Myers v. United States

WILKINSON, Circuit Judge:

The principal issue here is whether a privately procured insurance policy covering “non-medical expenses and pain and suffering” constitutes double coverage under the terms of an exclusion clause in a government employees’ health insurance policy. We conclude that recovery under the government policy is not prohibited by the double coverage exclusion.

Plaintiff Donald R. Myers, a Federal Bureau of Investigation special agent, brought this action, pursuant to 5 U.S.C. § 8912 (1982), based on alleged wrongful refusal of the Special Agents Mutual Benefit Association (SAMBA) Health Benefits Plan to pay his claim for medical benefits arising from an accidental injury. SAMBA is a non-profit corporation providing health insurance to FBI employees under a contract with the Office of Personnel Management (OPM), the administrative agency responsible for federal employee health insurance pursuant to 5 U.S.C. § 8901 (1982) et seq. Myers, insured under the SAMBA plan as an FBI agent, also elected to purchase a $5,000 insurance policy from Special Agents Travel Insurance (SATI), a private insurer, at his own expense.

Following his injury on March 19, 1979, Myers incurred $3,906.89 in medical expenses. SATI paid Myers the full coverage of $5,000 under its policy, which authorizes indemnification for “non-medical expenses and pain and suffering.” * SAMBA, however, paid Myers only the $50.00 deductible under the SATI policy, refusing the remainder of Myers’ medical expenses claim on the ground that the SATI policy represented double coverage. The double coverage exclusion of the SAMBA policy is applicable when “a person is eligible for benefits under any other kind of group health cover*1074age____” It requires, in such cases, that benefits be reduced to an amount which will not exceed all reasonable and customary expenses “when added to the benefits available from all plans for the same covered expenses.” The district court determined that the SAMBA and SATI plans “plainly provide coverage for two different types of loss,” and ruled that Myers was entitled to recover $3,856.89 under the SAMBA policy for the remainder of his medical expenses.

We agree. While the SAMBA and SATI plans are both group policies, the SATI plan is not health insurance, but an accident indemnification plan covering non-medical losses, and so falls outside the double coverage provision. A health benefits plan, as defined by 5 U.S.C. § 8901(6), is a group insurance policy provided “for the purpose of providing, paying for, or reimbursing expenses for health services.” It is obvious from the face of the SATI policy that expenses for health services are not being reimbursed, but only non-medical expenses and pain and suffering, as expressly stated. Medical expenses and reimbursement for non-medical pain and suffering cannot be equated.

The government relies on a 1979 OPM decision that found the SATI policy provision in issue to constitute double coverage with the SAMBA plan, because medical expenses must be incurred as a precondition to payment by SATI. Under the SATI policy, the amount of indemnity is “equal to the expense incurred for the medical and dental treatment of the bodily injury.” We are, of course, required to defer to an administrative agency’s interpretation of its own regulations unless “plainly erroneous or inconsistent with the regulation.” United States v. Larionoff, 431 U.S. 864, 872, 97 S.Ct. 2150, 2155, 53 L.Ed.2d 48 (1977), quoting Bowles v. Seminole Rock Co., 325 U.S. 410, 414, 65 S.Ct. 1215, 1217, 89 L.Ed. 1700 (1945); Allen v. Bergland, 661 F.2d 1001, 1004 (4th Cir.1981). Here, however, the OPM interpretation is not a reasonable one, and must be regarded as inconsistent with the double coverage provision. OPM was not entitled to disregard the express non-medical nature of the SATI coverage merely because benefits were calculated with reference to medical expenses. Pain and suffering, being subjective, must necessarily be assessed by an insurer according to some objective criterion. There was nothing inappropriate in SATI’s selection of medical expenses as a means to quantify such loss, rather than paying some arbitrary sum.

We also concur in the district court’s denial of attorney’s fees claimed by Myers under South Carolina law. It is unnecessary to decide whether SAMBA’s refusal to pay was “without reasonable cause or in bad faith,” as required by the state statute in issue, S.C.Code Ann. § 38-9-320(1) (1985), for we conclude that state law is preempted where a federal employees’ insurance policy and the regulations pertaining thereto are concerned. 5 U.S.C. § 8902(m)(l) (1982) provides:

The provisions of any contract under this chapter which relate to the nature 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 to the extent that such law or regulation is inconsistent with such contractual provisions.

Nowhere does the SAMBA policy or the relevant federal law authorize a plaintiff to recover attorney’s fees in an action brought under 5 U.S.C. § 8912, and a state law which purports to allow recovery of additional benefits not contemplated by a federal insurance contract must be deemed inconsistent. Accordingly, federal law precludes any award of attorney’s fees here.

For the reasons stated, both the district court’s judgment in plaintiff’s favor for $3,856.89 in insured medical expenses and the denial of attorney’s fees are

AFFIRMED.

SAMBA’s General Manager admitted that SATI had paid $5,000, and the district court so found. The government contends that Myers received only $3,820.25 under the SATI plan as "Accident Indemnification for Non-Medical Expense,” and that the remaining payment bringing Myers up to the total policy coverage was under the separate "Hospital Disability Income Protection” coverage of the SATI policy. We need not determine the precise source of the SATI payments, as it does not affect our analysis.