in-the-matter-of-the-consolidated-hospital-surcharge-appeals-of-gillette ( 2015 )

STATE OF MINNESOTA
IN COURT OF APPEALS
A14-1462
In the Matter of the Consolidated Hospital Surcharge Appeals of
Gillette Children’s Specialty Healthcare, St. Luke’s Hospital,
North Memorial Health Care, HealthEast Care System,
Park Nicollet Health Services, Fairview Health Services,
and Children’s Hospitals and Clinics of Minnesota.
Filed July 6, 2015
Affirmed
Johnson, Judge
Minnesota Department of Human Services
OAH Docket No. 8-1800-30119
Salvatore G. Rotella, Jr. (pro hac vice), Reed Smith LLP, Philadelphia, Pennsylvania; and
Thomas R. Muck, Samuel D. Orbovich, Sten-Erik Hoidal, Fredrikson & Byron, P.A.,
Minneapolis, Minnesota (for appellants Gillette Children’s Specialty Healthcare, St.
Luke’s Hospital, North Memorial Health Care, HealthEast Care System, Park Nicollet
Health Services, Fairview Health Services, and Children’s Hospitals and Clinics of
Minnesota)
Lori Swanson, Attorney General, Barry R. Greller, Patricia A. Sonnenberg, Assistant
Attorneys General, St. Paul, Minnesota (for respondent Minnesota Department of Human
Services)
Considered and decided by Peterson, Presiding Judge; Ross, Judge; and Johnson,
Judge.
SYLLABUS
Minnesota Statutes section 256.9657, subdivision 2, which directs the Minnesota
Department of Human Services to assess and collect from hospitals a 1.56-percent
surcharge on net patient revenues, is not preempted by the Federal Employee Health
Benefits Act or by the federal statute authorizing the TRICARE program.
OPINION
JOHNSON, Judge
We are asked to decide whether the State of Minnesota may, without encroaching
on federal law, assess and collect a surcharge on the revenues that Minnesota hospitals
receive for providing health-care services to persons who are insured by group health-
insurance plans that cover employees of the federal government. We conclude that the
applicable federal statutes do not preempt the applicable state statute. Therefore, we
affirm the decision of the commissioner of human services.
FACTS
In Minnesota, hospitals must pay a 1.56-percent surcharge on “net patient
revenues.” Minn. Stat. § 256.9657, subd. 2 (2014). The surcharge is assessed and
collected by the Minnesota Department of Human Services (DHS) and deposited into the
state general fund. Minn. Stat. § 256.9656 (2014).
The Federal Employees Health Benefits Act (FEHBA) authorizes the federal
government to provide health insurance to employees of the federal government. See
generally 5 U.S.C. §§ 8901-14 (2012). The act directs the federal Office of Personnel
Management (OPM) to enter into group health-insurance contracts with insurance
carriers. 5 U.S.C. § 8902(a). The act includes a provision that preempts certain state
laws:
(1) No tax, fee, or other monetary payment may be
imposed, directly or indirectly, on a carrier or an underwriting
or plan administration subcontractor of an approved health
benefits plan by any State, the District of Columbia, or the
Commonwealth of Puerto Rico, or by any political
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subdivision or other governmental authority thereof, with
respect to any payment made from the Fund.
(2) Paragraph (1) shall not be construed to exempt
any carrier or underwriting or plan administration
subcontractor of an approved health benefits plan from the
imposition, payment, or collection of a tax, fee, or other
monetary payment on the net income or profit accruing to or
realized by such carrier or underwriting or plan
administration subcontractor from business conducted under
this chapter, if that tax, fee, or payment is applicable to a
broad range of business activity.
5 U.S.C. § 8909(f).
Similarly, the federal TRICARE program provides health-insurance plans to
uniformed service members of the United States armed forces. 10 U.S.C. §§ 1071,
1072(7) (2012). In a manner similar to FEHBA, the statute authorizing the TRICARE
program directs the Secretary of Defense to enter into group health-insurance contracts
with insurance carriers. See 10 U.S.C. §§ 1071, 1073(a) (2012). The statute authorizing
the TRICARE program also preempts certain state laws. 10 U.S.C. § 1103 (2012). The
language of the TRICARE preemption provision is different from the language of the
FEHBA preemption provision, but a federal regulation promulgated by the Department of
Defense states that the scope of the TRICARE preemption provision is the same as that
of the FEHBA preemption provision. See 32 C.F.R. § 199.17(a)(7)(iii) (2014) (directing
that interpretations of section 1103 “shall be consistent with those applicable to the
Federal Employees Health Benefits Program under 5 U.S.C. 8909(f)”).
In 2012, seven hospitals operating in Minnesota challenged DHS’s assessments of
the surcharge authorized by section 256.9657, subdivision 2(a), by separately filing
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administrative appeals. See Minn. Stat. § 256.9657, subd. 6. The sole ground of each
administrative appeal was that FEHBA and the statute creating the TRICARE program
preempt the state statute that authorizes the surcharge. The commissioner of human
services denied the hospitals’ administrative appeals in September 2012.
The hospitals requested a consolidated contested-case hearing before the office of
administrative hearings, and the commissioner consolidated the hospitals’ administrative
appeals. See Minn. R. 9510.2040, subp. 3 (2013). In November 2013, the parties filed
cross-motions for summary disposition. See Minn. R. 1400.5500(K) (2013). In January
2014, the assigned administrative law judge (ALJ) issued a ten-page order recommending
that DHS’s motion for summary disposition be granted, that the hospitals’ motion for
summary disposition be denied, and that the hospitals’ administrative appeals be
dismissed.
In July 2014, the commissioner’s delegatee, the director of the appeals office of
the department, issued a seven-page order adopting the ALJ’s recommendation. The
hospitals appeal to this court by way of a writ of certiorari.
ISSUE
Do the federal statutes authorizing the FEHBA and TRICARE programs preempt
Minnesota Statutes section 256.9657, subdivision 2, which authorizes the department of
human services to assess and collect a surcharge on revenues received by Minnesota
hospitals for health-care services to the extent that revenue is received for services
provided to persons covered by the FEHBA and TRICARE programs?
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ANALYSIS
The hospitals argue that the commissioner erred by deciding that Minnesota’s
surcharge on their revenues is not preempted by federal law to the extent that the
hospitals receive revenues for services provided to persons covered by the FEHBA and
TRICARE programs.
The commissioner’s decision arose from a motion for summary disposition.
“Summary disposition is the administrative equivalent of summary judgment.” Pietsch v.
Board of Chiropractic Exam’rs, 683 N.W.2d 303, 306 (Minn. 2004) (citing Minn. R.
1400.5500(K) (2003)). Accordingly, the commissioner may grant a motion for summary
disposition if there is no genuine issue of material fact and the moving party is entitled to
judgment as a matter of law. In re Rate Appeal of Benedictine Health Ctr., 728 N.W.2d
497, 500-01 n.3 (Minn. 2007). In reviewing an agency’s grant of a motion for summary
disposition, “[t]he scope of our review is governed by the Minnesota Administrative
Procedures Act, Minn. Stat. § 14.63-69.” Hy-Vee Food Stores, Inc. v. Minnesota Dep’t of
Health, 705 N.W.2d 181, 184 (Minn. 2005). The Minnesota Administrative Procedures
Act provides:
In a judicial review under sections 14.63 to 14.68, the
court may affirm the decision of the agency or remand the
case for further proceedings; or it may reverse or modify the
decision if the substantial rights of the petitioners may have
been prejudiced because the administrative finding,
inferences, conclusion, or decisions are:
(a) in violation of constitutional provisions; or
(b) in excess of the statutory authority or
jurisdiction of the agency; or
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(c) made upon unlawful procedure; or
(d) affected by other error of law; or
(e) unsupported by substantial evidence in view of
the entire record as submitted; or
(f) arbitrary or capricious.
Minn. Stat. § 14.69 (2014).
A.
We begin our analysis with the source of the federal preemption doctrine, the
Supremacy Clause of the United States Constitution, which provides:
This Constitution, and the Laws of the United States
which shall be made in Pursuance thereof; and all Treaties
made, or which shall be made, under the Authority of the
United States, shall be the supreme Law of the Land; and the
Judges in every State shall be bound thereby, any Thing in the
Constitution or Laws of any State to the Contrary
notwithstanding.
U.S. Const. art. VI, § 2. The preemption of state law may operate impliedly, “through the
direct operation of the Supremacy Clause,” either because a federal statute conflicts with
a state statute or because “the scope of a [federal] statute indicates that Congress intended
federal law to occupy a field exclusively.” Kurns v. Railroad Friction Prods. Corp., 132
S. Ct. 1261, 1265-66 (2012) (quotations omitted); see also In re Qwest’s Wholesale Serv.
Quality Standards, 702 N.W.2d 246, 250-51 (Minn. 2005). In addition, Congress may
enact a statute that expressly preempts certain state laws. Kurns, 132 S. Ct. at 1265.
Thus, “Federal law can preempt state law in three ways: through (1) field preemption,
(2) express preemption, and (3) conflict preemption (sometimes called ‘implied conflict
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preemption’).” Housing & Redevelopment Auth. v. Lee, 852 N.W.2d 683, 687 (Minn.
2014) (citing Fidelity Fed. Sav. & Loan Ass’n v. de la Cuesta, 458 U.S. 141, 152-54, 102
S. Ct. 3014, 3022 (1982)); see also Freightliner Corp. v. Myrick, 514 U.S. 280, 287, 115
S. Ct. 1483, 1487 (1995); In re Estate of Barg, 752 N.W.2d 52, 63-64 (Minn. 2008). In
this case, the parties agree that the issue presented by the hospitals’ appeal is a matter of
express preemption. Accordingly, we focus on the doctrine of express preemption, i.e.,
the power of Congress “to pre-empt state law by so stating in express terms.”
Hillsborough Cnty. v. Automated Med. Labs., Inc., 471 U.S. 707, 713, 105 S. Ct. 2371,
2375 (1985).
When interpreting the preemption provisions of the FEHBA and TRICARE
statutes, we are mindful of the caselaw concerning the interpretation of federal
preemption statutes. The United States Supreme Court has stated that “‘[t]he purpose of
Congress is the ultimate touchstone’ in every pre-emption case.” Altria Grp., Inc. v.
Good, 555 U.S. 70, 76, 129 S. Ct. 538, 543 (2008) (quoting Medtronic, Inc. v. Lohr, 518
U.S. 470, 485, 116 S. Ct. 2240, 2250 (1996) (plurality opinion) (quoting Retail Clerks v.
Schermerhorn, 375 U.S. 96, 103, 84 S. Ct. 219, 223 (1963))); see also Meyer v. Nwokedi,
777 N.W.2d 218, 222 (Minn. 2010). If a federal statute includes an “express preemption
clause,” we should “‘focus on the plain wording of the clause, which necessarily contains
the best evidence of Congress’ preemptive intent.’” Chamber of Commerce of United
States v. Whiting, 131 S. Ct. 1968, 1977 (2011) (quoting CSX Transp., Inc. v.
Easterwood, 507 U.S. 658, 664, 113 S. Ct. 1732, 1737 (1993)). The Supreme Court also
has recognized an “‘assumption that the historic police powers of the States [are] not to
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be superseded by the Federal Act unless that was the clear and manifest purpose of
Congress.’” Altria Grp., 555 U.S. at 77, 129 S. Ct. at 543 (quoting Rice v. Santa Fe
Elevator Corp., 331 U.S. 218, 230, 67 S. Ct. 1146, 1152 (1947)); see also Dahl v.
Charles Schwab & Co., Inc., 545 N.W.2d 918, 922 (Minn. 1996). “Thus, when the text
of a pre-emption clause is susceptible of more than one plausible reading, courts
ordinarily ‘accept the reading that disfavors pre-emption.’” Altria Grp., 555 U.S. at 77,
129 S. Ct. at 543 (quoting Bates v. Dow Agrosciences LLC, 544 U.S. 431, 449, 125 S. Ct.
1788, 1801 (2005)); see also Meyer, 777 N.W.2d at 222.
B.
The preemption provision of FEHBA, which is quoted above in full, states, in
pertinent part, that no state tax “may be imposed, directly or indirectly, on a carrier . . .
with respect to any payment made from the Fund.” 5 U.S.C. § 8909(f)(1). The plain
language of section 8909(f)(1) reveals a clear and manifest intention by Congress to
preempt any state law that imposes a tax on a “carrier” due to the carrier’s receipt of a
payment from the FEHBA fund. See Health Maint. Org. of New Jersey, Inc. v. Whitman,
72 F.3d 1123, 1128, 1133 (3d Cir. 1995) (holding that state tax imposed on carrier is
preempted by FEHBA). But the plain language of section 8909(f)(1) does not speak
directly to the validity of a state law that imposes a tax on a provider that receives
payment from a carrier that receives payment from the FEHBA fund. The parties have
stipulated that the hospitals that are parties to this appeal are health-care providers but not
insurance carriers. The commissioner resolved the hospitals’ administrative appeals in
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part by reasoning that the surcharge authorized by section 256.9657, subdivision 2, “is
not imposed upon carriers.”
The hospitals contend that section 8909(f) preempts section 256.9657, subdivision
2, even though they are not carriers. They emphasize the phrase “directly or indirectly.”
See 5 U.S.C. § 8909(f)(1). They contend that section 256.9657, subdivision 2, indirectly
imposes a tax on carriers because the hospitals pass along to carriers the costs of the
surcharge authorized by section 256.9657, subdivision 2. More specifically, the hospitals
contend that when they set their fees for services that are billed to insurance carriers, they
do so in a manner that ensures that they recoup the costs of the surcharge, which
inevitably causes the FEHBA fund to incur higher insurance premiums than would be
incurred without the surcharge.1
There is no binding precedent on the question whether a state tax such as the
surcharge authorized by section 256.9657, subdivision 2, is preempted by FEHBA.
When interpreting a federal statute, this court is bound by the opinions of the United
States Supreme Court and the opinions of the Minnesota Supreme Court that interpret
and apply federal law. See Citizens for a Balanced City v. Plymouth Congregational
Church, 672 N.W.2d 13, 20 (Minn. App. 2003); Northpointe Plaza v. City of Rochester,
457 N.W.2d 398, 403 (Minn. App. 1990), aff’d, 465 N.W.2d 686 (Minn. 1991); Jendro v.
Honeywell, Inc., 392 N.W.2d 688, 691 n.1 (Minn. App. 1986). Neither the United States
1
The hospitals have submitted a thorough factual record to support this assertion.
On appeal of a summary disposition, we view the facts in the light most favorable to the
non-moving party and, thus, assume that the hospitals pass along the costs of the state
surcharge to carriers. See Benedictine Health Ctr., 728 N.W.2d at 500-01 n.3.
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Supreme Court nor the Minnesota Supreme Court has considered whether section 8909(f)
of FEHBA preempts a state law that imposes a tax or surcharge on health-care providers,
thereby causing the providers to increase the fees paid by carriers, thereby causing the
carriers to increase the premiums paid by the FEHBA fund. It appears that only one
federal court of appeals and only one federal district court have considered that question.
The United States Court of Appeals for the Fourth Circuit, 12 years ago, concluded that
FEHBA does not preempt a West Virginia statute that imposes a tax on health-care
providers, even though the increased costs arising from the state tax may be passed on to
carriers that receive payments from the FEHBA fund. United States v. West Virginia,
339 F.3d 212, 218-19 (4th Cir. 2003). The United States District Court for the District of
Connecticut, five years earlier, held that FEHBA may preempt a state statute that imposes
a tax on health-care providers to the extent that the evidence shows that providers
actually pass on the costs of the tax to carriers. Connecticut v. United States, 1 F. Supp.
2d 147, 153 (D. Conn. 1998).2 It also appears that only one state appellate court has
considered the question. See Mobility Med., Inc. v. Mississippi Dep’t of Revenue, 119 So.
2The commissioner did not cite the Connecticut opinion in her decision, and the
ALJ did not do so in his recommendation. The district court in Connecticut concluded
that the state tax was not preempted because the United States did not submit evidence
that the providers actually passed along the expenses of the tax to FEHBA carriers. See 1
F. Supp. 2d at 153. We do not perceive the Connecticut opinion to be particularly helpful
or persuasive for our purposes because, in reaching its conclusion, the court relied solely
on Travelers Ins. Co. v. Cuomo, 14 F.3d 708 (2d Cir. 1993), rev’d on other grounds by
New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514
U.S. 645, 115 S. Ct. 1671 (1995). Connecticut, 1 F. Supp. 2d at 153. But in Travelers,
the state tax was, in reality, a tax on carriers, although providers were required to collect
the tax from carriers on behalf of the state. See 14 F.3d at 712. In Connecticut, however,
the tax was imposed directly on providers. 1 F. Supp. 2d at 153.
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3d 1002, 1003 (Miss. 2013) (holding that section 8909(f) does not preempt sales taxes
assessed to medical-equipment retailer that sold equipment to individuals covered by
FEHBA plans), cert. denied, 134 S. Ct. 1541 (2014). We may consider and apply the
reasoning and the results of these opinions to the extent that we believe they are
persuasive. See Plymouth Congregational Church, 672 N.W.2d at 20.
In the absence of any binding precedent, we resolve this appeal by applying the
general principles concerning the interpretation of express preemption statutes. To
reiterate, we ask whether the federal statute reveals that preemption “‘was the clear and
manifest purpose of Congress.’” Altria Grp., 555 U.S. at 76, 129 S. Ct. at 543 (quoting
Rice, 331 U.S. at 230, 67 S. Ct. at 1152). In applying that criterion to the FEHBA
preemption provision, we conclude that Congress did not express a “clear and manifest”
purpose to preempt state laws that impose a tax on providers that may have a
consequential economic impact on carriers. If Congress had intended to preempt such a
state law, we must assume that Congress would have used different language or
additional language to make its intention clear. For example, Congress could have added
the following highlighted words to paragraph 1 of section 8909(f), to prohibit a tax
imposed “on a carrier or on a health-care provider to the extent that the provider receives
payments from a carrier . . . .” Such a statement would clearly reveal Congress’s
intention to preempt state laws that impose a tax on providers if the cost of the tax is
passed on to carriers. But Congress did not make such a statement or any similar
statement. Because we do not discern in section 8909(f) a “clear and manifest” intention
by Congress to preempt a state statute that imposes a tax on a provider, we interpret
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section 8909(f) of FEHBA to not preempt section 256.9657, subdivision 2, of the
Minnesota Statutes. See id.3
C.
Before concluding, we must address three additional arguments by the hospitals
that relate to the preemption analysis.
First, the hospitals contend that the commissioner erred by relying on the Fourth
Circuit’s opinion in West Virginia, which the hospitals assert is flawed in its reasoning.
The commissioner relied on West Virginia only insofar as the Fourth Circuit relied on
United States v. Fresno, 429 U.S. 452, 97 S. Ct. 699 (1977). See West Virginia, 339 F.3d
at 216. In Fresno, the United States Supreme Court considered whether a state could
impose a tax on federal employees’ possessory interests in housing provided by the
3
Because Congress’s intent to preempt a tax on providers is not clear and manifest
from the plain language of the FEHBA preemption provision, it is inappropriate to refer
to legislative history. See Chamber of Commerce, 131 S. Ct. at 1980. “Extrinsic
materials have a role in statutory interpretation only to the extent they shed a reliable
light on the enacting Legislature’s understanding of otherwise ambiguous terms.” Exxon
Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 568, 125 S. Ct. 2611, 2626 (2005).
We nonetheless note that the legislative history available to us does not indicate that
Congress clearly intended to preempt a state tax on a provider merely because the tax
would cause providers to charge carriers higher fees. A committee report indicates that
the FEHBA preemption provision was intended to “exempt[] the [Federal Employees
Health Benefits Program] from state premium taxes.” See H.R. Rep. No. 101-881, at 173
(1990), reprinted in 1990 U.S.C.C.A.N. 2017, 2181 (emphasis added). The committee
report also states that the FEHBA preemption provision is “intended to be similar in
nature and application to the existing premium tax exemptions applicable to the
Employees’ Life Insurance Fund.” Id., 1990 U.S.C.C.A.N. at 2184 (citing 5 U.S.C.
§ 8714(c)(1) (2012) (providing that no state tax “may be imposed . . . on, or with respect
to, any premium paid under an insurance policy purchased under this chapter”)).
Because premiums are paid by the FEHBA fund to carriers, the committee report
indicates that the House committee intended to preclude the operation of state taxes only
to the extent that they are imposed on transactions between the FEHBA fund and carriers,
but not on transactions between carriers and providers.
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federal government on federal land. Id. at 455-56, 97 S. Ct. at 701. The Supreme Court
upheld the state statute, holding that “the economic burden on a federal function of a state
tax imposed on those who deal with the Federal Government does not render the tax
unconstitutional so long as the tax is imposed equally on the other similarly situated
constituents of the State.” Id. at 462, 97 S. Ct. at 705. The Supreme Court in Fresno did
not apply a preemption statute but, rather, a constitutional doctrine, i.e., the federal
government’s “immunity from state taxation inherent in the Supremacy Clause.” See id.
at 453, 97 S. Ct. at 700 (citing McCulloch v. Maryland, 17 U.S. 316, 396 (1819)). The
Fourth Circuit reasoned that Fresno provided a useful analogy. West Virginia, 339 F.3d
at 217. We agree that Fresno is analogous. We also acknowledge that Congress may
choose to preempt any state law, even if the state law is not inherently inconsistent with
the Supremacy Clause. See Jones v. Rath Packing Co., 430 U.S. 519, 525, 97 S. Ct.
1305, 1309 (1977). That acknowledgment begs the question whether Congress intended
to preempt the state statute in this case, and we have resolved that question by applying
the caselaw governing the interpretation of express preemption statutes, and we interpret
the applicable federal statute to not preempt the applicable state statute.
Second, the hospitals contend that the commissioner erred by not applying a
decision of the Minnesota Tax Court. In HealthPartners, Inc. v. Commissioner of
Revenue, No. 6925, 1999 WL 123289 (Minn. Tax Ct. Mar. 4, 1999), the tax court
considered whether section 8909(f) of FEHBA preempted the MinnesotaCare tax, which
the commissioner of revenue is authorized to collect from health-care providers based on
gross revenue. See Minn. Stat. § 295.52 (1994). HealthPartners was a “staff model
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health plan company” that contracted directly with OPM to serve both as an insurance
carrier and a health-care services provider for federal employees. HealthPartners, 1999
WL 123289, at *1-2. The tax court concluded that HealthPartners was a “carrier” and
that the tax was imposed “indirectly . . . with respect to the payment by FEHBA.” Id. at
*6. Thus, the tax court held that FEHBA preempted the MinnesotaCare tax as applied to
OPM’s payments from the FEHBA fund to HealthPartners. Id.In this case, the commissioner reasoned that HealthPartners “is neither binding
nor applicable” to the hospital surcharge authorized by section 256.9657, subdivision 2.
The commissioner is correct. The HealthPartners decision is not binding precedent in
this case because the tax court is an executive-branch agency. See Minn. Stat. § 271.01,
subd. 1 (2014). For that reason, tax court decisions have “little, if any, precedential
effect.” Kmart Corp. v. County of Stearns, 710 N.W.2d 761, 769 (Minn. 2006). This
court has said that the tax court itself may not be bound by its own decisions but merely
subject to a duty to provide reasons or explanations for any departure from its prior
decisions. See In re Whitehead, 399 N.W.2d 226, 229 (Minn. App. 1987) (citing Peoples
Natural Gas Co. v. Minnesota Pub. Utilities Comm’n, 342 N.W.2d 348, 352-53 (Minn.
App. 1983), review denied, (Minn. Apr. 24, 1984)). In any event, the HealthPartners
decision is distinguishable because it depended on the fact that HealthPartners was both a
carrier and a provider, while the hospitals in this case are only providers. See
HealthPartners, 1999 WL 123289, at *6; see also Group Health Co-op. v. City of Seattle,
189 P.3d 216, 223 (Wash. Ct. App. 2008) (noting that city could not avoid preemption of
tax on HMO that served as both carrier and provider under section 8909(f) “by
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unilaterally recharacterizing” HMO “as a health care ‘provider’ rather than a carrier”).
Thus, the commissioner did not err by not applying or following the tax court’s decision
in HealthPartners.
Third, the hospitals contend that this court should defer to OPM’s position
concerning the scope of the FEHBA preemption provision. The hospitals contend that
OPM has maintained a “consistently broad interpretation” of section 8909(f) and that this
court should defer to OPM’s interpretation pursuant to Chevron U.S.A., Inc. v. Natural
Resources Defense Council, Inc., 467 U.S. 837, 104 S. Ct. 2778 (1984). Under Chevron,
if a federal statute is ambiguous, a court “must give effect to an agency’s regulation
containing a reasonable interpretation” of the federal statute. Christensen v. Harris Cnty.,
529 U.S. 576, 586-87, 120 S. Ct. 1655, 1662 (2000) (emphasis added) (citing Chevron,
467 U.S. at 842-44, 104 S. Ct. at 2781-82). OPM has promulgated a regulation
concerning section 8909(f), but that regulation does not answer the question before this
court. See 48 C.F.R. § 1631.205-41 (implementing section 8909(f)). Accordingly,
Chevron does not apply.
If an agency has not promulgated a regulation on a particular issue, courts should
give the agency’s position a lesser form of deference. Skidmore v. Swift & Co., 323 U.S.
134, 139-40, 65 S. Ct. 161, 164 (1944). Under Skidmore, a court should consider several
factors in determining the degree of deference owed to an agency’s interpretation of a
federal statute, such as “the thoroughness evident in its consideration, the validity of its
reasoning, its consistency with earlier and later pronouncements, and all those factors that
give it power to persuade.” Young v. United Parcel Serv., Inc., 135 S. Ct. 1338, 1352
15
(2015) (quoting Skidmore, 323 U.S. at 140, 65 S. Ct. at 164). The hospitals rely
primarily on a 2004 letter opinion, which OPM issued after the Fourth Circuit’s decision
in West Virginia. That letter states merely that section 8909(f) “does not preempt the
West Virginia Health Care Provider Tax Act of 1993” and that OPM “will evaluate
whether 5 U.S.C. § 8909(f) preempts taxes in other states in the Fourth Circuit in
accordance with the rationale set forth in” the West Virginia opinion. See Office of Pers.
Mgmt., FEHBA Program Carrier Letter No. 2004-12 (Oct. 4, 2004), available at
http://www.opm.gov/healthcare-insurance/healthcare/carriers/2004/2004-12.pdf. The
letter is not meaningful for purposes of this case because the letter does not state a
position with respect to the laws of states located outside the Fourth Circuit. Because
OPM’s opinion letter does not reveal a clear statement about the scope of the FEHBA
preemption provision, there is nothing to which we can defer. See Young, 135 S. Ct. at
1352 (considering multiple factors, including “thoroughness evident in its
consideration”).
In sum, the hospitals’ additional arguments do not alter our interpretation of the
FEHBA preemption provision. Therefore, we conclude that Minnesota Statutes section
256.9657, subdivision 2, is not preempted by FEHBA or by the statute authorizing the
TRICARE program.
DECISION
The commissioner did not err by adopting the recommendation of the ALJ and
granting the department’s motion for summary disposition.
Affirmed.
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