United States Court of Appeals,

                                              Fifth Circuit.

                                              No. 91-3653.

         Linda W. BURKEY and Carey David Burkey, Plaintiffs-Appellees, Cross-Appellants,

                                                   and

          Department of Health & Human Resources, et al., Intervenors-Plaintiffs-Appellees,

                                                    v.

  GOVERNMENT EMPLOYEES HOSPITAL ASSOCIATION, Defendant-Appellant, Cross-
Appellee.

                                             Feb. 17, 1993.

Appeals from the United States District Court for the Eastern District of Louisiana.

Before DAVIS and JONES, Circuit Judges, and Parker1, District Judge.

          EDITH H. JONES, Circuit Judge:

          Linda W. Burkey Mahaffey, a federal employee, and Carey David Burkey filed suit in 1986

contending that the Government Employees Hospital Association ("GEHA") breached its contractual

agreement to pay Carey David Burkey's medical bills. They were awarded recovery under Louisiana

law, which authorizes damages and attorneys' fees for unreasonable delay in paying health and

accident insurance claims. La.Rev.Stat.Ann. 22:657 (West Supp.1992). We hold, contrary to this

award, that Louisiana's penalty provision is inconsistent with and therefore preempted by the federal

law regulating federal employee health benefits. 5 U.S.C. § 8902(m)(1). We also hold that although

Mahaffey did not file a standard claim form with GEHA, she informed the carrier timely and

repeatedly of her quest for benefits, both orally and in writing, in substantial compliance with GEHA's

contractual provisions concerning the filing of claims. Consequently, the judgment for recovery of

medical expenses, though not for statutory penalties and attorneys fees, is affirmed.

                                            BACKGROUND

          The facts are recited as found by the district court. On December 17, 1981 plaintiff, Linda


   1
       Chief Judge for the Eastern District of Texas, sitting by designation.
Burkey, an employee of the Naval Station in New Orleans, had family coverage for herself and her

son, Carey, under a group health policy issued by GEHA as an authorized carrier under the Federal

Employees Health Benefits Act ("FEHBA"), 5 U.S.C. § 8901 et seq. Carey became 22 on November

19, 1981. On December 17, 1981 Carey was rendered a quadriplegic when he was a passenger in

an automobile involved in a collision. Carey was immediately hospitalized at Charity Hospital in New

Orleans, just three days before the 31st day after his 22nd birthday. Charity Hospital treated him

continuously during his inpatient hospitalization from December 18, 1981 to June 1983.

       Regulations of the federal Office of Personnel Management, which superintends FEHBA, 5

C.F.R. Part 890, and the GEHA policy provide that Carey was covered until age 22 and that he was

entitled to a 31-day extension thereafter. In addition, if he were hospitalized on the 31st day of that

extension, he was entitled to 60 days coverage for continuous hospitalization. 5 CFR 890.401.

February 18, 1982 was the 63rd day of Carey's continuous hospitalization after his injuries; from

December 17 until February 18, Carey's medical expenses at Charity were $44,693.00.

       Immediately upon learning of her son's serious condition, Mrs. Burkey contacted her employer

seeking confirmation that Carey was covered by GEHA so he could be transferred to a private

hospital specializing in treatment of spinal cord injuries. Despite her own contact with GEHA

verbally and through her employer and her repeated written pleas for help, Burkey never received that

confirmation. Her son continued on public assistance at Charity. On June 1, 1982, Linda Burkey

prepared for her lawyer to submit to GEHA its claim form E-1 seeking confirmation that Carey's

medical needs as a result of his 1981 injury were covered. The E-1 was received by GEHA before

June 25, 1982. In response to her E-1, plaintiff received a GEHA form F-012 stating only, "children

are covered until age 22," without further explanation.2 When, in late 1982, Mrs. Burkey received

a copy of GEHA's "open season" announcement that referenced the 31-day extension following a

person's 22nd birthday, she wrote to GEHA's claim office and inquired whether Carey was entitled

to the 31-day extension of coverage. Her letter advised GEHA of all pertinent facts needed to


   2
   GEHA argues that this letter referred not to the June, 1982 E-1, but to an earlier claim filed
by Mrs. Burkey. The trial court found against GEHA on this point.
determine whether or not Carey was entitled to medical services: (a) Carey severed his spinal cord

in a December 1981 accident; (b) GEHA refused coverage and Carey had been in Charity Hospital

continuously since that time; (c) she had sent an E-1 to GEHA in June 1982; (d) she had received

form F-012 from GEHA apparently denying Carey's entitlement to coverage because he was over age

22. GEHA did not respond to plaintiff's letter.

       On December 23, 1982, Mrs. Burkey again wrote to GEHA's claim office addressing her

letter to its President , Mr. Rowland. She enclosed copies of her E-1 and GEHA's F-012 denying

coverage. On December 23, Mrs. Burkey also wrote to Congresswoman Lindy Boggs and outlined

the difficulties with GEHA. Because Carey's insurance benefits were never confirmed by GEHA,

Carey was never transferred to a private specialty hospital.

       GEHA's trial representative testified that if she had received the E-1 and Mrs. Burkey's letters

referred to above, she would have investigated the claim. She testified that it is not always a

prerequisite to confirming coverage that a bill for medical services be received because in certain

circumstances a bill may not be available to a plan participant until quite some time later. While

admitting that Carey had hospitalization coverage from December '81 through February '82, she also

agreed that once GEHA received Burkey's E-1, it had all the authority it needed to request bills

directly from Charity.

       Having found out about the Burkeys' lawsuit against GEHA, Louisiana's Department of

Health and Human Resources ("DHHR") intervened to assert its interest in the claim for medical

expenses incurred by Charity Hospital. The case was tried to the court without a jury on March 21,

1991. At the conclusion of the trial, the court gave oral reasons for judgment in favor of plaintiffs

under the Louisiana statutory penalty provision, and it remanded to a magistrate judge for an

evidentiary hearing to determine reasonable attorneys' fees and the amount of medical bills. The

magistrate judge recommended that $40,000 in attorneys' fees were reasonable and that $44,693 be

recognized as the actual amount of medical expenses due. The court initially entered judgment in

favor of the Burkeys for twice the amount of medical expenses plus attorneys' fees of $40,000. After

revising the judgment to recognize the intervenors' interest, the final damage award against GEHA
remained $129,386, but $44,693 of that amount was ordered to be paid to DHHR and twenty-five

percent of the $40,000 attorneys fees was ordered payable to the plaintiffs' former attorneys, who had

also intervened.

        The Burkeys and GEHA have appealed, but neither DHHR nor the attorney intervenors have

done so. GEHA asserts that the district court incorrectly interpreted the scope of FEHBA

preemption and therefore improperly applied Louisiana law in assessing coverage and awarding

damages and attorneys fees. Further, GEHA claims that the substantive finding of coverage was

incorrect under the GEHA plan. We agree with GEHA's preemption argument but disagree with its

contention that plaintiffs' expenses were not covered by the plan because no complete claim form was

filed. The Burkeys are thus entitled to recover only the stipulated expenses of $44,693 incurred at

Charity Hospital, together with pre- and post-judgment interest, subject to the intervention judgment

awarded DHHR by the district court.3

                                           DISCUSSION

         While one federal circuit court has held otherwise concerning the scope of FEHBA

preemption of state law, "The weight of authority and most persuasive analysis supports the position

that state law claims are preempted".4 Federal Plaza Medical Associates v. Palermino, 

(S.D.N.Y.). Federal preemption of state law is fundamentally "a question of Congressional

intent ..." English v. General Elec. Co., 

, 78, 

, 2275, 

(1990) (citation omitted). Congress expressed itself with unusual clarity in 5 U.S.C. § 8902(m)(1),

   3
    Prejudgment interest is authorized by West v. Harris, 

, 882 (5th Cir.1978), cert.
denied, 

, 

, 

(1979). Contrary to the Burkeys' request,
costs cannot be awarded them at this late date because they did not timely request an award under
the district court's rules. Local Rule 5.04E, Louisiana Uniform District Court Rules; Assoc.
Builders and Contractors of La., Inc. v. Orleans Parish School Board, 

, 380 (5th
Cir.1990) (discussion the application of local rule 5.04(e) absent explicit federal preemption).
   4
    Compare Blue Cross & Blue Shield of Florida, Inc. v. Department of Banking & Finance,

, 1505 (11th Cir.1986) (state law is preempted to the extent it conflicted with
federal employees benefits); Myers v. United States, 

, 1074 (4th Cir.1985) (state
law which purports to allow recovery of additional benefits not contemplated by federal insurance
contract must be deemed inconsistent with and preempted by FEHBA); and Tackitt v. Prudential
Insurance Co., 

, 1575 (11th Cir.1985) ("the interpretation of health insurance
contracts is controlled by federal, not state law") with Howard v. Group Hospital Service, 

, 1510-12 (10th Cir.1984) (approving state law interpretation of FEHBA provisions).
which states:

       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 regulation issued thereunder, to the extent that such law
       or regulation is inconsistent with such contractual provisions.

The policy underlying § 8902(m)(1) is to ensure nat ionwide uniformity of the administration of

FEHBA benefits. Hayes v. Prudential Insurance Company of America, 

, 925 (9th

Cir.1987) (citing H.R.Rep. No. 282, 95th Cong., 1st Sess. 1, 4 (1977)), cert. denied, 

,

, 

(1988); Blue Cross & Blue Shield of Florida v. Department of

Banking, 

, 192-193 (D.C.Fla.1985) (discussion of legislative history of the

preemption provision of FEHBA) aff'd 

(11th Cir.1986), reh. denied, 

(11th Cir.1986); Hartenstine v. Superior Court, 

, 220, 

, 765

(1987) (discussion OPM's belief that state law claims should be preempted because the imposition

of varying state law requirements would undermine the purpose and objectives of the FEHBA), cert.

denied, 

, 

, 

(1988).

       The Burkeys argue that their state law claim for penalties is not preempted under §

8902(m)(1) because their claim relates to remedies and not to the "nature or extent of coverage or

benefits." No such distinction can sensibly be made. Tort claims arising out of the manner in which

a benefit claim is handled are not separable from the terms of the contract that governs benefits.

Compare Allis-Chalmers Corp. v. Lueck, 

, 220, 

, 1915-16, 

(1985). Moreover, such claims "relate to" the plan under § 8902(m)(1) as long as they have a

connection with or refer to the plan, Blue 

. The Supreme Court recently

decided that similar language in the Employee Retirement Income Security Act (ERISA) broadly

preempts state law tort and contract claims for benefits if they "relate to" ERISA-governed plans.

Pilot Life Insurance Company v. Dedeaux, 

, 47, 

, 1552, 

(1987). See Gomez, Preemption and Preclusion of Employee Law Rights by Federal and State

Statutes, 11 Indus.Rel.L.J. 45, 58 n. 90 (1989); Blue Shield of 

, 791 F.2d at 1504;

Bar v. Arkansas Blue Cross & Blue Shield, 

, 

, 176 (1988) (finding

preemption under FEHBA); 

, 819 F.2d at 926.
          Insofar as the Burkeys' claim for statutory delay damages necessarily refers to GEHA's plan

to determine coverage and whether the proper claims handling process was followed, it refers to the

plan, "relates to" it and is therefore preempted. Further, preemption is required because imposition

of Louisiana's statutory penalties would invariably expand GEHA's obligations under the terms of its

plan and would foster interstate conflicts in coverage.

           As § 8902(m)(1) preempts the application of Louisiana's statutory penalty provision, so it

also contradicts the trial court's sole reliance on Louisiana law, Fakouri v. Insurance Company of

North America, 

(La.App.1979), to determine that Mrs. Burkey furnished adequate

notice of her claim to GEHA.5 The proper standard of coverage is whether Mrs. Burkey's efforts to

inform GEHA of her claim complied with the contractual provisions at issue. § 8902(m)(1). There

is no dispute regarding these efforts, and they were legally sufficient under the contract. GEHA's plan

established the following claims procedure:

          HOW TO FILE CLAIM

          1. After you have incurred covered expenses exceeding the deductible, submit a completed
                  Form E-1 Employee Statement of Claim for reimbursement of covered expenses in
                  excess of the Deductible. Include copies of the bills with your claim to show that you
                  met the Deductible. A separate claim form must be submitted for each covered family
                  member.

          2. Submit an attending doctor's statement (Form S02). This form must be completed by the
                 principal attending doctor and all items must be answered. If assignment authorizing
                 direct payment to the doctor is desired you should complete and sign the upper
                 portion of Form S-2. A Form S-2 need not be completed by any other attending
                 doctor unless requested by the Plan.

          3. If you wish to authorize direct payment to a hospital, show your identification card upon
                  admission. The hospital completes their own form or will send an itemized statement
                  to the Government Employees Hospital Association (GEHA). If you do not wish to
                  authorize direct payment to a hospital, see 4.

          4. Submit hospital and doctor bills itemized to show—

                 Name of the person for whom service was rendered

                 Name of the attending doctor and/or admitting hospital

                 Date charge was incurred, statement of the diagnosis or treatment given and amount
                 of the charge.

   5
       The timeliness of Mrs. Burkey's "claim" is undisputed because of GEHA's liberal deadlines.
GEHA contends that Mrs. Burkey's E-1, prepared in June, 1982, was fatally incomplete because it

included no bill for medical services rendered by Charity Hospital and no specific information on

Carey's injury. Although this is correct as far as it goes, the trial court implicitly found, and we agree,

that filing a "claim" under the GEHA plan does not invariably require the attachment of medical bills.

Further, Mrs. Burkey's E-1, taken together with her two letters in December 1982—still within the

period for filing a timely GEHA claim for December, 1981 services rendered to Carey—furnished

sufficient information concerning the claim to require GEHA to investigate and inquire. It is both

unrealistic and insensitive of GEHA to assert, as it implicitly does, that only a letter-perfect filled-in

claim form, complete with exhibits, will satisfy its contractual claim filing procedures. The contract

says no such thing. The evidence that Carey had been covered, that he had suffered a serious injury,

and that he had just barely become 22 at the time of his hospitalization required GEHA, given the

coverage provisions of its plan, to treat Mrs. Burkey's communications as a claim.

        In this connection, we fully endorse the district court's comments:

        We are not dealing with technicalities. It seems to me we're dealing here with matters of just
        plain common sense and human decency. Even a brief contact to this lady in response to her
        letters, if somebody had just read their mail, would have resolved the problem and none of
        us would [be] in this Court today.

        GEHA additionally argues that the Burkeys failed to exhaust administrative remedies by not

seeking OPM review of GEHA's inaction pursuant to 5 C.F.R. § 890.105 (1991). The Eleventh

Circuit recently held that this regulation creates an exhaustion requirement. Kobleur v. Group

Hospitalization and Med. Serv's, Inc., 

, 709-10 (11th Cir.1992). While we generally

agree with Kobleur, Kobleur arrives too late to affect the Burkeys' case. The district court and the

amicus brief filed by OPM properly conclude that applying an exhaustion doctrine now would be a

waste of resources.

                                            CONCLUSION

        Based on the above discussion, we vacate that portion of the judgment based on Louisiana's

statutory penalty law and revise it downward to a total of $44,693 plus pre- and post-judgment

interest. This judgment remains subject to the intervention award to DHHR, however.

        AFFIRMED in Part, REVERSED in Part.