The following questions and answers apply to all of the plans for which we provide recovery services – the Mail Handlers Benefit Plan, the Rural Carriers Benefit Plan, the Foreign Service Benefit Plan, and the SAMBA Health Benefits Plan.
The Plan is a health benefits plan for federal and postal employees and annuitants sponsored by its employee organization carrier under the terms of a federal procurement contract between the Union and the U.S. Office of Personnel Management (“OPM”). See Plan brochure, p. 3. Plan benefits are paid from an account in the U.S. Treasury, and our net recoveries are returned to the U.S. Treasury account. See 5 U.S.C. § 8909; 48 C.F.R. § 1631.201-70(a).
Yes, the Plan is governed by a federal law known as the Federal Employees Health Benefits (“FEHB”) Act, 5 USC § 8901 et seq. OPM is the statutorily designated administrator of the FEHB Program and it has issued governing regulations at 5 CFR Part 890 and 48 CFR Chapter 16. The FEHB Act includes a general state law preemption provision at 5 USC § 8902(m)(1). OPM has issued regulations setting forth a FEHB plan’s rights of reimbursement and subrogation at 5 C.F.R. § 890.106. The regulations specifically state that the Plan’s “rights and responsibilities are…effective notwithstanding any state or local law, or any regulation issued thereunder, which relates to health insurance or plans.” 5 C.F.R. § 890.106(h).
Furthermore, 5 C.F.R. § 890.106(e) states that a FEHB plan’s rights to recovery “shall be effectuated against any recovery first (before any of the rights of any other parties are effectuated) and is not impacted by how the judgment, settlement, or other recovery is characterized, designated, or apportioned.”
The Plan is exempt from regulation under the Employee Retirement Income Security Act (“ERISA”) because it is a “governmental plan.” 29 USC §§ 1002(32), 1003(b)(1).
Section 2.5(a) of the OPM contract establishing the Plan provides as follows:
The Carrier’s subrogation rights, procedures, and policies, including recovery rights, shall be in accordance with the provisions of the agreed upon brochure text, which is incorporated in this Contract in
Appendix A. As the member is obligated by Section 2.3(a) to comply with the terms of this Contract, the Carrier, in its discretion, shall have the right to file suit in federal court to enforce those rights.
The approved brochure text is found in the Plan contract statement of benefits or brochure for the year in which the medical charges were incurred. You can find the relevant brochure here.
Section 2.6 of the OPM contract establishing the Plan is a federal regulation, 48 C.F.R. § 1652.204-71) that reads as follows:
COORDINATION OF BENEFITS (JAN 2001) (FEHBAR 1652.204-71)
(a) The Carrier shall coordinate the payment of benefits under this contract with the payment of benefits under Medicare, other group health benefits coverages, and the payment of medical and hospital costs under no-fault or other automobile insurance that pays benefits without regard to fault.
(b) The Carrier shall not pay benefits under this contract until it has determined whether it is the primary carrier or unless permitted to do so by the Contracting Officer.
(c) In coordinating benefits between plans, the Carrier shall follow the order of precedence established by the NAIC Group Coordination of Benefits Model Regulation, Rules for Coordination of Benefits, as specified by OPM.
(d) Where (1) the Carrier makes payments under this contract which are subject to COB provisions; (2) the payments are erroneous, not in accordance with the terms of the contract, or in excess of the limitations applicable under this contract; and (3) the Carrier is unable to recover such COB overpayments from the Member or the providers of services or supplies, the Contracting Officer may allow such amounts to be charged to the contract; the Carrier must be prepared to demonstrate that it has made a diligent effort to recover such COB overpayments.
(e) COB savings shall be reported by experience-rated carriers each year along with the Carrier’s annual accounting statement in a form specified by OPM.
(f) Changes in the order of precedence established by the NAIC Group Coordination of Benefits Model Regulation, Rules for Coordination of Benefits, implemented after January 1 of any given year shall be required no earlier than the beginning of the following contract term.
[NOTE: In the event that benefits are payable to the Member under no-fault automobile insurance, the no-fault automobile insurer shall be the Primary Carrier if it is obligated legally to pay benefits for health care expenses without regard to other health benefits coverage that the Member may have. The term “no-fault automobile insurance” includes any automobile insurance policy under which the insurer pays benefits for health care expenses resulting from the accident without regard to whether the insured’s conduct contributed to the accident.
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