Helfrich v Blue Cross and Blue Shield Association

Helfrich, a federal employee, was injured in a car accident and received health insurance benefits to treat her injuries. After she settled her claim, Blue Cross sought reimbursement of the benefits under a provision of its contract with the federal government. The issue was ultimately brought before a federal district court which granted judgment on the pleadings to Blue Cross ruling Kansas state law bars on reimbursement claims were preempted. The panel, with one judge concurring, affirmed. The majority held that federal common law applied as contracts between the federal government and its employees concern uniquely federal interests and the Kansas bar is preempted because directly conflicts with congressional intent to allow reimbursement claims in order to lower premiums or increase benefits and interferes with the federal interest in uniform benefits for its employees.  The majority also held that 5 USC 89-02(m)(1) preempted the Kansas bar as reading the ambiguous text to allow preemption is a permissible one as stated by the United States Supreme Court, the presumption against preemption does not apply when uniquely federal interests are involved and even if Chevron deference to the agency’s position is not appropriate here, the explanation for why allowing reimbursement claims is the correct interpretation (to keep costs down and ensure uniformity) is persuasive and thus the majority adopted it. The concurrence argued that federal common law preemption is limited to tort claims and deciding whether to seek reimbursement is not the kind of discretionary act preemption should apply to. It agree with analysis as to 5 USC 8902(m)(1).