MSPA Found to Preempt New York State Law Limiting Recovery of Healthcare Expenses

    In August 2011, Rebecca Meek-Horton filed a class action suit on behalf of several other plaintiffs against forty health insurers that offer Medicare Advantage (MA) Plans.  Meek-Horton v. Trover Solutions, dba Healthcare Recoveries, 2012 U.S. Dist. LEXIS 181839 (S.D.N.Y. Dec. 26, 2012).  The case was soon removed to federal court.  In October 2011, the insurers moved to dismiss the action for lack of subject matter jurisdiction or, in the alternative, for failure to state a claim upon which relief may be granted.  That motion to dismiss was recently granted.
    The plaintiffs all received settlements as a result of personal injury or wrongful death lawsuits.  The defendants pursued recovery for medical expenses by placing liens on these settlements.  The plaintiffs filed suit on the grounds that these liens violated Section 5-335 of the New York General Obligations Law (GOL).  The plaintiffs cited GOL § 5-335, which states

Except where there is a statutory right of reimbursement, no party entering into such a settlement shall be subject to a subrogation claim or claim for reimbursement by a benefit provider and a benefit provider shall have no lien or right of subrogation or reimbursement against any such settling party, with respect to those losses or expenses that have been or are obligated to be paid or reimbursed by said benefit provider.

Gen. Oblig. § 5-335. The court pointed out that New York’s law specifically does not apply to “benefit providers who have a statutory right under federal or state law to be reimbursed for benefits provided to settling plaintiffs in personal injury or wrongful death actions.” Meek-Horton v. Trover Solutions, 2012 U.S. Dist. LEXIS 181839, at *10.
    The court wrote that the central issue was “whether Congress, in enacting the Medicare Advantage Program, intended to provide [Medicare Advantage Organizations] with a statutory right of reimbursement for medical benefits paid to an enrollee who subsequently recovers a settlement from a third party tortfeasor.” Id. at *12.  The court found that the plain language of the statute preempted all but a few state laws and GOL 5-335 did not fit the few exceptions granted under the statute.  The court ruled that plaintiffs had not filed a claim upon which relief could be granted and thus dismissed the action.