The Federal Employees Health Benefit Act (FEHBA) governs federal employee health plans and contains a broad preemption clause comparable to the one found in ERISA.1 Despite the similarity, state and federal courts are split on whether FEHBA preempts state anti-subrogation laws, causing uncertainty for federal health plans attempting to enforce their contractual subrogation and reimbursement rights. After receiving adverse decisions in state courts, two health plans recently petitioned the U.S. Supreme Court to determine whether FEHBA preempts state laws precluding carriers from seeking reimbursement or subrogation pursuant to the terms of a FEHBA contract. Unless and until this issue is resolved by the Supreme Court, administrators of federal health plans should carefully evaluate the law in their jurisdiction when pursuing subrogation or reimbursement.

For preemption to apply under FEHBA, the contract term must relate to coverage, benefits, or to payments with respect to benefits. 5 U.S.C. § 8902(m)(1). While the U.S. Supreme Court briefly addressed the preemption of anti-subrogation laws in Empire Healthchoice Assurance v. McVeigh, 547 US 677 (2006), its discussion was entirely in dicta. As a result, courts are divided on whether state statutes prohibiting subrogation sufficiently relate to benefits so as to fall under the purview of FEHBA’s preemption clause.