The Ninth Circuit Court of Appeals held on Friday that a Medicare Part C Plan – PacifiCare of Arizona – did not have the right, under federal law, to pursue a reimbursement claim against wrongful death proceeds paid to surviving family members.[1] Medicare Part C – or Medicare Advantage – plans are those in which private healthcare insurers administer Medicare benefits on behalf of the federal government. The Ninth Circuit’s ruling affirmed the 2011 decision of an Arizona federal court, which dismissed PacifiCare’s case after determining that it did not have a private right of action to recover its costs. Notably, the Ninth Circuit’s decision seems to have turned on the specific facts of the case, as an insurance company had already released funds for settlement of wrongful death damages.
The case stemmed from the death of a PacifiCare Medicare Part C member – Manuel Parra – who died from injuries suffered after a vehicle struck him in a parking lot. Parra’s relatives filed a wrongful death lawsuit against the driver and the driver’s insurer paid the full policy limits to settle the claim. The Medicare Part C plan paid $136,630.90 for Parra’s care, and the insurer of the driver who struck Parra turned over funds for that amount, in a check jointly payable to PacifiCare and the attorney for Parra’s surviving relatives. The insurer then paid the remainder of the policy limits directly to Parra’s relatives.
Parra’s family then filed suit in federal court in Arizona to block PacifiCare from receiving any part of the wrongful death proceeds. PacifiCare countersued and argued that it had a right – both under the federal Medicare statute and the specific contract terms of its Medicare Part C plan – to recover its costs for Parra’s medical treatment, out of the pool of money from the wrongful death settlement. The district court dismissed PacifiCare’s federal claim – finding that the company did not have a private cause of action under Medicare law. The court did not address the contractual claim.
PacifiCare appealed the ruling, again arguing that it had a private recovery right under the laws governing Medicare Part C[2] and traditional Medicare.[3] The Ninth Circuit disagreed – and affirmed the lower court’s ruling dismissing PacifiCare’s lawsuit. The appellate court held that the Medicare Part C laws did not create a private cause of action and that, under the facts of this case in which the decedent’s family was directly pursued for recovery, rather than an insurer or an estate, the laws pertaining to traditional Medicare did not allow for that type of recoupment either.
This decision comes directly on the heels of the U.S. Supreme Court’s denial of cert last week in the In Re: Avandia case[4], which let stand the Third Circuit Court’s ruling that a Medicare Part C plan did have the right to pursue a claim, under federal law, to recover costs of its subscribers’ medical treatment.[5] At first glance it could appear that the Third and Ninth Circuits reached conflicting results on the recovery rights of Medicare Part C plans. But, the Ninth Circuit specifically distinguished the In Re: Avandia ruling – noting that the two cases involved reimbursement claims against completely different entities. The Ninth Circuit opinion emphasizes that the Medicare Part C plan’s claim for relief was not against an insurer, or even the decedent’s estate, but rather against the relatives’ claim to the wrongful death proceeds. This distinction based on the focus of the private cause of action is the key to understanding the potential impact of both decisions.
The landscape of Medicare Part C is constantly shifting and we continue to follow each new development.
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If you have any questions, please contact: Michael Russell at mrussell@garretsongroup.com or (704) 559-4300.
[1] Parra v. PacifiCare of Arizona, Inc., --F.3d—, 2013 WL 1693713 (9th Cir. 2013); see also Parra v. Pacificare of Arizona, Inc., 2011 WL 1119736 (Dist. AZ 2011)(unreported).
[2] 42 USC 1395w-22(a)(4) & 42 CFR 422.108(f)
[3]42 USC 1395y(b)(3)(A).
[4]GlaxoSmithKline, et al., v. Humana Medical Plans, et. al., U.S. 569 __ (2013), denial of cert. April 15, 2013; See also In re Avandia Mktg., 685 F.3d 353 (3d Cir. 2012).
[5] For more information, please see http://www.garretsongroup.com/client-alerts/the-u-s-supreme-court-wont-hear-in-re-avandia.
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