state law prevents Coventry Health Care of Missouri from clawing back the cost of covering healthcare employees. Coventry insures some federal employees on a Federal Employees Health Benefits Act plan.
Coventry had placed an approximately $6,500 lien on a settlement between planholder Jodie Nevils and another driver who caused a car accident that injured him. Nevils, a federal employee on a FEHBA plan, filed a class action lawsuit against Coventry, alleging the lien violated Missouri law.
But the U.S. Supreme Court said FEHBA allows insurers to place reimbursement and subrogation clauses in their insurance plan contracts with the federal government. State law cannot preempt that arrangement, the justices ruled.
Aetna, the parent company of Coventry, said it was pleased with the decision.
Justice Ruth Bader Ginsburg, who wrote the court's opinion, noted that the federal government has "a significant financial stake" in giving insurers this subrogation right. According to the U.S. Office of Personnel Management, insurers providing FEHBA plans recouped $126 million in subrogation recoveries in 2014. Those payments allow the federal government and FEHBA beneficiaries to pay lower premiums, Ginsburg wrote.
Approximately 8 million federal workers receive healthcare insurance through FEHBA plans, according to Coventry's court filings.
Newly confirmed Justice Neil Gorsuch did not participate in the decision, as he was not on the high court bench at the time of oral arguments.