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Monday, January 24, 2005

Ind. Decisions - 7th Circuit posts one today

Blue Cross Blue IL v. Cruz, Julia (ND Ill.)
Before POSNER, KANNE, and WILLIAMS, Circuit Judges.

KANNE, Circuit Judge. Jose S. Cruz was injured in a car accident. Cruz’s insurer, Blue Cross and Blue Shield of Illinois, a division of Health Care Service Corporation (“Blue Cross”), paid for the treatment of his injuries. Cruz was enrolled in Blue Cross’s Service Benefit Plan provided for government employees and their dependents under the Federal Employees Health Benefits Act (“FEHBA”). Cruz sued the tortfeasor responsible for his injuries and recovered money in excess of his medical expenses in a settlement agreement. Pursuant to the Statement of Benefits in the Service Benefit Plan, Blue Cross filed suit demanding reimbursement for the benefits paid to Cruz. The district court dismissed the suit for lack of subject matter jurisdiction. Because we find that FEHBA preempts state law on this matter, we reverse. * * *

III. Conclusion. With FEHBA, Congress intended to create cost-efficient and uniform health insurance benefits for employees of the United States and their dependents throughout the country. The Act’s express preemption provision dictates that the terms of contracts created under FEHBA preempt state law when such terms are related to benefits and coverage. Congress intended for terms related to subrogation to be included in this realm. Thus, the FEHBA-created contract provision in the Statement of Benefits preempts state law with respect to reimbursement for benefits paid to Cruz. The district court has federal question subject matter jurisdiction over this case under 28 U.S.C. § 1331. Accordingly, we REVERSE the district court’s finding to the contrary and REMAND for further proceedings consistent with this opinion.

Posted by Marcia Oddi on January 24, 2005 02:13 PM
Posted to Ind. (7th Cir.) Decisions