This article has been published in “The Advocate”, a monthly publication of the Arizona Association for Justice/Arizona Trial Lawyers Association, May-June 2015 issue, @2015 by Steven J. Bruzonsky, Esq.
May/June 2015 Lien Updates
Medicare Advantage Plans Now Have Same Lien Rights as Medicare in Arizona:
The U.S. Supreme Court has denied cert in Estate of Ethridge v. Recovery Management Sys. Et Al, 235 Ariz. 30, 326 P.2d 297 (App. 2014). The denial of cert citation is 2015 WL 459916 and may also be found in the “Order List”, no. 14-935, 574 U.S. ___ (March 2, 2015) at https://www.google.com/?gws_rd=ssl#q=us+Supreme++court+estate+of+ethridge. The Arizona Supreme Court had previously denied a petition for review. Accordingly, Ethridge is the law in Arizona regarding Medicare Advantage liens.
In Ethridge, Division One held that “Part C of the Medicare Act and its associated regulations preempt Arizona’s anti-subrogation doctrine, and thus a Medicare Advantage plan may recover the medical expenses it paid for one of its enrollees from the settlement of personal injury claims asserted on behalf of the enrollee.” In this case, 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 lien for $348,166.20 incident-related medical benefits paid by the plan. Division One clearly agreed with the Medicare Advantage Plan that 42 C.F.R. § 422.108(f), which provides that Medicare Advantage Organizations exercise “the same rights to recover from a primary plan, entity, or individual that the Secretary exercises under the MSP regulations”, gives the plan subrogation/lien rights in Ethridge.
There are a few issues which are not discussed or decided in Ethridge: (1) Since it is mandatory that Medicare liens be reduced to cover procurement costs (pro-rata attorney’s fees and costs) when litigation is not necessary to collect the lien, per 42 C.F.R. § 411.37; then, in my opinion: (A) The Medicare Advantage plan asserting the “same” lien rights as Medicare must give the same procurement cost reduction that Medicare gives, and (B) The plan also must have in place a similar procedure for consideration of further compromise/waiver of the lien beyond the procurement cost reduction as does Medicare; and (2) What if the Medicare Advantage “Evidence of Coverage” or insurance policy with the insured does not provide for subrogation/lien rights? Recently I have reviewed a few such Medicare Advantage policies which all included subrogation/lien rights. If the policy does not include subrogation/lien rights then perhaps this is an argument that the Medicare Advantage plan may not claim subrogation/lien rights based on state contract law.
Medicare Set Asides:
CMS (Centers for Medicare & Medicaid Services) has been in the process of promulgating regulations concerning Medicare Set Asides for personal injury and medical malpractice cases since June 2012, when CMS released an Advanced Notice of Proposed Rulemaking. Then on August 1, 2013, CMS continued this process by submitting to OMB (Office of Management and Budget) its Notice of Proposed Rulemaking on August 1, 2013. However, in early October 2013, CMS withdrew its Notice of Proposed Rulemaking to OMB. To date, CMS has given no indication that in the future it will restart the process of promulgating regulations concerning Medicare Set Asides. The American Association for Justice (formerly the Association of Trial Lawyers of America) lobbied hard against this rulemaking, working with a broad coalition which included consumers and patient groups, business and insurers. To what extent
the Medicare statute itself requires Medicare Set Asides for non-Worker’s Compensation personal injury and medical malpractice cases is uncertain from a legal standpoint and a subject of varying opinions and disagreements among plaintiff attorneys.