The US Supreme Court [official website] on Wednesday heard arguments [transcript] in Coventry Health Care of Missouri, Inc. v. Nevils [SCOTUSblog backgrounder], a case that required the court to decide whether an insurer, guaranteed a right of subrogation through a Federal Employees Health Benefits Act (FEHBA) policy, actually has such a right when it is in contravention of the law of the state in which it seeks recovery. Jodie Nevils, a federal employee covered by an FEHBA policy that included a right of subrogation, or repayment, filed a lawsuit against Coventry, her insurer, after it enforced its subrogation lien against part of the settlement of a related personal injury claim. The law of Missouri, which governed the dispute, proscribes insurer subrogation rights as being against public policy. The FEHBA, however, expressly preempts state law with the following language:

The terms of any contract under this chapter 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.

The case came up for Supreme Court review in mid-2015, at which time it was remanded to the Missouri state court for re-argument due to a then-new Office of Personnel Management (OPM) statutory interpretation [text] stating that the subrogation provisions should apply notwithstanding contrary state law. The Missouri court ruled again [opinion, PDF] in Nevils’ favor, despite the OPM interpretation. The case now returns to the Supreme Court for full review.