{ "id": 1891369, "name": "James G. BARR and Delois Barr v. ARKANSAS BLUE CROSS AND BLUE SHIELD, INC.", "name_abbreviation": "Barr v. Arkansas Blue Cross & Blue Shield, Inc.", "decision_date": "1988-12-05", "docket_number": "88-202", "first_page": "262", "last_page": "268", "citations": [ { "type": "official", "cite": "297 Ark. 262" }, { "type": "parallel", "cite": "761 S.W.2d 174" } ], "court": { "name_abbreviation": "Ark.", "id": 8808, "name": "Arkansas Supreme Court" }, "jurisdiction": { "id": 34, "name_long": "Arkansas", "name": "Ark." }, "cites_to": [ { "cite": "276 Ark. 1", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1751496 ], "weight": 2, "year": 1982, "opinion_index": 0, "case_paths": [ "/ark/276/0001-01" ] }, { "cite": "584 F. Supp. 288", "category": "reporters:federal", "reporter": "F. Supp.", "case_ids": [ 3664574 ], "year": 1984, "opinion_index": 0, "case_paths": [ "/f-supp/584/0288-01" ] }, { "cite": "739 F.2d 1508", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 654400 ], "year": 1984, "opinion_index": 0, "case_paths": [ "/f2d/739/1508-01" ] }, { "cite": "241 Cal. Rptr. 756", "category": "reporters:state", "reporter": "Cal. Rptr.", "year": 1987, "opinion_index": 0 }, { "cite": "196 Cal. App. 3d 206", "category": "reporters:state", "reporter": "Cal. App. 3d", "case_ids": [ 2218722 ], "year": 1987, "opinion_index": 0, "case_paths": [ "/cal-app-3d/196/0206-01" ] }, { "cite": "548 F. Supp. 251", "category": "reporters:federal", "reporter": "F. Supp.", "case_ids": [ 3502536 ], "year": 1982, "opinion_index": 0, "case_paths": [ "/f-supp/548/0251-01" ] }, { "cite": "791 F.2d 1501", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 10553123 ], "year": 1986, "opinion_index": 0, "case_paths": [ "/f2d/791/1501-01" ] }, { "cite": "294 Ark. 373", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1895801 ], "weight": 2, "year": 1988, "opinion_index": 0, "case_paths": [ "/ark/294/0373-01" ] }, { "cite": "673 F.2d 332", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 1412791 ], "year": 1982, "opinion_index": 0, "case_paths": [ "/f2d/673/0332-01" ] }, { "cite": "395 U.S. 185", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 1771532 ], "year": 1969, "opinion_index": 0, "case_paths": [ "/us/395/0185-01" ] }, { "cite": "303 U.S. 41", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 6137092 ], "year": 1938, "opinion_index": 0, "case_paths": [ "/us/303/0041-01" ] }, { "cite": "29 U.S.C. \u00a7 185", "category": "laws:leg_statute", "reporter": "U.S.C.", "year": 1982, "pin_cites": [ { "page": "(a)" } ], "opinion_index": 0 }, { "cite": "471 U.S. 202", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 6199648 ], "year": 1985, "pin_cites": [ { "parenthetical": "where the Court held \u00a7 301 of the Labor Management Relations Act, 29 U.S.C. \u00a7 185(a) (1982), preempted Wisconsin tort law for alleged bad faith delay in making disability payments under a collective bargaining agreement" } ], "opinion_index": 0, "case_paths": [ "/us/471/0202-01" ] }, { "cite": "29 U.S.C. \u00a7 1144", "category": "laws:leg_statute", "reporter": "U.S.C.", "year": 1982, "pin_cites": [ { "page": "(a)" } ], "opinion_index": 0 }, { "cite": "107 S. Ct. 1549", "category": "reporters:federal", "reporter": "S. Ct.", "case_ids": [ 6208979 ], "year": 1987, "opinion_index": 0, "case_paths": [ "/us/481/0041-01" ] }, { "cite": "819 F.2d 921", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 1710143 ], "year": 1987, "opinion_index": 0, "case_paths": [ "/f2d/819/0921-01" ] }, { "cite": "5 C.F.R. \u00a7 890.105", "category": "laws:admin_compilation", "reporter": "C.F.R.", "weight": 3, "year": 1986, "pin_cites": [ { "page": "(c)(3)" }, { "page": "(d)(1)" } ], "opinion_index": 0 }, { "cite": "5 U.S.C.A. \u00a7\u00a7 8901-8914", "category": "laws:leg_statute", "reporter": "U.S.C.", "pin_cites": [ { "parenthetical": "West 1967 & Supp. 1988" } ], "opinion_index": 0 } ], "analysis": { "cardinality": 597, "char_count": 10404, "ocr_confidence": 0.892, "pagerank": { "raw": 4.2741229974679127e-07, "percentile": 0.9158294556941351 }, "sha256": "da3e0907f86bb7595047ed089475b7f87e84c285561446debfc12a83e441f403", "simhash": "1:adaad5d8d9a1e29b", "word_count": 1694 }, "last_updated": "2023-07-14T17:24:39.933112+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "James G. BARR and Delois Barr v. ARKANSAS BLUE CROSS AND BLUE SHIELD, INC." ], "opinions": [ { "text": "Tom Glaze, Justice.\nThis case involves a claim dispute under the Federal Employees Health Benefit Act (FEHBA) embodied in 5 U.S.C.A. \u00a7\u00a7 8901-8914 (West 1967 & Supp. 1988). Appellant James G. Barr, a retired Federal employee, paid into the Federal Employees Benefit Plan offered through the appellee, Arkansas Blue Cross and Blue Shield. Under FEHBA, the United States Office of Personnel Management (OPM) enters into contracts with private carriers, in this case the appellee, that will administer the Federal Benefit plan. OPM promulgated regulation 5 C.F.R. \u00a7 890.105 (1986) which sets forth a procedure for resolving benefit claim disputes between a FEHBA plan\u2019s carrier and enrollees in the plan, such as appellants.\nAppellants submitted hospital and medical bills to appellee for payment under the terms of FEHBA. After appellee denied two requests for payment of those bills, appellants filed suit against appellee in circuit court, alleging breach of contract and the tort of bad faith for appellee\u2019s alleged outrageous conduct in denying the appellants\u2019 claims. Appellee moved to dismiss the appellants\u2019 action because the appellants had not exhausted their administrative remedies by appealing to the OPM. Appellee also moved for partial summary judgment on the tort of bad faith claim on the basis that such a state claim was preempted by FEHBA. The trial court granted both of appellee\u2019s motions, and we affirm.\nRegarding the preemption issue, we first turn to the terms of the preemption clause contained in \u00a7 8902(m)(l) of FEHBA, which provides as follows:\nThe 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. (Emphasis added.)\nThe Ninth Circuit Court of Appeals in Hayes v. Prudential Ins. Co. of America, 819 F.2d 921 (9th Cir. 1987), considered the foregoing clause in a case similar to the one before us. In Hayes, the retired employee claimed he was wrongfully refused benefits under FEHBA and sought damages against the contract carrier (Prudential Insurance Co.) alleging state law causes of action which included breach of contract and breach of a duty of good faith and fair dealing. The employee contended his state claims were not preempted under \u00a7 8902(m)(l) because the claims related to the manner in which Prudential Insurance Co. processed his benefits and not to the \u201cnature or extent of coverage or benefits.\u201d The court rejected the contention, stating no such distinction existed since tort claims arising out of the manner in which a benefit claim is handled are not separable from the terms of the contract. The court reasoned that the employee\u2019s state claims \u201crelate to\u201d the health insurance plans, under \u00a7 8902(m)(l) of FEHBA, as long as they have a connection with or refer to the plan. Because the court determined the employee\u2019s state law claims referred to the health insurance plan provided under FEHBA, it held the claims fell under the Act\u2019s preemption clause. The Hayes court further concluded as follows:\nBecause the state law claims invariably expand appellees\u2019 obligations under the terms of the Plan, the claims are inconsistent with the Plan and, hence, preempted under \u00a7 8902(m)(l).\nThe rationale employed by the court in Hayes is well supported by the Supreme Court\u2019s decision in Pilot Life Ins. v. Dedeaux, 107 S. Ct. 1549 (1987). In Dedeaux, the Court held that the Employee Retirement Income Security Act (ERISA) preempts state common law tort and contract claims for benefits under an ERISA regulated plan. The Supreme Court\u2019s holding was based upon its interpretation and application of the following preemptive clause contained in ERISA, which is notably similar to FEHBA\u2019s preemptive clause before us now:\n[T]he provisions of this subchapter . . . shall supersede any and all state laws insofar as they may now or hereafter relate to any employee benefit plan .... 29 U.S.C. \u00a7 1144(a) (1982).\nIn construing the foregoing clause, the Supreme Court gave the phrase \u201crelate to\u201d its broad common-sense meaning, such that a state law \u201crelates to\u201d a benefit plan in the normal sense of the phrase if it has a connection with or reference to such a plan. In doing so, the Court emphasized that the preemption clause was not limited to state laws specifically designed to affect employee benefits plans and concluded that common law causes of action raised in Dedeaux\u2019s complaint, each based on alleged improper processing of a claim for benefits under an employee benefit plan, undoubtedly met the criteria for preemption under the clause. Cf. Allis-Chalmers Corp. v. Lueck, 471 U.S. 202 (1985) (where the Court held \u00a7 301 of the Labor Management Relations Act, 29 U.S.C. \u00a7 185(a) (1982), preempted Wisconsin tort law for alleged bad faith delay in making disability payments under a collective bargaining agreement).\nWe believe the principles employed by the Court in Dedeaux, to determine Congress\u2019s intent and purpose in enacting the preemptive clause in ERISA, are equally applicable here, when construing FEHBA\u2019s preemptive clause. As we have cited already, other jurisdictions have adopted this same view when holding state causes of actions, such as contract and bad faith tort, are precluded under FEHBA. In the present case, appellants\u2019 actions clearly made reference or related to the plans provided by FEHBA, and in order to prevail in their breach of contract and bad faith tort claims, appellants must show that the appellee failed, in varying degrees, to comply with the requirements under that federal law when appellee denied appellants their benefits. In accordance with what we believe to be the controlling law on this subject, we conclude that appellants\u2019 state actions are preempted under FEHBA, and that the trial court was correct in so holding.\nNext, we address appellants\u2019 argument that the trial court erred in dismissing their action because appellants failed to exhaust their administrative remedies. The doctrine of exhaustion of administrative remedies provides that no one is entitled to judicial relief for a supposed or threatened injury until the prescribed administrative remedy has been exhausted. Myers v. Bethlehem Shipbuilding Corp., 303 U.S. 41 (1938). The doctrine is, however, subject to numerous exceptions. McKart v. United States, 395 U.S. 185 (1969). For example, exhaustion is not required where no genuine opportunity for adequate relief exists or where irreparable injury will result if the complaining party is compelled to pursue administrative remedies. Exhaustion is also not required where an administrative appeal would be futile. See, e.g., Linfors v. United States, 673 F.2d 332 (11th Cir. 1982).\nAppellants first claim no remedy is available to them because they failed to request a review of the denial of benefits within a 90-day period required under 5 C.F.R. \u00a7 890.105(c)(3). We find little merit in this argument in view of 5 C.F.R. \u00a7 890.105(d)(1), which provides that OPM may extend the time for requesting a review when a person shows he or she was never notified of the time limit or was prevented by circumstances beyond his or her control from submitting a timely request for review. Clearly, OPM has the discretion to grant appellants a belated review, and we are unable to presume OPM will decline such a request given an opportunity to do so.\nAppellants next argue that the administrative remedy fails to provide them with adequate relief because they seek judicial redress for appellee\u2019s bad faith conduct. This argument, of course, is resolved by our decision that FEHBA preempts the state causes of actions sought by appellants. Thus appellants\u2019 remedies lie within the terms and procedures set forth in that federal law.\nAppellants also assert their claim clearly would be rejected by OPM because appellee has rejected it twice and it was rejected again by the trial court. Appellants\u2019 assertion ignores that the OPM review process provided by law is designed to remedy any error committed by a carrier \u2014 in this case, the appellee. As is set out in \u00a7 8902(j) of FEHBA, the carrier is required to pay benefits under the law if OPM finds that the employee is entitled to them.\nFinally, appellants argue estoppel as another exception or reason they should not be obliged to pursue their administrative remedies. They claim, among other things, that the appellee had a duty, but failed, to advise appellants of their responsibility to seek OPM review. Appellants never raised this point below, and it is well settled that this court will not consider arguments raised for the first time on appeal. Hooper-Bond. Ltd. Partnership Fund III v. Ragar, 294 Ark. 373, 742 S.W.2d 947 (1988).\nBecause appellants fail to establish their situation and circumstances relieve them from first pursuing their administrative remedies under FEHBA, we believe the trial court was right in dismissing their claim under that federal law for their failure to exhaust their remedies. Also, for the reasons given hereinabove, we affirm the trial court\u2019s ruling that appellants\u2019 state claims are preempted under the provisions of FEHBA.\nOther jurisdictions have held to the same effect. See Blue Cross & Blue Shield v. Dept. of Banking, 791 F.2d 1501 (11th Cir. 1986); LaBelle v. Blue Cross & Blue Shield United, 548 F. Supp. 251 (W.D. Wisc. 1982); Hartenstine v. Superior Court, 196 Cal. App. 3d 206, 241 Cal. Rptr. 756 (1987). But see, Howard v. Group Hosp. Service, 739 F.2d 1508 (10th Cir. 1984); Skoller v. Blue Cross-Blue Shield of Greater New York, 584 F. Supp. 288 (S.D.N.Y. 1984).\nIn reaching this issue, we observe that a state court, as here, has concurrent jurisdiction with the federal courts to enforce rights granted by a federal act unless prohibited from doing so. McEntire v. Monarch Feed Mills, Inc., 276 Ark. 1, 631 S.W.2d 307 (1982). We find nothing in FEHBA that prohibits this court\u2019s interpretation of that federal law.", "type": "majority", "author": "Tom Glaze, Justice." } ], "attorneys": [ "Q. Byrum Hurst, for appellants.", "Wright, Lindsey & Jennings, for appellee." ], "corrections": "", "head_matter": "James G. BARR and Delois Barr v. ARKANSAS BLUE CROSS AND BLUE SHIELD, INC.\n88-202\n761 S.W.2d 174\nSupreme Court of Arkansas\nOpinion delivered December 5, 1988\nQ. Byrum Hurst, for appellants.\nWright, Lindsey & Jennings, for appellee." }, "file_name": "0262-01", "first_page_order": 292, "last_page_order": 298 }