By Thomas D. Begley, Jr., CELA
This is the second in a series of articles dealing with lien resolution in personal injury cases.
Medicare Advantage and Prescription Drug Plans
Medicare Part C. commonly known as Medicare Advantage, is a Medicare substitute program operated by private health insurance companies as a managed care plan. Medicare Part D similarly provides prescription coverage to eligible beneficiaries through private insurance plans. To the extent a reimbursement right may be created under a specific MAO plan, the Part C statute itself limits any recovery from a beneficiary to the amount actually received from a third party as payment for plan-covered expenses.1
Generally, employer-sponsored benefits plans are governed by the Employee Retirement Income Security Act of 1974, commonly referred to as ERISA.2 However, certain employers and their benefits plans are not subject to ERISA. These include governmental plans;’ church plans:’ plans maintained solely for the purpose of complying with applicable Workmen’s Compensation, unemployment compensation, or disability insurance laws;5 a plan maintained outside of the UnitedStates primarily for the benefit of persons who are virtually all non-resident aliens;6 or an excess benefit plan.” ERISA preempts state law that “relates to” an ERISA governed plan;8 however, ERISA does not exempt or relieve any person from complying with any law of any state that regulates insurance, banking, or securities.9 Neither an employee benefit plan nor any trust established under such a plan shall be deemed to be an insurance company or other insurer, bank, trust company, or investment company.10 As a result of this statutory framework, any self-insured employee benefit plan regulated under ERISA enjoys federal preemption of state law, but an insurance company insuring such a plan does not. Such insurance companies are regulated by state law, including laws concerning subrogation and reimbursement.11 If an ERISA plan is insured, the insurance company is subject to state law and the plan is bound by state insurance regulations insofar as they apply to the plan’s insurer. ERISA itself is silent with respect to subrogation and reimbursement, neither requiring a welfare plan to contain a subrogation clause nor barring such a clause or otherwise regulating its content12
Federal Employee Health Benefit Act
The Federal Employee Health Benefit Act (FEHBA) provides group health insurance for federal employees.13 Although there is no statutory right of subrogation or reimbursement. FEHBA contains a preemption provision under which the terms of insurance contracts issued by its private carriers purportedly preempts state and local law.1″1 However, the Supreme Court has held that FEHBA does not provide contract insurers with a federal cause of action or federal jurisdiction in a subrogation/reimbursement claim, leaving the matter to the state courts, and it further called into question whether a FEHB plan may assert any contractual recovery right at all against a beneficiary where such claims are prohibited by state law; the Court was “not prepared to say” that a carrier’s contract with the government “would displace every condition state law places on that recovery.”15
Federal Medical Care Recovery Act
The federal statutory scheme provides several independent bases for recovery of medical costs expended on behalf of government personnel and their dependents for injury or disease not connected to their military or other government service, but the Federal Medical Care Recovery Act (FMCRA)16 establishes standards generally applicable to claims of all federal departments and agencies. Significantly, while the government may exercise its recovery rights under the statute by making claims directly against third-party tortfeasors, the statute authorizes no such claims against a beneficiary. The statute provides, inter alia, that in any case in which the United States furnishes or pays for medical or dental care and treatment under circumstances creating third-party tort liability for such expenses, the United States shall have a right to recover from the third party the reasonable value of such care and treatment.17 The United States also has an independent right to recover from the third party the total amount of pay fora member of the Uniformed Services for any period in which the member is unable to perform his or her duties as a result of the injury or disease and is not assigned to perform other military duties.18
Veterans Administration and TRICARE Claims
The Veterans’ Benefits Act19 and the Armed Forces Act20 establish the Veterans Administration and TRICARE/CHAMPUS healthcare programs, respectively. Neither the VA nor TRICARE/CHAMPUS statutes allow for a lien or reimbursement claim against a beneficiary’s personal injury recovery. The government does have a subrogation right if it chooses to pursue its own claim against a third party: however, the statutes specifically governing the programs have a very narrow definition of “third party” that does not include a tortfeasor, but is specifically limited to public and private healthcare payors.21 Moreover, applicable regulations spell out that a beneficiary only has a duty to cooperate with the government’s third-party claim, and the extent of that cooperation itself is rather limited, merely obliging a beneficiary to provide necessary information for the government’s third-party claim.22 Moreover, the government’s claim is expressly limited by both statute and regulation to the extent of liability under state tort law, so federal preemption of state liability rules does not apply.
142 U.S.C. §1395w-22(a).
229 U.S.C. §, 1003.
329 U.S.C. § 1003(b)(1).
429 U.S.C. § 1003(b)(2).
529 U.S.C. § 1003(b)(3).
629 U.S.C. § 1003(b)(4).
729 U.S.C. § 1003(b)(5).
*29 U.S.C. ^ 1144(a).
“29 U.S.C. § 1144(b)(2)(A).
,0 29 U.S.C. § 1144(b)(2)(B).
11 FMCCorp. v.Holhday,498 U.S. 52 (1990).
13 Ryan v. Federal Express Corp.. 78 F.3d 123 (3d Cir. 1996).
13 38 U.S.C.§ 1725(a)(1).
M5 C.F.R. § 890.
15 Empire UealthChoice V. McVeigh.547 U.S. 677 (2006).
16 42 U.S.C. §2651.
1742 U.S.C. §2651 (a).
18 42 U.S.C. § 2651(b).
19 38 U.S.C. § 1729.
20 10 U.S.C. §1095.
21 38 U.S.C. § 1729(i)(3)and 10 U.S.C. § 1095(h)(1).
22 32 CFR §§ 199.12 and 220.9