Bell v. Blue Cross and Blue Shield of Oklahoma et al

Filing 25

OPINION AND ORDER denying 10 Motion to Remand and granting 14 Motion for Judgment on the Pleadings. Signed by Honorable Timothy L. Brooks on November 3, 2014. (tg) Modified on 11/4/2014 to correct document type (jn).

IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF ARKANSAS
FAYETTEVILLE DIVISION

TERESA BELL
V.

PLAINTIFF
CASE NO. 5:14-CV-05046

BLUE CROSS AND BLUE SHIELD
OF OKLAHOMA, a Division of HEALTH CARE
SERVICE CORPORATION, a Mutual Legal
Reserve Company; and BLUE CROSS AND
BLUE SHIELD OF TEXAS, a Division of HEALTH
CARE SERVICE CORPORATION, a Mutual
Legal Reserve Company

DEFENDANTS

OPINION AND ORDER

Now before the Court are Plaintiff Teresa Bell’s Motion to Remand (Doc. 10) and
Defendants Blue Cross and Blue Shield of Oklahoma (“BCBS-OK”) and Blue Cross and
Blue Shield of Texas’s (“BCBS-TX”) Motion for Judgment on the Pleadings (Doc. 14).
For the following reasons, Plaintiff’s Motion to Remand (Doc. 10) is DENIED, and
Defendants’ Motion for Judgment on the Pleadings (Doc. 14) is GRANTED.
I. BACKGROUND
Bell seeks to determine the rights of the parties with respect to Defendants’
subrogation claim against her. In October of 2010, Bell, who worked as a registered nurse
for the Veterans Affairs Hospital in Tulsa, Oklahoma, sustained personal injuries and
medical expenses as a result of a motor vehicle accident to which she was not at fault.
Bell was insured through a government-sponsored benefits plan (“Plan”) available only to
federal employees and administered by BCBS-OK and BCBS-TX.

The Plan paid

$33,014.01 in medical benefits on Bell’s behalf. Bell alleges this amount does not

adequately compensate her for all injuries, damages, and attorney fees, which according
to Bell total in excess of $100,000.00.
Bell negotiated a compromise settlement1 with Progressive Insurance Company
(“Progressive”), the third-party carrier that insured the tortfeasor responsible for her car
accident. Before Bell received her settlement check, BCBS-OK and BCBS-TX intervened
and made a claim for subrogation, maintaining that the terms and conditions of Bell’s
health benefits Plan stipulated that any money she received from a third party was required
to be reimbursed to the Plan, regardless of whether Bell had been “made whole,” for her
injuries.
The Plan’s Statement of Benefits states in relevant part:
If another person or entity, through an act or omission, causes you to suffer
an injury or illness, and if we paid benefits for that injury or illness, you must
agree to the provisions listed below. In addition, if you are injured and no
other person or entity is responsible but you receive (or are entitled to) a
recovery from another source, and if we paid benefits for that injury, you
must agree to the following provisions:
!

All recoveries you or your representatives obtain (whether by lawsuit,
settlement, insurance or benefit program claims, or otherwise), no
matter how described or designated, must be used to reimburse us
in full for benefits we paid . . .

!

We are entitled under our right of recovery to be reimbursed for our
benefit payments even if you are not “made whole” for all of your
damages in the recoveries that you receive. Our right of recovery is
not subject to reduction for attorneys’ fees and costs under the
“common fund” or any other doctrine.

(Doc. 16, p. 16; Doc. 5-10, p. 138).

1

The dollar amount of the settlement was not disclosed to the Court by either party.
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Despite this provision, Bell brought suit against BCBS-OK and BCBS-TX in state
court, contending that she should not be required to reimburse the Plan with her third-party
settlement monies. She points out that under Arkansas law, an insurer may only be
reimbursed after the insured has been “wholly compensated for his injuries.” Shelter Mut.
Ins. Co. v. Kennedy, 347 Ark. 184, 189 (2001). Bell claims she was not “made whole” and
that the subrogation lien is therefore invalid, void, and unenforceable as a matter of law.
The made-whole doctrine in Arkansas is one of equity. Bell argues that the
combined sum received from the tortfeasor and the benefits paid by the Plan is less than
the total amount of her injuries and damages. According to Bell, she should only be
required to reimburse an amount, if any, by which her combined benefits and settlement
proceeds exceed her actual loss. The Arkansas Supreme Court likens this concept to
unjust enrichment.

“An insured should not recover more than that which fully

compensates, and an insurer should not recover any payments that should rightfully go to
the insured so that . . . she is fully compensated. S. Farm Bureau Cas. Ins. Co. v. Tallant,
362 Ark. 17, 24 (2005); Shelter Mut. Ins. Co. v. Bough, 310 Ark. 21, 28 (1992) (“Thus,
while the general rule is that an insurer is not entitled to subrogation unless the insured has
been made whole for his loss, the insurer should not be precluded from employing its right
of subrogation when the insured has been fully compensated and is in a position where the
insured will recover twice for some of his or her damages.”).
Under Arkansas law, an insurer cannot unilaterally assert and recover benefits
through the subrogation provisions of its policy language. Eastwood v. S. Farm Bureau
Cas. Ins. Co., 291 F.R.D. 273, 277 (W.D. Ark. 2013) (“[A]n insurance company seeking

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subrogation is required to secure either a legal determination by a court that the insured
was made whole or an agreement with the insured that he was made whole prior to
collecting subrogation.”) (analyzing Riley v. State Farm Mut. Auto. Ins. Co., 2011 Ark. 256
(2011)) (emphasis in original). Bell therefore contends, applying Arkansas law,2 that a
court must determine whether she has been made whole by the combined amount of Plan
benefits and settlement monies.
BCBS-OK and BCBS-TX removed this case to federal court on February 2, 2014
(Doc. 1), citing the Federal Officer Removal Statute, 28 U.S.C. § 1442(a)(1). In Jacks v.
Meridian Resource Co., LLC, 701 F.3d 1224, 1233 (8th Cir. 2012), the Eighth Circuit held
that removal pursuant to this Statute was appropriate in a case involving an insurance plan
governed by the Federal Employees Health Benefits Act of 1959 (“FEHBA”), 5 U.S.C.
§8901 et seq., and a private insurer’s subrogation claims against an insured. According
to Jacks, federal jurisdiction is proper in a case such as the one at bar because the “act
of pursuing subrogation and reimbursement from a plaintiff” is “sufficiently under the control
of a federal officer or agency for purposes of federal officer removal.” Id. at 1230.
Bell contends in her Motion to Remand that the Jacks holding has been undermined
by the recent Missouri Supreme Court decision in Nevils v. Group Health Plan, Inc., 418
S.W. 3d 451 (Mo. 2014) (en banc), and federal jurisdiction over the subject matter of this
case is no longer proper.
Defendants have separately moved for judgment as a matter of law. BCBS-OK and
BCBS-TX take the position that Arkansas law does not control the substance of this
2

No argument has been advanced for a similar or analogous equitable principle under
federal law.
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dispute. They contend that since Bell’s insurance Plan is governed by the FEHBA, federal
law preempts Bell’s state law claims. Although Bell disputes federal preemption, she
agrees there are no material facts in dispute. The Court will address first the applicability
of the Federal Officer Removal Statute on the question of remand, and then render
judgment on the pleadings.
II. DISCUSSION
A. Motion to Remand
Bell argues that this case should be remanded to state court, primarily because of
the Missouri Supreme Court’s holding in Nevils, 418 S.W. 3d at 451. Nevils, however, only
discusses the substantive issue of whether the FEHBA may preempt Missouri law and not
the issue of subject-matter jurisdiction. Accordingly, Nevils is not helpful in determining
whether jurisdiction is proper in this Court.
The burden of proof on a motion to remand lies with the party opposing the motion.
Green v. Ameritrade, Inc., 279 F.3d 590, 596 (8th Cir. 2002). In order to remain in federal
court, BCBS-OK and BCBS-TX must demonstrate that the Federal Officer Removal Statute
applies to the facts of this case and permits removal. To do this, Defendants must
establish three things: (1) in seeking subrogation from Bell, BCBS-OK and BCBS-TX acted
under the direction of a federal officer; (2) there was a causal connection between
Defendants’ actions and the official authority; and (3) Defendants have a colorable federal
defense. Jacks, 701 F.3d at 1230; 28 U.S.C. § 1442(a)(1).
The Eighth Circuit’s opinion in Jacks explains in detail why the Federal Officer
Removal Statute applies when a private insurance company litigates a potential

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subrogation claim arising from an FEHBA contract with the Office of Personnel
Management (“OPM”). In the Jacks case, a Missouri resident was involved in a motor
vehicle accident and received benefits from Blue Cross Blue Shield of Kansas City
(“BCBS-KC”), which administered an FEHBA benefits plan for federal workers on behalf
of OPM. Jacks, 701 F.3d at 1228. Jacks contended that the benefits she received through
her BCBS-KC plan were insufficient to make her whole for her injuries. She negotiated a
separate settlement with the insurer of the tortfeasor. Before she could be paid, however,
BCBS-KC asserted a lien on the third-party settlement, claiming entitlement to subrogation.
Jacks brought suit against BCBS-KC in state court, alleging Missouri state-law violations,
and BCBS-KC removed, citing the Federal Officer Removal Statute. Thus, the facts in
Jacks are nearly identical to those at issue in the case at bar.
The Court of Appeals in Jacks affirmed the district court’s decision to allow the
litigation to proceed in a federal forum, pursuant to the Federal Officer Removal Statute.
Applying the same reasoning here, it appears that BCBS-OK and BCBS-TX have properly
removed this case. As to the first prong of the Statute’s requirements, it is clear that
BCBS-OK and BCBS-TX “act under” the direction of a federal officer because their
“assistance to the federal government in all respects in no way can be described as simple
compliance with a federal law.” Id. at 1234. Instead, these private insurers, like those in
Jacks, “help the government fulfill the basic task of establishing a health benefits program
for federal employees.” Id. at 1233.
Turning to the second prong of the Statute’s requirements, there is a causal
connection between BCBS-OK and BCBS-TX’s actions in administering Bell’s Plan and

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OPM, the official governmental authority. The Jacks case explains how in health plans
such as Bell’s, OPM exerts “direct and extensive control over these benefit contracts under
the FEHBA.” Id. Moreover, “OPM is responsible for the overall administration of the
program while sharing the day-to-day operating responsibilities with the employing
agencies and the insurance carriers.” Id. (internal quotation and citations omitted). “[T]he
federal government maintains the funds for all carriers participating under the FEHBA,” id.
at 1234-35, and FEHBA's regulations state that any judicial action “must be brought
against OPM and not against the carrier.“ 5 C.F.R. § 890.107(c). All of these factors
evidence the extent of the government’s authority in this sort of contractual relationship.
As the Jacks court explained, “FEHBA program carriers contracting with the federal
government to provide health care insurance for federal employees are not unrelated and
wholly separate business entities merely doing business in a highly regulated arena, but
rather conduct business under the delegation of the federal government.” Id. at 1234. By
extension, it follows that BCBS-OK and BCBS-TX have pursued subrogation claims
against Bell because OPM directed them to do so, according to the provisions of Bell’s
health benefits Plan.
The third prong of the Statute is also satisfied here, as Defendants have asserted
not one, but three colorable federal defenses. The first defense is that Bell’s claims are
preempted by the FEHBA’s express preemption provision. The same defense was
asserted in Jacks, and there the court found it to be colorable. Id. at 1235 (citing Empire
Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677, 697-98 (2006)). For purposes of
federal jurisdiction analysis, only one colorable defense is necessary to meet the

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requirements of § 1442(a)(1); therefore, the Court will not analyze the other two defenses
claimed by Defendants.
Because all prerequisites to establishing federal subject-matter jurisdiction have
been satisfied by Defendants, the Court finds that removal was proper, and Bell’s Motion
to Remand (Doc. 10) is DENIED.
B. Defendants’ Motion for Judgment on the Pleadings
Now that the Court has determined that this dispute is appropriately within the
Court’s jurisdiction, the next issue to address is Defendant’s Motion for Judgment on the
Pleadings. Such a motion is contemplated by Federal Rule of Civil Procedure 12(c), and
is, for all practical purposes, to be treated just as a Rule 12(b)(6) motion to dismiss for
failure to state a claim. Clemons v. Crawford, 585 F.3d 1119, 1124 (8th Cir. 2009).
“Judgment on the pleadings is appropriate where no material issue of fact remains to be
resolved and the movant is entitled to judgment as a matter of law.” Faibisch v. Univ. of
Minn., 304 F.3d 797, 803 (8th Cir. 2002). In evaluating a motion for judgment on the
pleadings, a court must accept as true all of the factual allegations contained in a complaint
and review the complaint in the light most favorable to the plaintiff, drawing all reasonable
inferences in the plaintiff’s favor. Wishnatsky v. Rovner, 433 F.3d 608, 610 (8th Cir. 2006).
Bell concedes that “[t]he relevant facts of how this case got to this point are not in
dispute” (Doc. 21, p. 2); but contends “there is a dispute of material fact and law as to how
this subrogation matter should be resolved.” Id. at p. 3. After conducting a thorough
review of the pleadings and the parties’ briefing, the Court finds that there are no relevant,
disputed facts at issue here. Rather, the matter of “how this subrogation matter should be

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resolved” is purely a question of law.

Accordingly, judgment on the pleadings is

appropriate.
BCBS-OK and BCBS-TX advance three reasons why their Motion for Judgment on
the Pleadings should be granted. The first reason is that Arkansas’ made-whole law is
preempted by the FEHBA’s express preemption provision. The second reason is that the
made-whole doctrine has been displaced by federal common law. The third reason is that
sovereign immunity bars Bell’s state law claims. Because the Court finds that judgment
on the pleadings is warranted due to the first reason alone—that the FEHBA’s express
preemption provision supersedes Arkansas’ “made-whole” doctrine—the other two possible
bases for judgment will not be addressed.
The Eighth Circuit has held that express preemption pursuant to the FEHBA is a
colorable defense in a subrogation dispute. Jacks, 701 F.3d at 1235 (citing Empire, 547
U.S. at 697-98). The FEHBA states that “the terms of any contract . . . which relate to the
nature, provision, or extent of coverage or benefits (including with respect to benefits) shall
supersede and preempt any State or local law, or any regulation issued thereunder, which
relates to health insurance or plans.” 5 U.S.C. § 8902(m)(1). Defendants maintain, and
Bell does not dispute, that according to the FEHBA Plan at issue here, all reimbursement
and subrogation recoveries obtained by the carrier must be returned to the United States
Treasury. See Doc. 15, p. 18. Any money left in the designated Treasury fund at the end
of the year is used in OPM’s discretion to reduce the cost of benefits or to “increase the
benefits provided by . . . the plan.” 5 U.S.C. § 8909(b); 5 C.F.R. § 890.503(c)(2).
The FEHBA’s express preemption provision provides as follows:

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The terms of any contract under this chapter which relate to the nature,
provision, or extent of coverage or benefits (including payments with respect
to benefits) shall supersede and preempt any State or local law, or any
regulation issued thereunder, which relates to health insurance or plans.
5 U.S.C. § 8902(m)(1). The FEHBA does not, however, address the manner in which a
carrier may collect subrogation or reimbursement on behalf of OPM.

Instead, the

insurance contract itself contains such language. For example, in Bell’s contract, the
subrogation provision is as follows:
(a) The Carrier’s subrogation rights, procedures and policies, including
recovery rights, shall be in accordance with the provisions of the agreed
upon [Statement of Benefits], which is incorporated in this Contract . . . .
(Doc. 5-1, p. 31; Doc. 5-6, p. 40). The Statement of Benefits entitles the carrier to be
reimbursed for its benefit payments even if the insured is not made whole for damages.
(Doc. 16, p. 16; Doc. 5-10, p. 138).
For preemption to apply under the FEHBA, there are two conditions precedent listed
in § 8902(m)(1). First, the contract’s terms must “relate to the nature, provision, or extent
of coverage or benefits (including payments with respect to benefits)”; and, second, the
state law at issue must “relate[ ] to health insurance or plans.” 5 U.S.C. § 8902(m)(1). The
Court will focus its analysis on the first condition, as the parties agree that the second
condition has been met here, and only the first condition is in dispute. See Doc. 23, p. 8;
Doc. 21, p. 3.
Neither the Court of Appeals nor any district court in the Eighth Circuit has
considered the interpretation of the FEHBA’s preemption clause. This issue is therefore
somewhat of an open question for this Court, as the Supreme Court in Empire determined
that the clause was susceptible to more than one possible reading. See Empire, 547 U.S.
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at 697-98 (observing that the terms of an FEHBA contract could be interpreted as either
“relating to the beneficiary’s entitlement (or lack thereof) to Plan payments for certain
health-care services” or “to the carrier’s postpayment right to reimbursement,” as both are
“plausible constructions”) (emphasis in original). Because the term “relate to,” as it
appears in the FEHBA, is open to interpretation, it remains for the Court to decide whether
the contract at issue in Bell’s case contains a subrogation provision that either relates—or
does not relate—to coverage or benefits.
Bell’s cited authority in support of her position on preemption proceeds from two
state-court opinions, one from the Arizona Court of Appeals—Kobold v. Aetna Life Ins. Co.,
309 P.3d 924 (Ariz. Ct. App. 2013)—and one from the Missouri Supreme Court—Nevils,
418 S.W. 3d at 451. In Kobold, the court determined that Arizona law was not preempted
by the FEHBA in a personal injury case involving a carrier’s claim for subrogation. The
Kobold court found that “the fact that [the carrier’s] contractual right to reimbursement is
triggered by the payment of benefits does not mean that it ‘relate[s] to the nature,
provision, or extent of’ benefits,” as “[t]he ‘benefits’ to which Kobold was entitled under the
Plan were not dependent on recovery from a third party.” 309 P.3d at 928.
Similarly, the court in Nevils found that “subrogation necessarily occurs after the
‘coverage’ issue is resolved, so subrogation cannot affect the extent, nature or provision
of insurance ‘coverage.’” 418 S.W. 3d at 456. Nevils stands for the proposition, therefore,
that a claim for subrogation by the carrier cannot “relate to the nature, provision, or extent
of coverage or benefits” because a claim for subrogation is too remote in time, having been
made well after the carrier’s initial payment of benefits. Id.

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Both the Kobold and Nevils courts went so far as to hold that the connection
between reimbursement and benefits must be “direct and immediate” in order for
subrogation to “relate to . . . coverage or benefits” pursuant to the FEHBA and trigger
federal preemption. See Kobold, 309 P.3d at 927; Nevils, 418 S.W. 3d at 456. Both courts
asserted that unless such a temporal requirement were imposed, “for all practical purposes
pre-emption would never run its course,” and no limitation on preemption would exist in the
FEHBA context. Id.
As an initial matter, the Court disagrees with Kobold and Nevils that a direct and
immediate connection must be established between a carrier’s demand for reimbursement
on the one hand and its payment of plan benefits on the other in order to “relate to . . .
coverage or benefits” pursuant to the FEHBA. No such temporal restriction has been
imposed on the term “relate to” in other contexts, including the Employee Retirement
Income Security Act of 1974 (ERISA). Instead, the Supreme Court has determined that
the term “relate to” means having “a connection with or reference” to the plan, “even if . . .
the effect is only indirect.” Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 139 (1990).
The Statement of Benefits section in Bell’s insurance contract generally indicates
the existence of a relationship between benefits and subrogation because the carrier’s
demand for reimbursement is triggered only “[i]f another person or entity . . . causes [the
insured] to suffer an injury or illness, and if [the carrier] paid benefits for that injury or
illness.” See Doc. 15, p. 22 (citing Doc. 5-10, p. 138) (emphasis added). More specifically,
the Plan explicitly states on behalf of the carrier: “We are entitled under our right of
recovery to be reimbursed for our benefit payments even if you are not ‘made whole’ for

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all of your damages in the recoveries that you receive.” Id. (emphasis added). Finally, any
subrogation payments recovered by the carrier are ultimately credited to the Employee
Health Benefit Fund of the federal Treasury, and any money left in the Fund is used to
reduce the cost or increase the benefits provided by the Plan. For all of these reasons, the
Court is persuaded that when a carrier’s demand for subrogation is separated in time from
the carrier’s initial payment of benefits, the contractually-defined subrogation rights of the
carrier may nonetheless “relate” to the payment of benefits pursuant to the Plan.
Eighth Circuit precedent supports a finding that federal preemption is appropriate.
In MedCenters Health Care v. Ochs, 26 F.3d 865, 867 (8th Cir. 1994), overruled in part by
Empire, 547 U.S. 677,3 the Court of Appeals affirmed the District Court of Minnesota’s
“well-reasoned opinion” that the FEHBA preempted state law regarding a subrogation
provision in an OPM-directed plan. The district court had found that “Minnesota state law
is inconsistent with the contractual [subrogation] provision at issue, [and therefore,] the
contractual provisions preempt and supersede Minnesota state law.” MedCenters Health
Care, Inc. v. Ochs, 854 F. Supp. 589, 593 (D. Minn. 1993). Later, on appellate review, the
Eighth Circuit analyzed the text of the contract at issue and found that it “clearly required

3

A portion of the Court of Appeals’ opinion in MedCenters concerning whether subjectmatter jurisdiction was proper was overturned by the Supreme Court in Empire. The
Empire court did not, however, overturn the MedCenters court’s finding that the FEHBA
preempted state law, which the Eighth Circuit adopted from the lower-court opinion with
little substantive discussion. As discussed above, Empire was a subject-matter jurisdiction
case. The Empire court ruled that the FEHBA’s preemption clause could plausibly be
interpreted as “relating to” the carrier’s postpayment right to reimbursement, thus leaving
open the possibility that a subrogation clause in an FEHBA-governed contract could
possibly preempt state law. See Empire, 547 U.S. at 697-98. Accordingly, as the Eighth
Circuit’s opinion in MedCenters adopted the reasoning of the District Court of Minnesota
as to preemption, such has not been overturned and is still binding on this Court.
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reimbursement” and that “this approach would best serve the federal interests of uniformity
and low premiums.” 26 F.3d at 867. The Supreme Court in Empire found that Congress’s
intent in enacting § 8902(m)(1) of the FEHBA was “[t]o ensure uniform coverage and
benefits under plans OPM negotiates for federal employees.” 547 U.S. at 686.
Nearly a decade later in Jacks, the Eighth Circuit again commented, albeit in dicta,
on the propriety of federal preemption in an FEHBA-governed contract. See Jacks, 701
F.3d at 1233. Though Jacks principally concerned the issue of federal subject-matter
jurisdiction pursuant to the Federal Officer Removal Statute, the court did state in passing
that the subrogation provision of Jacks’s plan—which was nearly identical to Bell’s
Plan—was “necessarily a product of the benefit payment process.” Id. In sum, both the
MedCenters opinion and the Jacks opinion, in combination, tend to persuade this Court
that the Eighth Circuit, if faced with the task of interpreting the subrogation provision of the
Plan in the instant case, would also find that it “relates to” benefits, and therefore mandates
federal preemption of Arkansas law.
Other federal courts have come to the same conclusion. In reviewing these
opinions, the Court finds that they are more persuasive than the state-court opinions in
Kobold and Nevils. See, e.g., Calingo v. Meridian Res. Co., LLC, 2013 WL 1250448, *4
(S.D.N.Y. Feb. 20, 2013) (granting judgment on the pleadings based on a finding that a
subrogation provision in an FEHBA-authorized benefit plan relates to benefits); NALC
Health Ben. Plan v. Lunsford, 879 F. Supp. 760, 763 (E.D. Mich. 1995) (finding that a
reimbursement provision in a contract made pursuant to the FEHBA, which “is the
exclusive source of a federal employee’s compensation rights,” preempts any incompatible

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state law) (internal quotation and citation omitted); Helfrich v. Blue Cross and Blue Shield
Ass’n, 2014 WL 3845143, *8 (D. Kan. Aug. 5, 2014) (reasoning that allowing the insured
to rely on Kansas law and ignore the preemption provisions of her FEHBA-governed
contract “would frustrate the congressional purpose” because “[t]he aim of the statute was
to provide for a uniform, nationwide interpretation of health insurance plans for all federal
employees so that issues such as reimbursement would not vary depending on which state
the insured lives”).
For these reasons, the Court finds that Arkansas’ made-whole doctrine is preempted
by the FEHBA’s express preemption provision.4 Consequently, Defendants BCBS-OK and
BCBS-TX’s Motion for Judgment on the Pleadings (Doc. 14) is GRANTED.
III. CONCLUSION
IT IS ORDERED that Plaintiff’s Motion to Remand (Doc. 10) is DENIED. The Court
has proper subject-matter jurisdiction over this case pursuant to the Federal Officer
Removal Statute. IT IS FURTHER ORDERED that Defendants’ Motion for Judgment on
the Pleadings (Doc. 14) is GRANTED, as the subrogation provisions in the insurance
contract at issue here expressly preempt Arkansas law and therefore control Defendants’
claim for subrogation.
This case is accordingly DISMISSED WITH PREJUDICE, with judgment to enter
contemporaneously with this Order.
4

In reaching this conclusion, the Court recognizes the potential for harsh and inequitable
results. The preemption provisions of the FEHBA effectively enjoin Bell—and others
similarly situated—from making a full recovery for injuries caused by third-party tortfeasors.
Moreover, Defendants’ recovery is the result of Bell’s time, expense, and work product.
Unfortunately, to this Court’s knowledge, there is no body of federal common law to
ameliorate these inequities.
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