Health Care Service Corp. v. Pollitt

The Supreme Court has agreed to decide whether a federal health plan's administrator can be sued in state court.

Juli Pollitt was a federal employee with health care insurance administered by Health Care Service Corporation. In 2007, HCSC stopped paying all claims submitted by Pollitt on behalf of her son and began trying to recoup payments it had already made to service providers on his behalf. Pollitt filed suit in state court, alleging that HCSC took the action it did when the Department of Labor failed to pay the proper premium.

HCSC, which was working for the Labor Department, argued that it had to be sued in federal court, where the law requires the suit be dismissed. But Pollitt contends that the administrator decided on its own, without Labor Department direction, to cancel her child's insurance, leaving it vulnerable to a state lawsuit.

The case was removed to federal court, where it was dismissed as preempted by the Federal Employees Health Benefits Act by Judge Robert Gettleman of the U.S. District Court for the Northern District of Illinois, Eastern Division.

In March, a three-judge panel on the 7th U.S. Circuit Court of Appeals vacated and remanded the lower court's decision, holding that the state law claims were not preempted.

“Disputes about jurisdictional facts must be resolved after a hearing under Fed. R. Civ. P. 12(b)(1),” the 7th Circuit said. “The district court must receive evidence, make appropriate findings, and then either retain or remand the case as the facts require.”

On Oct. 13, the Supreme Court agreed to review the case. Oral arguments are expected to be held some time early next year.

Question presented: whether a federal law -- 5 USC §§ 8901–14 -- on federal employees' health benefits preempts a state court lawsuit filed against a government contractor administering such benefits.