Opinion
39553/07.
Decided June 23, 2011.
The following papers have been read on this motion:
Papers Numbered
Notice of Motion/Order to Show Cause/ Petition/Cross Motion and Affidavits (Affirmations) Annexed 1 2 Opposing Affidavits (Affirmations) 3 Reply Affidavits (Affirmations) 4 (Affirmation) Other PapersBackground Facts and Procedural History
Plaintiff moved by order to show cause to extinguish the purported claim / right / lien of reimbursement of Oxford and Rawlings.
The underlying action arises from an automobile accident that occurred at the intersection of Rockaway Beach Boulevard and 119th Street in Brooklyn, New York, on March 20, 2005. Plaintiff, Janine Trezza, allegedly sustained serious injuries, including a back injury requiring surgery at L4-5. Ms. Trezza commenced an action on October 24, 2007 against the owners and operators of the vehicles involved in the accident. That action was resolved by exhausting both drivers' policies in a $75,000 settlement, in April of 2010.
Ms. Trezza's motor vehicle personal injury protection insurance, GMAC, covered the initial cost of her medical treatment for her accident related injuries. However, after she reached her policy limit, Oxford Health Plans ("Oxford"), her personal medical insurance plan, paid her additional medical expenses. Oxford administered a Medicare+Choice policy authorized to provide benefits to Medicare recipients pursuant to the terms of 42 USC § 1395, and Ms. Trezza participated in the Oxford Health Plans Medicare+Choice Programs during the relevant period.
The Rawlings Company LLC ("Rawlings"), on behalf of Oxford, served Ms. Trezza with a Notice of Lien / Claim / Right of Reimbursement on September 10, 2008. Rawlings claims that the current amount due on the lien is $37,787.64.
Discussion
The dispute between Ms. Trezza and Oxford results from a tension between the Federal Medicare law and New York General Obligations Law § 5-335.
The Medicare Act permits, but does not require, HMO insurers "to contract for subrogation rights" Nott v. Aetna, F.Supp.2d 565, 571 [E.D.Pa. 2004]. 42 USC § 1395y(2)(B) provides:
"Notwithstanding any other provision of law, a Medicare+Choice organization may (in the case of the provision of items and services to an individual under a Medicare+Choice plan under circumstances in which payment under this subchapter is made secondary pursuant to section 1395w-22(a)(4) of this title) charge or authorize the provider of such services to charge, in accordance with the charges allowed under a law, plan, policy described in this section (A) the insurance carrier, employer or other entity which under such law, plan, or policy is to pay for the provision of such services, or (B) such individual to the extent that the individual has been paid under such law, plan, or policy for such services. (emphasis added)."
See also 42 U.S.C. § 1395mm(e)(4) "Notwithstanding any other provision of law, the eligible organization may (in the case of the provision of services to a member enrolled under this section for an illness or injury for which the member is entitled to benefits under a workmen's compensation law or plan of the United States or a State, under an automobile or liability insurance policy or plan, including a self-insured plan, or under no fault insurance) charge or authorize the provider of such services to charge, in accordance with the charges allowed under such law or policy — (A) the insurance carrier, employer or other entity which under such law, plan, or policy is to pay for the provision of such services, or (B) such individual to the extent that the individual has been paid under such law, plan, or policy for such services."
On the other hand, General Obligations Law § 5-335[a] creates a conclusive presumption that personal injury settlements do not include compensation for health care costs, except where there is a "statutory right of reimbursement." Therefore, "except where there is a statutory right of reimbursement," a benefit provider has "no lien or right of subrogation or reimbursement against any such settling party, with respect to those losses or expenses that have been or are obligated to be paid or reimbursed by said benefit provider" (General Obligations Law § 5-335[b]).
The threshold question is whether the Medicare Act preempts General Obligations Law § 5-335. "The central inquiry' is whether Congress intended to create. . . . a private cause of action" when passing the Medicare Act ( Care Choices HMO v. Engstrom, 330 F.3d 786, 789 [6th Cir. 2003], quoting Touche Ross Co. v. Redington, 442 US 560, 575). Courts have held that because the Medicare Act did not establish a federal scheme for the civil enforcement of HMO subrogation rights, it did not create a private cause of action ( Nott, F.Supp.2d at 570; See also Care Choices HMO v. Engstrom, 330 F.3d 786, 789 [6th Cir. 2003]). The Medicare Act therefore does not create a statutory right of reimbursement; instead, it allows HMOs to include subrogation rights in its contracts with beneficiaries ( Nott, F.Supp.2d at 570). Because "the Medicare Act permits, but does not mandate, HMO insurers to contract for subrogation rights" ( id. at 571), subrogation in this context remains a state contract law issue ( id. at 572; Care Choices, 330 F.3d at 790).
Oxford cites the following contractual provision in support of its contention that its contract with Ms. Trezza provides it with a subrogation right:
"Who pays first?
As a Member, you are always entitled to receive Covered Services through AARP Medicare Complete plan. Medicare law, however, gives us or our designee the right to recover payments from certain third party insurance companies or from you, if you were paid by a third party. Because of this, we may ask you for information about other insurance you may have. If you have other insurance, you can help us obtain payment from the other insurer by promptly providing the requested information.
If any no-fault or any liability insurance is available to you, benefits under that plan must be applied to the costs of health care covered by that plan. Where we have provided benefits, and a judgment or settlement is made with a no-fault or liability insurer, you must reimburse us or our designee (entity or person selected for this purpose) to the extent of your medical expenses. However, our reimbursement may be reduced by a share of procurement costs (e.g., attorney fees and costs). Workers' Compensation from treatment of a work-related illness or injury should also be applied to covered health care costs" (emphasis added).
However, General Obligations Law § 5-335 (a) expressly states that a settlement for personal injuries does not include compensation for health care costs. Therefore, Ms. Trezza's personal injury settlement did not compensate her for health care expenses.
More specifically, the section pertinently provides that "[w]hen a plaintiff settles with one or more defendants in an action for personal injuries . . . it shall be conclusively presumed that the settlement does not include any compensation for the cost of health care services . . . to the extent those losses or expenses have been or are obligated to be paid or reimbursed by a benefit provider, except for those payments as to which there is a statutory right of reimbursement." Here, no statutory right of reimbursement applies.
The section further pertinently provides that " [b]y entering into any such settlement, a plaintiff shall not be deemed to have taken an action in derogation of any nonstatutory right of any benefit provider that paid or is obligated to pay those losses or expenses; nor shall a plaintiff's entry into such settlement constitute a violation of any contract between the plaintiff and such benefit provider" (emphasis added).
In addition, the second paragraph of General Obligations Law § 5-335 (a) directly addresses the subrogation issue by exempting a settling party from "a subrogation claim or claim for reimbursement by a benefit provider." Consequently, Oxford does not have a subrogation claim for medical expenses against Ms. Trezza.
More specifically, this paragraph, as partially referenced earlier, provides that "[e]xcept where there is a statutory right of reimbursement, [inapplicable herein], no party entering into such a settlement shall be subject to a subrogation claim or claim for reimbursement by a benefit provider and a benefit provider shall have no lien or right of subrogation or reimbursement against any such settling party, with respect to those losses or expenses that have been or are obligated to be paid or reimbursed by said benefit provider" (emphasis added).
Oxford's lien of reimbursement against Ms. Trezza is extinguished. This constitutes the decision and order of the Court.