5 U.S.C. § 8902(m)( 1) of
the Federal Employee Health
Benefits Act Does Not
Preempt Arizona Law Barring
Subrogation in Personal Injury
Cases. Arizona law generally for-
bids subrogation in personal injury
cases. However, under the pre-
emption clause in the Federal
Employee Health Benefits Act
(“FEHBA”), certain FEHBA
contract terms that “relate to the
nature, provision, or extent of
coverage or benefits (including
payments with respect to benefits)
shall supersede and preempt any
State or local law … which relates
to health insurance or plans.” 5
U.S.C. § 8902(m)( 1). Neverthe-
less, § 8902’s subrogation clause
does not “relate to” “coverage”
because it has no effect on the
scope of risk accepted by a plan,
and does not “relate to” “benefits”
because it has no impact on a car-
rier’s payments on behalf of an
insured. The clause instead creates
a contingent right to repayment in
favor of the plan, but has no imme-
diate relationship to the scope of
coverage or receipt of benefits
under a plan. When a subrogation
clause is not covered by FEHBA’s
preemption clause, the Arizona
anti-subrogation rule applies.
Kobold v. Aetna Life Ins. Co., 1
CA-CV 12-0315, 9/5/13.
Homeowners May Not
Recover Damages under A.R.S.
§ 33-420 When Lender Transfer
Documents Contain Immaterial
Errors. Pursuant to A.R.S. § 33-
420(A), an owner or beneficial title
holder of real property may have a
claim for money damages arising
from certain types of recorded documents on property, and does not
waive that claim by failing to enjoin
a trustee’s sale. A trustor under
a deed of trust qualifies as an
“owner.” The types of documents
that can give rise to a claim under
the statute include assignments of
the note and deed of trust, notices
of trustee substitutions, and a
notice of trustee’s sale. But immaterial misrepresentations or errors
will not give rise to any claims.
Sitton v. Deutsche Bank Nat’l Trust
Restitution Payments May
Be Insurable. Under the
RESTATEMENT (SECOND) OF
CONTRACTS § 178, courts should
rely on public policy to displace the
private ordering of contractual relationships only when the term is
contrary to an otherwise identifiable
public policy that clearly outweighs
any interests in the term’s enforcement. Factors that favor enforcement of a contract include the parties’ justified expectations, forfeiture
that would result if the contract
were not enforced, and public interest in having the term enforced.
Factors that weigh against enforcement include the strength of the
public policy involved, the likelihood that denying enforcement will
further the policy, the seriousness
and deliberateness of any misconduct involved, and the directness or
attenuation between the misconduct and the contract term. Arizona
law does not as a matter of public
policy prohibit insurance coverage
for restitution payments. Cohen v.
Lovitt & Touche, Inc., 2 CA-CV
2012-0063, 9/6/13.
Co., 1 CA-CV 12-0557, 9/5/13.
A.R.S. § 33-441, Which Voids
Deed Restrictions Prohibiting
the Placement of “For Sale”
and “For Rent” Signs on Real
Property, Is Constitutional
Under the Contract Clause and
Applies Retroactively to Pre-existing CC&Rs. In 2009, the
legislature passed A.R.S. § 33-441,
which makes covenants, conditions, and restrictions (CC&Rs)
prohibiting the posting of
“for sale” signs unenforceable.
Although the statute impairs
existing contracts, the contract
clause only prohibits “substantial”
impairments. If CC&Rs say that
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