by Matt Dorius, Esq.
The Ninth Circuit is now the most recent court to address the reimbursement rights of Medicare Advantage Plans under the Medicare Secondary Payer Act. In Parra v. PacifiCare, No. 11-16069, 2013 U.S. App. LEXIS 7861 (9th Cir. April 19, 2013), the survivors of a deceased Medicare Advantage enrollee settled a wrongful death claim for $500,000.00. PacifiCare, the Medicare Advantage plan, had paid $136,630.90 in medical expenses related to the accident. In settling the case, the insurer issued a check for $136,630.90 payable jointly to the survivors’ attorney and to PacifiCare’s affiliate, to be held in trust pending resolution of the parties’ claims, and the remainder of the settlement funds was paid to the survivors. The survivors then filed an action in federal district court seeking a determination that PacifiCare was not entitled to any reimbursement because the wrongful death settlement did not include any funds for medical expenses under state law. Rather than addressing the issue of whether the settlement included funds for medical expenses under state law, the district court granted the survivors’ motion for summary judgment on the basis that PacifiCare could not assert a private cause of action under federal law.
In its appeal to the Ninth Circuit, PacifiCare argued that it has a right of recovery under 42 U.S.C. § 1395w-22(a)(4), which allows a Medicare Advantage plan to charge an insurer or individual that has received payment from an insurer. The court, however, found that Congress did not intend to create a federal cause of action under this statute. Instead, the court held that this statute only allows for a right of subrogation based on the Medicare Advantage plan’s contract with the enrollee. PacifiCare pointed to 42 C.F.R. § 422.108(f), which provides that Medicare Advantage plans have "the same rights to recover from a primary plan, entity, or individual that the Secretary exercises under the MSP regulations." The court, however, explained that this regulation could not created a private right of action since none was created by Congress.
PacifiCare also argued that it could assert a private cause of action under 42 U.S.C. § 1395y(b)(3)(A), the portion of the Medicare Secondary Payer Act that allows Medicare to assert a private cause of action against a primary plan and recover double damages. PacifiCare relied on the Third Circuit’s decision in In re: Avandia Marketing, Sales Practices, and Products Liability Litigation, 685 F.3d (3rd Cir. 2012), which held that Medicare Advantage plans may assert a private cause of action against a primary plan under 42 U.S.C. § 1395y(b)(3)(A). As we reported, the U.S. Supreme Court recently denied certiorari in the Avandia case.
The Ninth Circuit held that it did not need to address the issue decided in the Avandia case, whether 42 U.S.C. § 1395y(b)(3)(A) provides Medicare Advantage plans with a cause of action against primary plans, because the private cause of action was inapplicable to PacifiCare’s claim against the survivors. As the court noted, the private cause of action applies "in the case of a primary plan which fails to provide for primary payment." 42 U.S.C. § 1395y(b)(3)(A). PacifiCare, the court explained, had not made any claims against the insurer. Further, the court noted, the insurer could not be subject to a private cause of action, as it had already paid the funds jointly to both parties. As such, the court held that the district court had properly dismissed PacifiCare’s claim.
The Ninth Circuit is now the most recent court to address the reimbursement rights of Medicare Advantage Plans under the Medicare Secondary Payer Act. In Parra v. PacifiCare, No. 11-16069, 2013 U.S. App. LEXIS 7861 (9th Cir. April 19, 2013), the survivors of a deceased Medicare Advantage enrollee settled a wrongful death claim for $500,000.00. PacifiCare, the Medicare Advantage plan, had paid $136,630.90 in medical expenses related to the accident. In settling the case, the insurer issued a check for $136,630.90 payable jointly to the survivors’ attorney and to PacifiCare’s affiliate, to be held in trust pending resolution of the parties’ claims, and the remainder of the settlement funds was paid to the survivors. The survivors then filed an action in federal district court seeking a determination that PacifiCare was not entitled to any reimbursement because the wrongful death settlement did not include any funds for medical expenses under state law. Rather than addressing the issue of whether the settlement included funds for medical expenses under state law, the district court granted the survivors’ motion for summary judgment on the basis that PacifiCare could not assert a private cause of action under federal law.
In its appeal to the Ninth Circuit, PacifiCare argued that it has a right of recovery under 42 U.S.C. § 1395w-22(a)(4), which allows a Medicare Advantage plan to charge an insurer or individual that has received payment from an insurer. The court, however, found that Congress did not intend to create a federal cause of action under this statute. Instead, the court held that this statute only allows for a right of subrogation based on the Medicare Advantage plan’s contract with the enrollee. PacifiCare pointed to 42 C.F.R. § 422.108(f), which provides that Medicare Advantage plans have "the same rights to recover from a primary plan, entity, or individual that the Secretary exercises under the MSP regulations." The court, however, explained that this regulation could not created a private right of action since none was created by Congress.
PacifiCare also argued that it could assert a private cause of action under 42 U.S.C. § 1395y(b)(3)(A), the portion of the Medicare Secondary Payer Act that allows Medicare to assert a private cause of action against a primary plan and recover double damages. PacifiCare relied on the Third Circuit’s decision in In re: Avandia Marketing, Sales Practices, and Products Liability Litigation, 685 F.3d (3rd Cir. 2012), which held that Medicare Advantage plans may assert a private cause of action against a primary plan under 42 U.S.C. § 1395y(b)(3)(A). As we reported, the U.S. Supreme Court recently denied certiorari in the Avandia case.
The Ninth Circuit held that it did not need to address the issue decided in the Avandia case, whether 42 U.S.C. § 1395y(b)(3)(A) provides Medicare Advantage plans with a cause of action against primary plans, because the private cause of action was inapplicable to PacifiCare’s claim against the survivors. As the court noted, the private cause of action applies "in the case of a primary plan which fails to provide for primary payment." 42 U.S.C. § 1395y(b)(3)(A). PacifiCare, the court explained, had not made any claims against the insurer. Further, the court noted, the insurer could not be subject to a private cause of action, as it had already paid the funds jointly to both parties. As such, the court held that the district court had properly dismissed PacifiCare’s claim.
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