EMPIRE HEALTHCHOICE ASSUR., INC. v. McVEIGH

SACK, Circuit Judge, concurring.

I concur. I think, for the reasons elaborated by Judge Sotomayor in the principal opinion, that the Boyle test is applicable here and that Empire has failed to satisfy the second prong of that test because it has not demonstrated that there is a "significant conflict . . . between an identifiable federal policy or interest and the operation of state law." Boyle v. United Techs. Corp., 487 U.S. 500, 507, 108 S.Ct. 2510, 101 L.Ed.2d 442 (1988) (citation and internal quotation marks omitted). I also agree with Judge Sotomayor's explanation as to why 5 U.S.C. § 8902(m)(1) does not itself authorize the exercise of federal jurisdiction over the cause of action asserted by Empire.

I write separately, though, simply to identify several issues that I think we do not decide.

First, Empire has made a substantial showing that the first part of the Boyle test has been met because this case implicates "uniquely federal interests," id. at 504, 108 S.Ct. 2510 (citation and internal quotation marks omitted), in providing uniform healthcare coverage for federal employees and in decreasing the administrative costs associated with such insurance. It may well be that, as in Boyle, "the interests of the United States will be directly affected," id. at 507, 108 S.Ct. 2510, by the outcome of this litigation and of litigation like it. It is Empire's inability to meet the second,"significant conflict," part of the test that leads me to join in Judge Sotomayor's opinion affirming the district court's dismissal for lack of subject matter jurisdiction.

Second, a future litigant in a similar action may, unlike Empire here, be able to point to specific ways in which the operation of state contract law, or indeed of other laws of general application, would conflict materially with the federal policies underlying FEHBA in the circumstances presented. In that case, presumably, the second part of the Boyle test would be met and, if that litigant's well-pleaded complaint arises under federal law, a federal court would have subject matter jurisdiction.

Third, there is no need for us to decide what course to take if, "at a later stage in the proceedings, a significant conflict might arise between New York state law and the federal interests underlying FEHBA, such that the dispute would satisfy both prongs of Boyle." Opinion of Judge Sotomayor, Part B, ante at 142. This portion of the opinion therefore does not seem to me to set forth a part of our holding on this appeal.

Fourth, and similarly, although I find Judge Sotomayor's discussion in Section C of the principal opinion of the proper reading of section 8902(m)(1) to be both interesting and persuasive, it is not necessary to our resolution of this appeal. It seems to me to be possible, notwithstanding that analysis, that the statute is unavoidably unconstitutional because contract terms are not "Laws of the United States," that are "the supreme Law of the Land." Id. at 143 (quoting U.S. Const. Art. VI, cl. 2). On the other hand, even if the statute does attempt to render contract terms "supreme" despite the fact that they are not strictly "law," perhaps the statute nonetheless would bear constitutional scrutiny. Still, in either case we must affirm because, for reasons spelled out largely in parts A and D of the principal opinion, the district court rightly ruled that it does not have subject matter jurisdiction under either Boyle or the statute as written. This discussion in the principal opinion, whatever its merits, therefore seems to me also to be dicta. It is possible that our views would turn out to be otherwise were we to confront a different situation in which this issue actually required our resolution. Should that day come, I do not think that the panel that considers the issue will be bound by our analysis here.

RAGGI, Circuit Judge, dissenting.

In this contract action, Plaintiff-Appellant Empire HealthChoice Assurance, Inc., sues Denise McVeigh, as administratrix of Joseph McVeigh's estate, for breach of the reimbursement provision of a federal employee health insurance plan that had covered her husband before his death. The court today rules that this dispute cannot be heard in federal court for lack of subject matter jurisdiction. See 28 U.S.C. § 1331. Specifically, it rejects Empire's argument that the case arises under federal common law, concluding that Empire fails to satisfy the "significant conflict" prong of the test established in Boyle v. United Technologies, 487 U.S. 500, 507, 108 S.Ct. 2510, 101 L.Ed.2d 442 (1988) (holding that federal courts may create federal common law only where the operation of state law would (1) "significantly conflict" with (2) "uniquely federal interests"). I respectfully disagree. Congress has itself addressed the Boyle factors in its 1998 amendment to the preemption provision of the Federal Employees Health Care Protection Act ("FEHBA"), 5 U.S.C. § 8902(m)(1), thereby eliminating the need for courts to consider the question. Section 8902(m)(1) now states: "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 of plans." 5 U.S.C. § 8902(m)(1). I conclude, for reasons discussed in this dissent, that this language requires courts to construe or enforce any term in a FEHBA plan that relates to health insurance coverage or benefits by reference to uniform federal common law, not state law.

I. Federal Question Jurisdiction

Under 28 U.S.C. § 1331, federal district courts have original jurisdiction of "all civil actions arising under the Constitution, laws, or treaties of the United States." An action "arises under" federal law for purposes of § 1331 jurisdiction only when a plaintiff's well-pleaded complaint alleges a cause of action raising a federal question. See Beneficial Nat'l Bank v. Anderson, 539 U.S. 1, 7, 123 S.Ct. 2058, 156 L.Ed.2d 1 (2003); Caterpillar Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987). Such a federal question is presented when the complaint invokes federal law as the basis for relief, see Merrell Dow Pharm. Inc. v. Thompson, 478 U.S. 804, 808, 106 S.Ct. 3229, 92 L.Ed.2d 650 (1986); American Well Works Co. v. Layne Bowler Co., 241 U.S. 257, 260, 36 S.Ct. 585, 60 L.Ed. 987 (1916) (Holmes, J.) (a "suit arises under the law that creates the cause of action"), or when a "substantial, disputed question of federal law is a necessary element of" a well-pleaded state-law claim, Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 13, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983); see also Marcus v. AT T Corp., 138 F.3d 46, 56 (2d Cir. 1998).

Empire contends that § 1331 jurisdiction is proper in this case because federal common law governs all disputes involving the enforcement of FEHBA contracts. See Illinois v. City of Milwaukee, 406 U.S. 91, 100, 92 S.Ct. 1385, 31 L.Ed.2d 712 (1972) (holding that § 1331 jurisdiction extends to causes of action governed by federal common law); Woodward Governor Co. v. Curtiss Wright Flight Sys., Inc., 164 F.3d 123, 126 (2d Cir. 1999) (same). Alternatively, Empire argues that even if its claims do arise under state law, they are nevertheless properly heard in federal court because their resolution turns upon an interpretation of the operative Plan, which, Empire submits, is itself federal law. Because I agree with Empire's first argument, I find it unnecessary to address the second.

II. Federal Common Law

As the majority observes, neither FEHBA nor its regulations expressly provide a federal cause of action for insurance carriers to vindicate their rights under FEHBA contracts. This does not mean that carriers are without a remedy for FEHBA-based disputes. Congress is understood to legislate against the pre-existing backdrop of the common law. See Astoria Fed. Sav. Loan Ass'n v. Solimino, 501 U.S. 104, 108, 111 S.Ct. 2166, 115 L.Ed.2d 96 (1991); United States v. Nucci, 364 F.3d 419, 423 (2d Cir. 2004); see also Kolstad v. American Dental Ass'n, 527 U.S. 526, 539, 119 S.Ct. 2118, 144 L.Ed.2d 494 (1999) ("[W]here Congress borrows terms of art in which are accumulated the legal tradition and meaning of centuries of practice, it presumably knows and adopts the cluster of ideas that were attached to each borrowed word in the body of learning from which it was taken and the meaning its use will convey to the judicial mind unless otherwise instructed." (internal quotation marks omitted)). It is an elementary common-law principle that a party to a valid contract is bound by its terms and is subject to suit for their enforcement. See, e.g., Mobil Oil Exploration Producing Southeast, Inc. v. United States, 530 U.S. 604, 607-08, 120 S.Ct. 2423, 147 L.Ed.2d 528 (2000); Gerrish Corp. v. Universal Underwriters Ins. Co., 947 F.2d 1023, 1028 (2d Cir. 1991). See generally O.W. Holmes, The Common Law 227-40 (1881) (describing the characteristics of contracts). Nothing in FEHBA suggests that FEHBA contracts are to be treated differently. The Act does not, for example, provide a comprehensive remedial scheme that supplants a common-law action, cf. Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 147, 105 S.Ct. 3085, 87 L.Ed.2d 96 (1985), nor does it contain an express provision precluding such an action, see United States v. Nucci, 364 F.3d at 423. Thus, it is reasonable to conclude that FEHBA contracts are enforceable through common-law breach of contract actions. See Jackson Transit Auth. v. Local Div. 1285, Amalgamated Transit Union, 457 U.S. 15, 20, 102 S.Ct. 2202, 72 L.Ed.2d 639 (1982) (concluding that although the Urban Mass Transportation Act did not provide a cause of action to enforce contracts entered into pursuant to the Act, "it is reasonable to conclude that Congress expected [these contracts], like ordinary contracts, to be enforceable by private suit upon a breach").

That insurance carriers are able to bring breach of contract actions to vindicate FEHBA rights does not, however, mean that these actions are necessarily federal. The presumption, in fact, is to the contrary. As the Supreme Court declared in Erie R. Co. v. Tompkins, "there is no federal general common law." 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). Thus, contract actions are usually creatures of state law, see Caceres Agency, Inc. v. Trans World Airways, Inc., 594 F.2d 932, 934 (2d Cir. 1979); see also Aronson v. Quick Point Pencil Co., 440 U.S. 257, 262, 99 S.Ct. 1096, 59 L.Ed.2d 296 (1979), and, accordingly, absent diversity in citizenship among the parties, are ordinarily not subject to federal jurisdiction, see Nolan v. Meyer, 520 F.2d 1276, 1280 (2d Cir. 1975).

Since issuing Erie, however, the Supreme Court has made clear that federal common law displaces state law in certain narrow circumstances. See Texas Indus., Inc. v. Radcliff Materials, Inc., 451 U.S. 630, 640-41, 101 S.Ct. 2061, 68 L.Ed.2d 500 (1981); see also Hinderlider v. La Plata River Cherry Creek Ditch Co., 304 U.S. 92, 110, 58 S.Ct. 803, 82 L.Ed. 1202 (1938) (decided the same day as Erie and declaring that "whether the water of an interstate stream must be apportioned between the two States is a question of `federal common law'"). See generally Henry J. Friendly, In Praise of Erie — And of the New Federal Common Law, 39 N.Y.U. L.Rev. 383, 405 (1964) (remarking on the various "specialized" categories of federal common law). Specifically, courts may fashion federal common law (1) when "Congress has given [them] the power" to do so, Texas Indus., Inc. v. Radcliff Materials, Inc., 451 U.S. at 640-41, 101 S.Ct. 2061; or (2) if Congress has not granted such authorization, when (a) a case involves an area of "uniquely federal interests" and (b) the application of state law would "significantly conflict" with federal policies in this area, Boyle v. United Techs., 487 U.S. at 507-08, 108 S.Ct. 2510; accord Woodward Governor Co. v. Curtiss Wright Flight Sys., Inc., 164 F.3d at 127; see also Atherton v. FDIC, 519 U.S. 213, 218, 117 S.Ct. 666, 136 L.Ed.2d 656 (1997); O'Melveny Myers v. FDIC, 512 U.S. at 87, 114 S.Ct. 2048.

A. Empire's Reliance on Boyle to Invoke Federal Common Law

Empire relies on Boyle v. United Technologies to support its claim that this contract dispute arises under federal common law. Specifically, it urges this court to follow the Fourth Circuit's application of Boyle in Caudill v. Blue Cross Blue Shield of North Carolina, 999 F.2d 74 (4th Cir. 1993). Although I do not think that Boyle analysis is necessary to reach this conclusion, I think it useful to begin with a brief discussion of Empire's Caudill-based argument.

In Caudill, Blue Cross had removed to federal court a state action filed by a FEHBA plan enrollee challenging Blue Cross's denial of benefits. Noting that federal removal jurisdiction is limited to state court actions "of which the district courts of the United States have original jurisdiction," 28 U.S.C. § 1441, the Fourth Circuit ruled that removal was proper because Caudill's claim, although pleaded under state law, actually arose under federal common law. See Caudill v. Blue Cross Blue Shield of North Carolina, 999 F.2d at 77. Applying the Boyle standard, the court found that (1) Caudill's claim implicated unique federal interests because, if her suit were successful, it would hinder OPM's ability to enter into future FEHBA contracts and might result in costs being passed through to the federal government, and (2) the use of state law would undermine the federal interest in ensuring that federal employees receive uniform health benefits. See id. at 78-79. The latter interest in uniform treatment of enrollees was evinced, the court explained, by FEHBA's preemption provision, which, at that time, stated that "[t]he provisions of any contract under this chapter which relate to the nature or extent of coverage or benefits . . . shall supersede and preempt any State or local law . . . which relates to health insurance or plans to the extent that such law or regulation is inconsistent with such contractual provisions." 5 U.S.C. § 8902(m)(1) (1997).

As the majority notes, Caudill has been criticized by courts and commentators. That criticism, however, is not leveled at its conclusion that federal common law governs FEHBA claims, but at its failure to adhere to the well-pleaded complaint rule. See Goepel v. Nat'l Postal Mail Handlers Union, 36 F.3d 306, 314-15 (3d Cir. 1994); see also 15 James Wm. Moore et al., Moore's Federal Practice § 103.45[3][c] (3d ed. 1997) (commenting that Caudill's holding "is fatally flawed if the validity of the well-pleaded complaint rule . . . [is] accepted"). The criticism is not without force. Under the well-pleaded complaint rule, a plaintiff, as master of his claim, may avoid federal jurisdiction by relying exclusively on state law in his complaint. See Caterpillar Inc. v. Williams, 482 U.S. at 392, 107 S.Ct. 2425. It appears that Caudill's complaint pleaded claims under only state law, see Caudill, 999 F.2d at 77, and, thus, on its face, presented no federal claim justifying removal. Although Blue Cross's contention that federal common law governed Caudill's state claims may have provided the insurer with a federal defense to the claims that it could raise in the state action, this was not a ground for the removal of those state claims to federal court. See Caterpillar Inc. v. Williams, 482 U.S. at 393, 107 S.Ct. 2425.

Thus it appears that in Caudill, removal would have been proper only if Blue Cross had demonstrated that plaintiff's state claims were "completely preempted" by federal law. City of Rome v. Verizon Communications, Inc., 362 F.3d 168, 176-77 (2d Cir. 2004). "[C]omplete preemption" occurs when Congress manifests its intent that federal law displace state law by enacting a "federal statute [that] . . . provide[s] the exclusive cause of action for the claim asserted and also set[s] forth procedures and remedies governing that cause of action"; in such cases, the claim, although pleaded in terms of state law, actually arises under federal law. Beneficial Nat'l Bank v. Anderson, 539 U.S. at 8, 123 S.Ct. 2058; City of Rome v. Verizon Communications, Inc., 362 F.3d at 177. As the Third Circuit has pointed out, however, FEHBA did not provide a cause of action to vindicate the rights at issue in Caudill's state-law claims. See Goepel v. Nat'l Postal Mail Handlers Union, 36 F.3d at 315. Thus, by finding removal proper, the Caudill court implicitly extended the complete preemption doctrine to claims that arise under federal common law but for which Congress has not manifested an intent to provide an exclusive cause of action. See id. at 314-15 (criticizing Caudill for expanding the complete preemption doctrine).

In this case, unlike in Caudill, the propriety of applying federal common law does not depend on complete preemption. Empire's complaint does not plead claims in terms of state law; rather, it relies exclusively upon federal law. Thus, this court need not decide whether a state-law claim to enforce the terms of a FEHBA plan may be recharacterized as arising under federal law. It need decide only whether federal common law does in fact govern claims to enforce rights under a FEHBA plan. If it does, then this case arises under federal law and the district court had jurisdiction to hear it.

I conclude that federal common law does govern the parties' dispute in this case, but I do not rely on Boyle. Instead, I conclude that in amending § 8902(m)(1) in 1998, Congress itself addressed the Boyle factors, making the analysis undertaken in Caudill unnecessary. The amendment necessarily grants courts the power to develop uniform federal common law to construe and enforce the coverage and benefit terms of FEHBA plans.

B. Congressional Authorization in § 8902(m)(1) for Federal Common Law to Construe and Enforce FEHBA Plans

In 1998, Congress amended FEHBA's preemption provision by striking the clause alluded to in Caudill, providing for preemption of state laws only "to the extent [they are] inconsistent with" a contractual term, see Federal Employees Health Care Protection Act of 1998, Pub.L. No. 105-266, § 3(c), 112 Stat. 2363, 2366 (1998), and enacting a more expansive provision that reads in full: "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." 5 U.S.C. § 8902(m)(1).

The amendment thus effectively legislates both Boyle factors. First, by providing for FEHBA coverage and benefits terms to "supersede" certain state and local laws, Congress has identified a unique federal interest in ensuring national uniformity in the construction and enforcement of such terms. Second, by amending § 8902(m)(1) to eliminate the need for any judicial finding of conflict between contract terms and certain state and local laws, Congress has implicitly authorized courts to employ federal common law to resolve disputes concerning coverage and benefits, even in the absence of the conflict generally required by Boyle.

As the majority observes, a literal reading of § 8902(m)(1) could give rise to constitutional concerns. The Supremacy Clause makes plain that the terms of a federal contract cannot by themselves preempt state law; only federal law can preempt state law. See U.S. Const. Art. VI, cl. 2. Because courts assume that Congress legislates in light of constitutional limitations, see Rust v. Sullivan, 500 U.S. 173, 191, 111 S.Ct. 1759, 114 L.Ed.2d 233 (1991), however, it is reasonable to conclude that the operation of federal law is necessarily implicit in § 8902(m)(1), see generally Edward J. DeBartolo Corp. v. Florida Gulf Coast Bldg. Const. Trades Council, 485 U.S. 568, 575, 108 S.Ct. 1392, 99 L.Ed.2d 645 (1988) (noting that where "an otherwise acceptable construction" of a statute is available that is not "plainly contrary to the intent of Congress," courts may adopt that construction to avoid serious constitutional doubts); accord Jones v. United States, 526 U.S. 227, 239-40, 119 S.Ct. 1215, 143 L.Ed.2d 311 (1999). Mindful of this principle, I read § 8902(m)(1) to mean that any terms in a FEHBA plan that relate to coverage or benefits are to be construed according to uniform federal law, and that law will, in turn, supersede any state or local law that relates to health insurance or health plans.

My colleagues in the majority apparently agree that the application of federal law is implicit in § 8902(m)(1)'s preemption of certain state laws. Where we disagree is in our assessment of whether that preemption is limited to laws specifically addressing "health insurance or plans," or whether it also extends to general state and local law, including contract law, when an action is brought to construe and enforce a coverage or benefits term in a FEHBA health insurance plan. I conclude that such actions necessarily arise under federal common law because § 8902(m)(1) precludes any state law, including contract law, from construing or enforcing the coverage or benefit terms of FEHBA plans. When the application of state contract law would have that effect, the law "relates to health insurance or plans."

Unlike its predecessor, which limited preemption to state laws that actually conflicted with the terms of a FEHBA contract, the 1998 amendment to § 8902(m)(1) precludes state laws that relate to health insurance or plans from playing any role in construing such coverage or benefits terms. See Botsford v. Blue Cross Blue Shield of Montana, Inc., 314 F.3d 390, 393-94 (9th Cir. 2002); see also Russello v. United States, 464 U.S. 16, 23-24, 104 S.Ct. 296, 78 L.Ed.2d 17 (1983) (when Congress deletes limiting language, "it may be presumed that the limitation was not intended"). While this amendment, on its face, indicates Congress's intent significantly to expand § 8902(m)(1) preemption, a House Report confirms the breadth of the new provision, explaining that the amendment was intended "to strengthen the ability of national plans to offer uniform benefits and rates to enrollees regardless of where they live" and to "strengthen the case for trying FEHB program claims disputes in Federal courts rather than State courts," by "completely displac[ing] State or local law relating to health insurance or plans." H.R. Rep. No. 105-374, at 9, 16 (1997); see also S.Rep. No. 105-257, at 15 (1997) (amendment "removes the language dealing with inconsistencies, thereby giving the federal contract provisions clear authority").

Although FEHBA does not define what it means for a state or local law to "relate to health insurance or plans," the Supreme Court has, in other contexts, recognized that the common meaning of the phrase "relate to" is expansive: "`to stand in some relation; to have bearing or concern, to pertain; refer; to bring into association with or connection with.'" Morales v. Trans World Airlines, Inc., 504 U.S. 374, 383, 112 S.Ct. 2031, 119 L.Ed.2d 157 (1992) (quoting BLACK'S LAW DICTIONARY 1158 (5th ed. 1979)) (discussing the phrase "relating to" in the context of the Airline Deregulation Act of 1978). Our court has also concluded that the phrase does not imply a causal connection; rather, it is synonymous with the phrases "in connection with," "associated with," "with respect to," and "with reference to." Coregis Ins. Co. v. American Health Found., Inc., 241 F.3d 123, 128-29 (2d Cir. 2001) (interpreting insurance contract); accord Kamagate v. Ashcroft, 385 F.3d 144, 154 (2d Cir. 2004) (applying broad definition to removal statute); see Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 139, 111 S.Ct. 478, 112 L.Ed.2d 474 (1990) (applying same definition in ERISA context); see also Celotex Corp. v. Edwards, 514 U.S. 300, 308 n. 5, 115 S.Ct. 1493, 131 L.Ed.2d 403 (1995) (stating that proceedings "related to" a bankruptcy include "suits between third parties which have an effect on the bankruptcy estate").

In the ERISA context, the Supreme Court has ruled that "[u]nder this `broad common-sense meaning,' a state law may `relate to' a benefit plan, and thereby be pre-empted, even if the law is not specifically designed to affect such plans, or the effect is only indirect." Ingersoll-Rand Co. v. McClendon, 498 U.S. at 139, 111 S.Ct. 478 (quoting Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 47, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987)). Recognizing the potential all-encompassing breadth of this definition, the Court has increasingly focused on ERISA's objective to establish a uniform system of benefits in determining whether a particular state law "relates to" a plan. In light of this federal interest in uniformity, the Court has concluded that a state law of general application "relates to" an ERISA plan where application of the different states' laws could yield inconsistent benefit outcomes in similar cases. See New York State Conference of Blue Cross Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 658, 115 S.Ct. 1671, 131 L.Ed.2d 695 (1995) ("[L]aws providing alternative enforcement mechanisms also relate to ERISA plans. . . ."); see also Ingersoll-Rand Co. v. McClendon, 498 U.S. at 139, 111 S.Ct. 478. Following these decisions, our court has concluded that ERISA preempts generally applicable state contract law when that law is relied upon to enforce a benefits plan. See Devlin v. Transp. Communications Int'l Union, 173 F.3d 94, 101 (2d Cir. 1999).

This precedent supports the conclusion that FEHBA preemption is not limited to state and local laws that expressly regulate health insurance or plans. Nor is it limited to specialized state rules applicable only to insurance plans, for example, a rule of decision providing for ambiguities in an insurance policy to be resolved in favor of the insured. See, e.g., City of Burlington v. Indemnity Ins. Co. of N. Am., 332 F.3d 38, 45 (2d Cir. 2003); Mostow v. State Farm Ins. Cos., 88 N.Y.2d 321, 326, 645 N.Y.S.2d 421, 423, 668 N.E.2d 392 (1996). Rather, FEHBA preemption also extends to general laws that can reasonably be understood to "relate to health . . . plans" whenever such laws would attempt to construe or enforce the coverage or benefits terms of FEHBA health plans.

The majority concludes that ERISA precedent is not helpful in determining the preemptive reach of § 8902(m)(1). Certainly, ERISA is a more comprehensive remedial statute than FEHBA, but that does not warrant a different conclusion with respect to preemption. The statutes' preemption clauses are notably similar. ERISA preemption applies to "any and all State laws insofar as they may now or hereafter relate to any employee benefit plan described in [the statute]." 29 U.S.C. § 1144(a) (emphasis added). FEHBA preemption applies to "any State or local law, or any regulation issued thereunder, which relates to health insurance or plans." 5 U.S.C. § 8902(m)(1) (emphasis added). More important, the objectives of the two laws are virtually identical. FEHBA — in particular, its amended preemption provision — is designed "to offer uniform benefits" to tens of thousands of federal employees across the nation. H.R. Rep. No. 105-374, at 9.

The majority suggests that construing § 8902(m)(1) to apply to state contract law renders meaningless the statute's limitation of federal preemption to state or local law that "relates to health insurance or plans." I cannot agree. Here again, ERISA precedent is instructive in distinguishing between generally applicable state laws that "relate to" health plans and laws that tangentially implicate such plans without relating to them. For example, in Mackey v. Lanier Collection Agency Service, Inc., 486 U.S. 825, 841, 108 S.Ct. 2182, 100 L.Ed.2d 836 (1988), the Supreme Court concluded that ERISA preemption of state laws that "relate to any employee benefit plan" did not extend to a state's garnishment statute, even though the garnishment would operate on ERISA benefits. In that case, state law did not attempt to construe the benefits afforded under an ERISA plan; it merely authorized the garnishment of whatever benefits were payable thereunder. Similarly, in New York State Conference of Blue Cross Blue Shield Plans v. Travelers Ins. Co., 514 U.S. at 660-61, 115 S.Ct. 1671, the Court noted that generally applicable state quality control and workplace regulations may tangentially affect what benefits an ERISA plan will be able to afford, but they do not attempt to construe the benefits provided by any particular plan. Application of these decisions to this case suggests that where a state law of general application would be employed to construe the rights enforceable under the coverage or benefits terms of a FEHBA plan, such a law "relates to health insurance or plans" and is properly preempted by federal law. But where general state or local law affects FEHBA coverage or benefits only tangentially, without attempting to construe or enforce those plan terms, preemption may not be warranted. Put another way, § 8902(m)(1) contemplates that the coverage and benefits terms of FEHBA plans will always be construed only by reference to uniform federal common law. That law will then preempt any state or local laws that relate to health insurance or plans, both (1) laws specifically denominated as such and (2) general laws that are fairly deemed to "relate to health insurance or plans" in those cases where such laws would attempt to construe the coverage or benefits terms of such a plan.

American Airlines, Inc. v. Wolens, 513 U.S. 219, 115 S.Ct. 817, 130 L.Ed.2d 715 (1995), is not to the contrary. The question in that case was whether the Airline Deregulation Act's preemption clause, which forbids states from enacting or enforcing "any law . . . relating to [air carrier] rates, routes, or services," 49 U.S.C.App. § 1305(a)(1) (1993) (now codified with technical changes at 49 U.S.C. § 41713), preempts a state law contract action to enforce rates, routes, and services set forth in an agreement between private parties. The Supreme Court said the answer was no. Wolens, 513 U.S. at 228-29, 115 S.Ct. 817. It explained that the Deregulation Act preempted only state-imposed, as opposed to privately contracted-for, rates, routes, and services. Moreover, the purpose of the Deregulation Act was to encourage competition in these areas, which anticipated a variety of private contractual arrangements. In this context, the Court observed that it was not "plausible that Congress meant to channel into federal courts the business of resolving, pursuant to judicially fashioned federal common law, the range of contract claims relating to airline rates, routes, or services." Id. at 232, 115 S.Ct. 817. In so ruling, the Court specifically distinguished the Deregulation Act from ERISA. See id. (noting that ERISA "does channel civil actions into federal court . . . under a comprehensive scheme . . . to promote prompt and fair claims settlement" (internal citations omitted)). Precisely because ERISA's objective is uniformity rather than competition, it makes sense to conclude that Congress intended contract claims arising under that statute to be reviewed according to a single national legal standard.

The same conclusion obtains as to FEHBA. The 1995 amendment to 5 C.F.R. § 890.107 channels the vast majority of benefits claims — those by plan beneficiaries — into federal court. See 5 C.F.R. § 890.107(c). As for any remaining FEHBA actions, Congress's expectation when it amended 5 U.S.C. § 8902(m)(1) in 1998 was to "strengthen the case for trying FEHB program disputes in Federal courts rather than state courts." H.R. Rep. No. 105-374, at 9, 16. Further, as already discussed, FEHBA's preemption provision and its uniformity objective have more in common with ERISA than with the Deregulation Act in signaling Congress's intent to have the coverage and benefits terms of FEHBA health insurance plans construed according to uniform federal common law. FEHBA does not simply bar states from enacting laws with respect to the coverage and benefit terms of federal health plans. It contemplates that the coverage and benefits terms of FEHBA plans will themselves supersede any state laws that relate to health insurance or health plans, something possible under the Supremacy Clause only if the construction and enforcement of those plan terms are the exclusive province of federal common law.

I recognize that in Wolens the Supreme Court observed that "contract law is not at its core `diverse, nonuniform, and confusing.'" 513 U.S. at 233 n. 8, 115 S.Ct. 817 (quoting Cipollone v. Liggett Group, Inc., 505 U.S. 504, 529, 112 S.Ct. 2608, 120 L.Ed.2d 407 (1992) (plurality opinion)). Thus, the Court anticipated no serious risk of nonuniform adjudication in the enforcement of a nationwide contract by the various states. The amendment to § 8902(m)(1), however, makes plain that Congress was not limiting FEHBA preemption to state laws that might conflict with the terms of federal-employee health plans. Rather, Congress has made clear that it deems any state laws relating to health insurance or health plans, even those that are consistent with federal law, as an obstacle to the uniform construction and enforcement of FEHBA plans. Cf. Ingersoll-Rand Co. v. McClendon, 498 U.S. at 139, 111 S.Ct. 478 ("Pre-emption is also not precluded simply because a state law is consistent with ERISA's substantive requirements.").

Here, Empire seeks to enforce a FEHBA plan term that expressly conditions the receipt of benefits on an enrollee's duty to reimburse the insurer if he recovers in tort from the third party causing his injuries. Because the operative Plan's reimbursement requirement plainly "relates to" the provision of insurance benefits, I conclude that under the broad preemption provision of § 8902(m)(1), Empire cannot look to state contract law to construe or enforce its rights. See Hayes v. Prudential Ins. Co. of Am., 819 F.2d 921, 926 (9th Cir. 1987) (holding that state law contract and tort claims, which expanded obligations under the terms of a FEHBA plan, were preempted under the earlier version of § 8902(m)(1)). In that context, state contract law qualifies as a law that "relates to health insurance or plans," which is necessarily preempted by federal common law construing FEHBA coverage and benefits terms.

The 1998 amendment to § 8902(m)(1) was surely not designed to expand federal preemption of state law in order to leave insurance carriers without any means to enforce their rights under FEHBA plans. For reasons already discussed, I assume that Congress intended FEHBA contracts to be enforceable. See Jackson Transit Auth. v. Local Div. 1285, Amalgamated Transit Union, 457 U.S. at 20, 102 S.Ct. 2202. Because I conclude that Congress expressly proscribed the use of state contract law to construe rights relating to FEHBA benefits or coverage, it logically follows that Congress was thereby authorizing courts to look to federal common law both to construe those rights uniformly and to resolve insurance carriers' FEHBA claims. See, e.g., Itar-Tass Russian News Agency v. Russian Kurier, Inc., 153 F.3d 82, 90 (2d Cir. 1998) (stating that when a statute recognizes rights but fails to provide necessary principles for their enforcement, courts must "fill the interstices of the Act by developing federal common law").

This conclusion is consistent with MedCenters Health Care v. Ochs, 26 F.3d 865, 867 (8th Cir. 1994). Relying on the pre-1998 preemption provision of FEHBA, the Eighth Circuit rejected a jurisdictional challenge to a FEHBA carrier's contract claim for restitution, holding that federal law governs such claims. Although the decision is brief, I can only assume that its respected author, Judge Richard Arnold, thought it so obvious that Congress had authorized federal common law to resolve FEHBA coverage or benefits disputes that the point merited little discussion. See also Tackitt v. Prudential Ins. Co., 758 F.2d 1572 (11th Cir. 1985) (citing FEHBA's former preemption provision for proposition that federal law controls interpretation of FEHBA contracts). Cf. Goepel v. Nat'l Postal Mail Handlers Union, 36 F.3d at 309 n. 3, 315 (recognizing that FEHBA claims may be governed by federal common law, but declining to reach the issue).

In sum, because (1) Empire's contract action seeks to enforce the benefits terms of a FEHBA plan; (2) § 8902(m)(1) contemplates that such benefits terms will uniformly be construed and enforced according to federal common law; and (3) any state law, including contract law, invoked to construe and enforce such benefits terms qualifies as a law that "relates to health insurance or plans" preempted by federal common law, I conclude that Empire's action is a case arising under federal common law over which the district court could properly exercise jurisdiction.

C. The Effect of 5 U.S.C. § 8912 on Federal Jurisdiction in this Case

Ms. McVeigh insists that, even if Empire's claims arise under federal common law, the district court cannot exercise § 1331 jurisdiction over them because federal jurisdiction over FEHBA claims is limited to that expressly conferred in 5 U.S.C. § 8912 (vesting federal courts with "original jurisdiction . . . of a civil action or claim against the United States founded on" FEHBA). Because the majority concludes that Empire's claims do not arise under federal common law, it does not reach this issue. Because I reach a different conclusion with respect to the application of federal common law, I write briefly to explain why I reject Ms. McVeigh's § 8912 argument.

Absent some indication to the contrary, statutes vesting courts with jurisdiction over certain matters do not strip courts of their jurisdiction over others. As the Supreme Court stated in Verizon Maryland, Inc. v. Public Service Commission of Maryland,"[t]he mere fact that some acts are made reviewable [under a statute] should not suffice to support an implication of exclusion as to others." 535 U.S. 635, 643-44, 122 S.Ct. 1753, 152 L.Ed.2d 871 (2002) (internal quotation marks omitted). Section 8912 does not purport to deprive federal courts of § 1331 jurisdiction. It simply authorizes federal jurisdiction over FEHBA claims against the United States. See Rice v. Office of Servicemembers' Group Life Ins., 260 F.3d 1240, 1244-46 (10th Cir. 2001) (holding that 38 U.S.C. § 1975, which grants district courts "original jurisdiction of any civil action or claim against the United States founded upon [the Servicemen's Group Life Insurance Act (SGLIA)]," does not preclude § 1331 jurisdiction of SGLIA suits against parties other than the United States). Indeed, without the provision, sovereign immunity would bar such claims. See Adeleke v. United States, 355 F.3d 144, 150 (2d Cir. 2004). But nothing in § 8912 evinces Congress's intent to limit § 1331's jurisdictional grant in FEHBA cases involving parties other than the United States.

For all these reasons, I conclude that this suit to enforce the terms of a FEHBA plan does arise under federal common law, and I dissent from the majority's conclusion that the case was properly dismissed for lack of subject matter jurisdiction.