The Court’s Cursory Supremacy Clause Analysis in Coventry Health Care

This week, the Supreme Court ruled 8-0 that the Federal Employees Health Benefits Act (FEHBA) pre-empts state laws that prohibit insurance subrogation.  The Court’s opinion in Coventry Health Care of Missouri v. Nevils tracks my analysis of the issue here.  The Court considered FEHBA’s express pre-emption clause, which provides that the terms of contracts negotiated between the federal government and private health insurance companies override state law relating to health insurance coverage or benefits.  This pre-emption clause, according to a unanimous Court, applies to state anti-subrogation laws.

Absent from participating in the decision, of course, was newly minted Justice Gorsuch, who may have taken issue with the way one aspect of the case was analyzed.  The Court correctly analyzed the pre-emption issue based on unambiguous statutory text, thus deferring for another day consideration of how much deference is owed to the Office of Personnel Management’s regulations on point.   However, the Court’s Supremacy Clause analysis elides an interesting problem and unnecessarily disparages legal formalism in a troubling way.


FEHBA’s express pre-emption provision states that:

“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.”

Respondent Nevils, wishing Missouri’s anti-subrogation principles to apply so he could keep the settlement he collected from the party who injured him in a motorcycle accident, argued that FEHBA’s express pre-emption provision violates the Supremacy Clause.  The Supremacy Clause of the Constitution renders federal laws, treaties, and regulations supreme over state laws.  Respondent’s brief pointed out that FEHBA’s pre-emption provision allows the terms of health insurance contracts, negotiated with private health insurers, to supersede state law.  These private health insurance terms are not “Laws” for the purposes of the Supremacy Clause and thus cannot pre-empt Missouri law.

The Supreme Court, in prose heavily borrowed from Petitioner Coventry Health Care’s brief, held that it was the federal law, FEHBA, that overrode state anti-subrogation contracts.  FEHBA gives the terms of the contracts pre-emptive force only if they “relate to” health insurance benefits and payments with respect to benefits.  To hold that the terms of the contract impermissibly overrode state law, according to Justice Ginsburg’s unanimous opinion, “elevates semantics over substance.”

I wonder how Justice Gorsuch, a self-proclaimed textualist, would have felt about that line, were he to have participated in the decision.  Taking a statute at its word is the essence of textualism, a philosophy of statutory interpretation that requires a judge to confine his or her analysis to the ordinary meaning of the words of a statute.  Textualism limits the scope of a judge’s power to interpretation, not speculation or obvious legislation by invalidating the terms of a statute.

Perhaps Judge Gorsuch would have agreed with the Court.  Perhaps I am being hyper-formalist, although I believe formalism is generally the correct approach to the law.  Formalism uses the tools a judge brings to bear on a case – analogical reasoning, precision, and insight – within the legitimate scope of a judge’s power.  Perhaps it is obvious that FEHBA itself properly provides the pre-emption power, not the terms of the health insurance contracts.  But many of the statutes Justice Ginsburg mentions as having similar pre-emption clauses to FEHBA are quite distinct.

As examples, the Employee Retirement Income Security Act (ERISA) pre-empts “any and all State laws insofar as they . . . relate to any employee benefit plan”  But ERISA itself provides the laws that pre-empt state law and govern health insurance plans; it does not delegate pre-emption power to the terms of contracts negotiated between the federal government and private parties.  Similarly, the Supreme Court has held that the Federal Arbitration Act (FAA), which allows arbitration agreements in private contracts, supersedes state laws providing otherwise.  But again, the FAA mentions arbitration clauses itself; it does not allow unspecified “terms of any contract” to pre-empt state law.  The only statutes that use the same pre-emption language as FEHBA also govern federal employee health benefits.

Justice Thomas’s concurrence notes one problem with holding that FEHBA has the same pre-emptive scope as ERISA or the FAA.  According to Justice Thomas, “[a] statute that confers on an executive agency the power to enter into contracts that pre-empt state law—such as the Federal Employee Health Benefits Act of 1959, 5 U. S. C. §8902—might unlawfully delegate legislative power to the President insofar as the statute fails sufficiently to constrain the President’s contracting discretion.”

Perhaps the Court was ultimately correct in its Supremacy Clause analysis.  Regardless, whether FEHBA violates the Supremacy Clause is a hard question that deserved more thorough analysis.  A unanimous Court should not glibly hold that the terms of a statute do not mean what they say they mean, especially when a majority of the Missouri Supreme Court believed that FEHBA’s pre-emption provision violated the Supremacy Clause.  Contrary to the sentiment expressed in the Court’s opinion, I believe that elevating statutory text over pragmatic concerns is often a good thing in the law.  I hope Justice Gorsuch provides a limiting force on dismissing statutory text, even if poorly written to suit its purposes, as “semantics.”