Humana Medical Plan, Inc. v. Mary Reale & Parra v. Pacificare of Arizona, Inc.

Humana Medical Plan, Inc. v. Mary Reale
No. 10-21493-Civ., 2011 WL 335341
Jan. 31, 2011
(D. S.D. Fla, January 31, 2011)


Parra v. Pacificare of Arizona, Inc.
No. CV 10–008–TUC–DCB,
2011 WL 1119736
(D. Arizona, March 28, 2011)

The main issue presented in these cases involved whether Medicare Advantage Plans could assert their recovery actions in the federal court (i.e. whether or not the federal courts had proper jurisdiction over these claims)

For the reasons more outlined in the case decisions, the courts basically ruled that the federal courts did not have proper subject matter jurisdiction to hear these cases. In reaching this decision, the courts essentially found that while the MSP provides Medicare Advantage Plans with recovery rights, these plans do not enjoy the same rights as the federal government in terms of recovery claims in federal court. It is important to note that the courts did not rule that Medicare Advantage Plans do not have recovery rights. Rather, the courts in these cases ruled that the federal courts did not have jurisdiction over recovery actions involving Medicare Advantage Plans.

The following passages from the Humana and Parra decisions may assist in placing this technical issue into better focus:

The court in Humana stated as follows:

Humana contends that this Court has subject matter jurisdiction because Humana’s alleged right to reimbursement under 42 U.S.C. 1395y(b)(2) ‘present [s] an important and substantial’ issue of federal law.” (ECF No. 19 at 2). Section 1395y(b)(2) requires reimbursement to the ‘appropriate Trust Fund for any payment made by the Secretary … with respect to an item or service if it is demonstrated that such primary plan … had a responsibility to make payment with respect to such item or service.’ 42 U.S.C. 1395y(b)(2).Humana argues that 42 U.S.C. 1395y(b)(2), coupled with 42 C.F.R. 422.108(f), entitle it to reimbursement. I disagree. A close reading of the federal regulation suggests otherwise.

A Medicare Advantage organization, such as Humana, “will exercise the same rights to recover from a primary plan, entity, or individual that the Secretary exercises under the MSP regulations …” However, under 42 U.S.C. 1395y(b)(2)(B)(i), the Secretary’s authority is limited to making payments “conditioned on reimbursement to the appropriate Trust Fund.” Id. The
United States is vested with full authority to bring an action for reimbursement, not the Secretary. 42 U.S.C. 1395y(b)(2)(B)(iii) (endnote reference omitted). Therefore, because the Secretary does not have the authority to bring an action for reimbursement, Humana cannot claim such a right under 42 C.F.R. 422.108(f). Accordingly, Humana has failed to bring a claim arising under federal law. (endnote reference omitted)

The court in Parra stated, in part, as follows:

PacifiCare errs in its assertion that the Magistrate Judge incorrectly treated Count 1 as predicated solely on state law, and hence recommended dismissal ….. The Magistrate Judge understood, as does this Court, that PacifiCare asserts its right to reimbursement, pursuant to provisions in its Medicare Advantage Plan (MA Plan), arises under federal law … (discussing Care Choices HMO v. Engstrom, 330 F.3d 786 (6th Cir.2003); Nott v. Aetna U.S. Healthcare, Inc., 305 F.Supp.2d 565 (E.D.Penn.2004)). The Magistrate Judge found that the Medicare statutes allow PacifiCare to include subrogation and reimbursement rights in its agreement with its members,‘but it did not create a federal right to enforce that contract.’ This Court agrees with the Magistrate Judge that the creation of this federal right did not create a federal cause of action for recovery. ….

The Court agrees with the Magistrate Judge’s analysis that the Medicare statutory and regulatory scheme does not reflect any congressional intent to create a private cause of action … (applying Court v. Ash, 422 U.S. 66, 78, 95 S.Ct. 2080, 45 L.Ed.2d 26 (1975) (finding PacifiCare to be a member of the class for whom the Medicare statute was enacted to benefit; that the action brought by PacifiCare is one traditionally within state law; and that the main factor of congressional intent cuts against a private right of action and it is not inconsistent with the legislative scheme to not imply a remedy).

The Court finds that the Medicare statutes at issue, here, do no more than create a federal right. 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. The Court finds the same in respect to 42 U.S.C. § 1395w–26(b)(3) (2003) and 42 C.F.R. § 422.108(f). Congress and the Secretary did no more than protect PacifiCare’s right to charge and/or bill a beneficiary for reimbursement, notwithstanding and state law or regulation to the contrary.

To learn more about Medicare Advantage Plans and other recent court decisions addressing this issue, please see the author’s article entitled Medicare Advantage (MA Plans): Exploring Recovery Rights & Recent Court Decisions as contained in Settlement News, July 2011.  This article can be obtained at



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