The MSP Does Not Create Coverage Where None Exists

Medicare Set-Aside Blog on January 18, 2013
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You know I always like to share when I’m amused by stupid legal tricks. I guess because I’m following McCutchen to see what the Supreme Court is going to do with apportionment under ERISA, I’m getting search alerts for ERISA cases. What struck me as interesting was that two cases this week attempted to use the MSP as reasons why the ERISA plan needed to provide benefits, you know, since Medicare was statutorily excluded from making payment and all.

In one case, the plan covered an injectable drug but required that it be obtained from within their pharmacy network. Plaintiff prefers his pharmacy, and prior to the federal law permitting written change to the ERISA plan that expressly prohibited going out of network, he did obtain verbal permission to fill it there a few times. Besides arguing wrongful denial of benefits, plaintiff also relied on the Medicare manual “Medicare and Other Health Benefits: Your Guide to Who Pays First” as authority as to why the plan had to pay. The court responded by stating that the “informational ‘government booklet’ neither creates nor purports to create coverage that does not otherwise exist under the Plan” and that “[i]f an individual’s private plan does not cover the expense at issue, then there are no benefits to coordinate.” [American Serv. & Products, Inc. and Warren Ingram v. Aetna Health Ins. Co., 2013 U.S. Dist. LEXIS 6883, January 17, 2013, Decided]

The other case involved a plaintiff using the MSP to try to keep his former employer from discontinuing his benefits under the ERISA plan and making Medicare his primary plan. Plaintiff went out on long term disability in 1996 and was entitled to receive health, dental and life insurance benefits as long as he was eligible for LTD coverage and paid the required premiums. The plan notified him in February 2010 that the plan’s coverage had become secondary to Medicare and he objected. Then in 2011, the plan was formally changed, which it is permitted to do under the ERISA law, to limit medial benefits while on LTD to 30 months (interesting to choose of the number of months from disability onset to Medicare entitlement). Plaintiff was notified again on January 10, 2011 that his benefits were being terminated and he filed suit for injunctive relief to prevent that occurrence, citing in part the MSP private cause of action under 42 U.S.C. 1395y(b)(3) as authority. The defendants argued that this private cause of action is limited to claims for damages and cannot be invoked unless a primary insurer has improperly denied a claim resulting in payment of the claim by Medicare, which had not occurred here. The court agreed, ruling on the fact that MSP does not authorize the plaintiff’s claim for injunctive relief and finding it unnecessary to rule on the other arguments regarding the MSP claim. [Pachaly v. Benefits Administration Committee Unilever, 2013 U.D. Dist. LEXIS 6429, January 16, 2013 Decided]

So this makes me wonder, if ERISA plans are so successful denying payments that don’t trigger MSP claims, why don’t the same type of arguments work more in the context of workers’ compensation?  If there is no underlying coverage provided under state law, then there are no benefits for Medicare to coordinate. Something to think about…