Court: District Court, E.D. Virginia; October 12, 2011; Federal District Court
Defendants Chartis Insurance Agency, Inc., American Home Assurance Company, and ARC of the Virginia Peninsula, Inc. filed a Motion to Dismiss the United States’ Amended Complaint on May 4, 2011, asserting lack of jurisdiction and failure to state a claim under Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure. The Court, led by Judge Robert G. Doumar, denied the motion.
The background involves James E. Thompson, a retired Air Force member, who fell and injured his arm while working for ARC on August 26, 2007. He filed a workers' compensation claim in Virginia and settled in May 2009, without informing the United States about the settlement negotiations despite their claim for reimbursement for medical expenses incurred. The United States claims entitlement to $20,354.90 for medical care provided to Thompson under 10 U.S.C. § 1095, arguing that this amount is recoverable from the employer or its workers' compensation insurer.
Legal standards detail that the plaintiff must prove jurisdiction when challenged and that a motion to dismiss for failure to state a claim should be denied unless it is evident that no set of facts would support the claim. The threshold for surviving such a motion is low, requiring only a short and plain statement of the claim with enough factual content to infer liability.
Defendants moved to dismiss the Amended Complaint on the grounds of lack of subject matter jurisdiction under Fed. R. Civ. P. 12(b)(1). They claimed the Court could not hear the case because it would conflict with a final order from the Virginia Workers’ Compensation Commission. However, the Court found Defendants' jurisdictional challenge insufficiently supported, noting that federal district courts have original jurisdiction over cases arising under U.S. law, specifically citing 10 U.S.C. § 1095, which allows the United States to seek reimbursement from third-party payers for healthcare costs related to armed forces members. Defendants cited Code of Virginia § 65.2-201 to argue that the Virginia Workers’ Compensation Commission has exclusive jurisdiction, but the Court determined that this statute does not prevent the United States from pursuing its claims. Consequently, the motion to dismiss under Rule 12(b)(1) was denied.
In a separate motion under Fed. R. Civ. P. 12(b)(6), Defendants contended that 10 U.S.C. § 1095 was inapplicable because Mr. Thompson had settled his workers’ compensation claim, releasing them from liability. They argued that he could not seek reimbursement or indemnification under the statute. The Court rejected this argument, emphasizing that federal regulations clarify that the obligation to reimburse the United States is not negated by a settlement. Thus, Defendants' attempt to disclaim liability based on the settlement was found unpersuasive in light of the applicable federal statutes.
32 C.F.R. § 220.13 allows the United States to waive or alter its right to seek reimbursement, contingent upon stipulations from authorized officials under 10 U.S.C. § 1095. § 220.2 clarifies that payments from third-party payers to beneficiaries do not satisfy the requirements of § 1095. The Supremacy Clause prevents Defendants from using state law to evade obligations under § 1095, which grants the U.S. the right to reimbursement from third-party payers. Regulations clarify that only payments made directly to the U.S. can fulfill § 1095 requirements. The intent of Congress is pivotal in assessing federal statutes' scope and preemption, and the U.S. argues that § 1095 was designed to enable recovery for medical care provided to military retirees and their dependents when insurers are liable.
Allowing a Virginia state law to obstruct these claims would contradict Congressional intent and constitutional principles. The U.S. claims are not bound by Virginia Code § 65.2-601’s statute of limitations, as it has not filed a claim for compensation under that statute but seeks reimbursement under § 1095. The U.S. is not subject to state statutes of limitations when acting in its governmental capacity. Defendants also assert that Chartis Insurance Company, previously AIG Commercial Insurance Agency, is not a proper party to the claims under § 1095, citing that the employer and workers' compensation insurer are liable under Virginia law. The U.S. contends that Chartis is the successor to American Home’s liabilities, including workers’ compensation insurance obligations, and is willing to dismiss Chartis if this is incorrect. Consequently, the Defendants’ Motion to Dismiss is denied, and the Clerk is instructed to send a copy of the order to all counsel of record. The facts are considered in favor of the Plaintiff.
