Monday, February 11, 2013

Empire HealthChoice Assurance Inc. v. McVeigh case brief

Empire HealthChoice Assurance Inc. v. McVeigh case brief summary
547 U.S. 677

SYNOPSIS: Petitioner, a health insurance carrier under a federal program, sued respondent administratrix of the estate of a former federal employee, seeking reimbursement of the employee's medical benefits from a settlement between the administratrix and tortfeasors. Upon the grant of a writ of certiorari, the carrier appealed the judgment of the U.S. Court of Appeals for the Second Circuit which held that there was no basis for federal jurisdiction.

-Under the Federal Employees Health Benefits Act of 1959 (FEHBA), 5 U.S.C.S. § 8901, the carrier contracted with the government to provide health insurance for federal employees, and the contract allowed the carrier to seek reimbursement of paid benefits from liable third parties.
-The carrier argued that its reimbursement claim was within federal jurisdiction since it sought to vindicate a contractual right contemplated by FEHBA and federal law was a necessary element of the claim.

The U.S. Supreme Court held, however, that the carrier's action failed to raise a federal question to support jurisdiction under 28 U.S.C.S. § 1331 and the claim raised only state law issues.

It was undisputed that FEHBA did not expressly create a federal right of action for reimbursement under contracts contemplated by FEHBA, and the carrier's right to reimbursement arose from its contract rather than from FEHBA.
-Further, the carrier's claim was triggered by the state-court settlement rather than any federal action, and FEHBA interests in the welfare of federal employees did not warrant federal jurisdiction over a state-law contract case which was fact-bound and situation-specific.

OUTCOME: The judgment finding a lack of federal jurisdiction was affirmed.

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