(Parra et al v. PacificCare of AZ) Further Support that Medicare Advantage Cannot Pursue MSP Recovery in Court on its Own Behalf

Medicare Set-Aside Blog on April 1, 2011 | Posted by

On March 25, 2011, an Arizona US District Court granted summary judgment on the issue of the defendant Medicare Advantage (MA) Plan not having standing to pursue a private cause of action under the MSP. The case involved an auto accident resulting in death after receiving medicare care paid for by PacificCare, the decedent’s Medicare Advantage Plan. Following a $500,000 wrongful death settlement against he driver of the car, PacificCare sought reimbursement for which plaintiffs sought a declaratory judgment and injunction to preclude repayment. Case was referred to a magistrate judge who recommended dismissing the action for lack of subject matter jurisdiction. Both parties objected to subject matter jurisdiction, and defendant argued that the judge erred by relying upon state law rather than considering its federal recovery right, which he also found PacifiCare did not possess.


While the magistrate judge did find that the MA Plan has an obligation to identify primary payers and coordinate benefits, has the right to seek reimbursement from the plaintiffs, and will exercise the same rights to recover from a primary plan, entity, or individual that the Secretary exercises under the MSP, he concluded that not only did the Medicare law not give the MA Plan a private cause of action but recognized that recovery actions taken by the Secretary involve detailed administrative procedures that are required to be exhausted before turning to the federal courts. Furthermore, the Court found that the MSP did no more than create a federal right to charge and/or bill a beneficiary for reimbursement, notwithstanding and state law or regulation to the contrary. They stop short of creating a federal private right of action to enforce that right and do not contain any jurisdictional provision granting the federal courts exclusive jurisdiction over Medicare reimbursement claims. This in no way implies that the MA Plan does not have a contract claim to bring in state court, only that it does not have private cause of action or exclusive federal jurisdiction.


An issue of more concern that was not thoroughly discussed was the fact that the survivors alleged that they did not make a claim for their father’s $136,630.90 of medical expenses paid by PacifiCare, and only sought compensation for their loss of relationship. It did not state what the state wrongful death statute permitted, but it was certainly implied that the survivorship statute would permit such a claim against the driver or GEICO. It is this course of action as to why CMS continues to assert its seemingly endless statutory rights of recovery without compassion. It is undisputed that a MA Plan is still Medicare for all intents and purposes and despite not being able to bring a private cause of action, is a secondary payer entitled to reimbursement. GEICO tendered $500,000 in policy limits, therefore all available insurance is gone and plaintiffs want to assert their right not to repay PacifiCare because they did not make a claim for medical expenses? Yet despite not making a claim for medical, plaintiffs had no problem releasing GEICO from any and all claims, past, present or future, known or unknown and without limitation inclusive of medical and furthermore defend, reimburse, hold harmless and indemnify claims by Ingenix, Secure Horizons or Medicare. If we do not behave reasonably, we certainly cannot expect CMS to. Just because it is apparent that the proper place for PacifiCare to adjudicate its claim is in state court under contract law, is it wrong to hope that the United States can still bring a claim for double damages for its payment to PacifiCare???



Guillermina Parra, et al., Plaintiffs, v. PacifiCare of Arizona, Inc., an Arizona
corporation, Defendant. PacifiCare of Arizona, Inc., an Arizona corporation,
Counterclaimant, Guillermina Parra, et al., Counter defendants.
CV 10-008-TUC-DCB
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA
2011 U.S. Dist. LEXIS 33630
March 25, 2011, Decided


Magistrate Report & Recommendation : 2011 U.S. Dist. LEXIS 33310