Arizona state law does not allow for health plan subrogation.
One inevitable question in every personal injury case where the plaintiff has health insurance is whether the health plan may subrogate and demand reimbursement from the settlement for paid medical expenses. Arizona Revised Statute 33-931 provides that health insurance is not entitled to a lien on the settlement. This means Arizona is an anti-subrogation state. For health plans, this law cuts short Arizona state court remedies.
Federal law allows certain private employer plans to subrogate.
Since state court in Arizona will not allow subrogation, the health plan's next option is federal court. Some plans provided by private employers fall under the ERISA (Employee Retirement Income Security Act) statute allowing for subrogation in certain instances. Federal employees however, are guided by FEHBA (Federal Employees Health Benefits Act). Thus, if the plaintiff in Arizona is a federal employee, the analysis is different than if s/he were insured through a private employer.
FEHBA does not preempt state law on subrogation.
The question here is whether under FEHBA, may a health plan sue for reimbursement in federal court when the host state is anti-subrogation. The United States Supreme Court has definitely held no, a health plan administered under FEHBA may not preempt state law on subrogation. Empire Healthchoice Assurance Inc., DBA Empire Blue Cross Blue Shield v. McVeigh, As Administratrix Of The Estate Of McVeigh, 547 U.S. 677 (2006). Justice Ginsburg, writing for the majority, found FEHBA contained a preemption clause on a separate topic, but "no provision addressing the subrogation..." Id. at 683. Thus, the Court held if Congress had intended for subrogation preemption, it would have clearly expressed such a clause. Here, Congress has neither expressly preempted nor shown the necessary intent to preempt. Consequently, federal courts will not find federal question subject matter jurisdiction for FEHBA based subrogation claims. Thus, federal courts in anti-subrogation states should also refuse to hear a FEHBA subrogation claim.
A federal employee with FEHBA based health insurance who incurs an injury in Arizona and obtains a settlement from the third party tortfeasor can reasonably expect not to reimburse the health plan for medical expenses. Of course the goals and strategies of all cases are unique and a plaintiff may also settle a health plan's claim for reimbursement so as to access the monetary award quicker, without going through the court system.
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