Private Medicare Plans Right to Sue for Reimbursement Limited

Private Medicare Advantage plan insurers do not have a the right to sue relatives for a share of their wrongful death award as a means to recover reimbursement for medical expenses, the 9th U.S. Circuit Court of Appeals ruled Friday.

Judge Andrew Hurwitz, a recent appointee of President Obama, wrote that Medicare Advantage Organization plans are not entitled to any reimbursement payments out of the wrongful death benefits paid to the survivors of an accident victim in Arizona.

Medicare generally covers people over 65. MAOs provide private options outside the Medicare system by allowing participates to opt out of traditional Medicare coverage, which is fee for service, and instead obtain benefits from MAOs, which get a fixed payment from the U.S. for each enrollee. The purpose is to allow the private market to contain costs and expand health care delivery, Hurwitz explained.

In this case, Manuel Parra was injured when he was struck by a car as he walked through a parking lot. He had an MAO plan offered by PacifiCare of Arizona, Inc., which paid his hospital bills.

Prra died of his injuries and his wife and children made a demand for $500,000 in wrongful death damages against the driver’s GEICO auto insurance policy.

PacifiCare also made a claim for $136,600 it spent on Parra’s care before he died. In a settlement agreement, GEICO made a check for $136,600 payable to both sides and held in trust pending a resolution of the dispute.

The family filed suit in federal court in Arizona asking the court to declare that PacifiCare had no right to the proceeds. The trial court sided with the family and PacifiCare appealed.

Hurwitz wrote that courts have consistently concluded that Congress did not intent to create a federal cause of action for MAOs in these cases, but simply describes when MAO coverage is secondary to other insurance.

“The MAO statute simply allows PacifiCare to provide via its contracts that its insurance is secondary to other available plans and allows recovery from a primary plan that refuses to reimburse the MAO for payments made on behalf of a participant,” he wrote.

Case: Parra v. PacifiCare of Arizona, No. 11-16069


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s