This article has been published in “The Advocate”, a publication of the Arizona Association for Justice/Arizona Trial Lawyers Association, November-December 2013 issue, @2013 by Steven J. Bruzonsky, Esq.
Recent Medicare Advantage Lien Cases, Part 2
This is the second part of a two part series of articles discussing recent Medicare Advantage lien cases.
Pradia v. Recovery Management Systems, Maricopa County Superior Court No.
CV 2011-014963 (2012):
The injury settlement was $1.2 million, both for Wrongful Death, with two surviving daughters claiming their damages, and for violations of the APSA(Adult Protective Services Act), with the Estate of the deceased claiming damages including the deceased incident-related medical bills. The deceased’s Mercy Care Medicare Advantage Plan claimed a reimbursement and subrogation rights from the settlement of the $348,166.20 incident-related medical benefits paid by the plan. On Cross-Motions for Judgment on the Pleadings, the court ordered granting judgment on the pleadings to plaintiff, applying Arizona anti-subrogation case law, and refusing to find for federal preemption of Arizona law. The case is on appeal to the Ninth Circuit.
Note that the district court, in the Parra opinion (affirmed by the Ninth Circuit) discussed above, stated:
“There being no jurisdiction in this Court for PacifiCare’s claim, it must proceed in state court. This is the better approach because the parties dispute the breadth of the settlement agreement between Plaintiffs and the third party insurer. Arguably, if the settlement was for wrongful death, then Plaintiff’s did not recover pursuant to liability insurance which is subject to reimbursement because Arizona’s wrongful death statute does not provide payment for medical damages. Arguably, if the settlement was broader, then PacifiCare may seek reimbursement and/or assert subrogation rights. - - - The Court agrees with the Magistrate Judge that the state courts are better suited to consider what is essentially a contract claim, pursuant to Arizona law, and are as capable as this Court to address the preemption questions relevant to resolving the merits of the claim for reimbursement.”]
In re Avandia Marketing Sales Practices and Products Liability Litigation, 685 F.3d 353
(3d Cir. 6-28-2012, cert. denied, 12-690, 2013 WL 1500235 (U.S. 4-15-2013):
Glaxosmithkline (Glaxo) manufactures and distributes Avandia, a Type 2 diabetes drug that has been linked to substantially increased risk of heart attack and stroke. Thousands of Avandia patients have alleged injuries from Avandia, and as part of the settlement process, Glaxo sets aside reserves to reimburse the Medicare Trust fund for payments by Medicare to cover the costs of treatment for Avandia-related injuries. Glaxo did not set aside reserves to reimburse Medicare Advantage plans for this. Humana’s Medicare Advantage plan provides benefits to approximately one million people , and Humana filed this class action litigation, on behalf of itself and similar MA plans, to seek reimbursement from Glaxo for the cost of treating its enrollees’ Avandia-related injuries.
The Third Circuit reversed the district court’s dismissal of Humana’s Medicare Advantage reimbursement claim against Glaxo. The Court held that whether or not there is an implied private right of action for reimbursement in the Medicare Advantage statute, the express private right of action in the Medicare Act is available to MA organizations. That statute provides that "[t]here is established a private cause of action for damages . . . in the case of a primary plan which fails to provide for primary payment (or appropriate reimbursement) in accordance with" the requirements of the Medicare Act. 42 U.S.C. § 1395y(b)(3)(A).
The Court held that the plain text of the statute "is broad and unambiguous, placing no limitations upon which private (i.e., non-governmental) actors can bring suit for double damages when a primary plan fails to appropriately reimburse the secondary payer."The court relied on the broad language of the MSP Act as applied to private causes of action, the policy and purpose behind the Federal Medicare Advantage program, and the regulations promulgated by CMS at 42 C.F.R. § 422.108 (providing that MAOs have the same subrogation rights as the U.S government in Medicare cases) are entitled to deference under Chevron USA., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S. Ct. 2778 (1984). The court found that Congress did not intend to deny MAOs the same right as traditional, fee for service Medicare Parts A and B, therefore concluding that MAOs have a private cause of action under the MSP to assert Medicare Advantage lien claims. Cert denied by the U.S. Supreme Court on April 15, 2013.
Ferlazzo v. 18th Ave. Hardware, 929 N.Y.S.2d 690 (Kings County, N.Y., 2011):
The New York trial court granted the motion to extinguish the Oxford Medicare Advantage plan’s liens and/or subrogation rights.
Pacificare of Nevada, Inc. v. Rogers, 266 P.3d 596, 601 (Nev., 2011):
Rogers sued Pacificare for her contracting hepatitis C because Pacificare failed to adopt and implement an appropriate quality assurance program. Pacificare moved to dismiss Rogers’ claims and to compel arbitration under the policy. The district court held that the arbitration provision was unconscionable and unenforceable under Nevada common law. The Nevada Supreme Court held that the arbitration provision of the policy was enforceable,
and that CMS regulations governing the approval of MA plans are standards that hold preemptive effect under the Medicare Act.
Konig v. Yeshiva Imrei Chaim Viznitz of Boro Park, Inc., et al, 12-CV-467
A Medicare Advantage lien claim for $24,000 medical benefits paid against a landowner tort liability claim was initially brought in New York state court, removed to federal court, and then remanded by the federal court back to state court. The federal district court rejected the application of federal preemption or that there was any private right of action, express or implied, for private Medicare Advantage insurers.
Potts v. Rawlings Company, LLC, 2012 WL 4364451 (S.D.N.Y., 2012):
The District Court, Southern District New York, dismissed a class action lawsuit that Medicare Advantage subrogation or lien claims are in violation of a New York anti-subrogation statute. The court held that regardless of whether there is a private right of action for MA organizations to enforce reimbursement rights, that the state statute is preempted because it directly conflicts with the Medicare Act’s broad, express preemption clause; and distinguished Nott v. Aetna U.S. Healthcare, Inc on the basis that in Nott, it was determined that state and not federal court had jursidiction to resolve the conflict between the state and the federal Medicare statutes.
Trezza v. Trezza, 2012 W1 6685525 (App. N.Y., 12-26-2012):
An intermediate court of appeals in New York denied the injured party’s motion to extinguish a Medicare Advantage lien, on the same basis as in the Potts case (above).
Meek-Horton v. Trover Solutions, Inc., 2013 WL 25888 (S.D.N.Y., 1-2-2013):
The District Court, Southern District New York, dismissed a class action lawsuit that Medicare Advantage subrogation or lien claims are in violation of a New York anti-subrogation statute, on the same basis as in the Potts case (above).