Empire HealthChoice Assurance v. McVeigh
Empire sued Denise McVeigh, the adminstratrix for Joseph McVeigh's estate, seeking reimbursement of insurance benefits. Joseph McVeigh was enrolled in an Empire health care plan for federal employees. This plan was negotiated by the United States Office of Personnel Management pursuant to the Federal Employees Health Benefits Act (FEHBA).
In 1997 Joseph McVeigh suffered an injury and received $157,309.06 in benefits from Empire under the health care plan. A lawsuit stemming from the injury ultimately led to a $3.175 million settlement for McVeigh. After learning about the settlement, Empire sued McVeigh in federal district court seeking reimbursement of the benefits paid. The district court dismissed the case, ruling that it did not have subject matter jurisdiction over the case because FEHBA creates no statutory cause of action for insurance carriers, and insurance is typically a question of state law. Empire appealed to the Second Circuit, arguing that the federal courts had subject matter jurisdiction because the complaint raised a question of federal law under FEHBA.
Federal question jurisdiction requires the plaintiff to show that the operation of state law would "significantly conflict" with "uniquely federal interests." Empire argued that reimbursement actions implicate "uniquely federal interests" because the outcome of these cases directly affect the United States Treasury and because Congress expressed interest in maintaining uniformity among the states with respect to federal employees' health benefits. The Second Circuit, affirmed the district court, finding no federal subject matter jurisdiction. It ruled that Empire failed to show that New York state law "significantly conflicts" with federal interests. The court conceded that McVeigh might raise a state law defense that might conflict with federal interests, but that this possibility was insufficient for Empire to invoke federal question jurisdiction. On this point of law, the Second Circuit reached a different conclusion than the Fourth Circuit.
Question Presented:
Whether federal question jurisdiction exists over a suit by a federal government contractor to enforce, on behalf of the United States, a provision in a health benefits plan for federal employees
that is part of a government contract established pursuant to the Federal Employees Health Benefits Act.
