Product Liability Client Alert: No Private Right of Action Exists for a Medicare Part C Plan Against Survivors of a Plan Participant

Recently, in Parra v. PacifiCare of Arizona, Inc., the Ninth Circuit Court of Appeals held that a Medicare Part C Plan does not have a private right of action to recover costs from the wrongful death proceeds paid to surviving family members. Specifically, the Ninth Circuit stated that “a private Medicare Advantage Organization [“MAO”] plan cannot sue a plan participant’s survivors for reimbursement for advanced medical expenses out of the proceeds of an automobile insurance policy.”

When Manual Parra died from injuries suffered in an automobile accident, his wife and children made a demand against the decedent’s Geico automobile insurance policy for wrongful death damages. The Medicare Part C Plan – PacifiCare of Arizona – also made a claim against Geico for the medical expenses it disbursed for the decedent’s injuries arising from the accident. After settling with Geico, the decedent’s survivors filed a complaint against PacifiCare seeking injunctive relief on the basis that the wrongful death benefits from Geico were not subject to PacifiCare’s anticipated claims.

Medicare Part C was created by Congress in 1997 as an amendment to the Medicare Act. Medicare Part C provides for private Medicare Advantage plans, allowing a participant to obtain benefits through MAOs, which receive a fixed payment from the United States for each participant. PacifiCare argued that it has a private right of action to recover wrongful death proceeds, according to two provisions of the Medicare Act: (1) § 1395w-22(a)(4) [“MAO Statute”] and (2) § 1395y(b)(3)(A) [“Private Cause of Action”].

The Ninth Circuit held that the MAO Statute merely permits PacifiCare, in its contracts, to provide for recovery from a primary plan that refuses to make reimbursement payments. The Court rejected PacifiCare’s argument that the MAO Statute creates a federal cause of action.

Regarding the Private Cause of Action, the Ninth Circuit distinguished the recent case of In re Avandia Mktg., 685 F.3d 355, 356 (3d Cir. 2012). In re Avandia Mktg. held that a MAO had a private right of action against third-party tortfeasors for the recovery of medical expenses. The Ninth Circuit emphasized that PacifiCare was not making a claim against Geico – an insurer – or an estate, but against the survivors’ claim to wrongful death proceeds. Consequently, the Private Cause of Action did not apply.

This document is intended to provide you with information about product liability law related developments. The contents of this document are not intended to provide specific legal advice. This communication may be considered advertising in some jurisdictions.

May 22, 2013