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Ninth Circuit Holds Medicare Part C Plans
Do Not Have a Right of Recovery Under Federal Statute

On April 19, 2013, the Ninth Circuit Court of Appeals held, in Parra v. PacifiCare of Arizona, No. 11-
16069, that a Medicare Part C Plan did not have the right, under the federal Medicare Act, to pursue a reimbursement claim against wrongful death proceeds paid to surviving family members. This case stems from a wrongful death complaint filed by the wife and children of Manuel Parra against the driver of the vehicle that struck Mr. Parra in a parking lot. Mr. Parra was a participant in a Medicare Advantage Organization plan, or Medicare Part C plan, offered by PacifiCare of Arizona, Inc. which paid After Mr. Parra died from injuries he suffered in the accident, his wife and children made a demand for wrongful death damages against the driver’s $500,000 automobile insurance policy. PacifiCare also made a claim against the automobile insurer for the $136,630.90 it expended for Mr. Parra’s care. The automobile insurer agreed to pay the full policy limits to settle the claim but issued a check for $136,630.90 jointly payable to PacifiCare and to the survivors’ attorney and paid the balance of the policy limits directly to the survivors. Mr. Parra’s wife and children then filed a complaint in federal court in Arizona to stop PacifiCare from receiving any part of the wrongful death proceeds. PacifiCare counterclaimed arguing that it was entitled to reimbursement under both the contract terms of its Medicare Part C plan and under the Medicare Act. The district court granted the survivors’ motion for summary judgment finding that PacifiCare did “not have a private cause of action under the Medicare statute or the Medicare Secondary Prayer (MSP) Act” and PacifiCare appealed. The Ninth Circuit disagreed with the position of PacifiCare and affirmed the district court’s ruling holding that PacifiCare failed to state a claim arising under the Medicare Act because the Medicare Advantage Organization statute does not create a cause of action and because the Private Cause of Action provision applies only “in the case of a primary plan which fails to provide for primary payment,” which was not applicable in this instance. The Ninth Circuit also found that the Private Cause of Action provision did not apply because PacifiCare’s claims were against the survivors, not the primary plan, and the Private Cause of Action was “intended to allow primary parties to vindicate wrongs occasioned by the failure of primary plans to make payments.” The Ninth Circuit emphasized that this statute, which allows recovery of double damages, “was not intended to apply to a primary plan which has interpleaded a sum subject to This decision came directly on the heels of the U.S. Supreme Court’s denial of certiorari the week before in the In Re: Avandia case (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)) 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. PacifiCare relied heavily on the Third Circuit Court’s ruling in the In re: Avandia case that a Medicare Part C plan did have the right to pursue a claim, under federal law, to recover costs of its subscribers’ The Ninth Circuit, however, specifically distinguished the In Re: Avandia ruling on the basis that the suit filed there dealt with a claim lodged directly against the tortfeasors while this case was brought against the survivors of the deceased insured, not against the tortfeasor. The Ninth Circuit opinion emphasizes that the two cases are distinguishable in that they involved reimbursement claims against completely different entities. In the present case, 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 This distinction between Parra and In Re: Avandia is crucial to understanding the potential impact of both decisions on the evolving landscape of Medicare Part C. This article is designed to provide information in regard to the subject matter and may not reflect the most current legal developments, verdicts or settlements. This information is made available with the understanding that the article does not constitute the rendering of legal advice or other professional services. If legal advice is required, such services should be sought. 2013 Morris Polich & Purdy LLP. All rights reserved.

Source: http://www.mpplaw.com/files//upload/Medicare_Part_C_Plans_Have_No_Right_of_Recovery_Under_Federal_Statute.pdf