Estate of Ethridge v. Recovery Management Sytems, Inc.
235 Ariz. 30
| Ariz. Ct. App. | 2014Background
- Ethridge died from nursing home neglect; Mercy Care Advantage paid Ethridge's medical expenses under its Medicare Advantage plan.
- Ethridge's estate and beneficiaries settled the APSA wrongful death and related claims against the nursing home for $1.2 million.
- After settlement, Mercy Care Advantage sought reimbursement from the Estate for the medical expenses it paid.
- The Estate sued Mercy Care Advantage, arguing Arizona's anti-subrogation doctrine barred reimbursement; the superior court held Part C did not preempt the doctrine.
- This Arizona case centers on whether Medicare Part C preempts state anti-subrogation doctrine so MA plans can recover from settlement proceeds.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does Part C preempt Arizona's anti-subrogation doctrine? | Mercy Care Advantage relies on Part C and related regs to preempt state law. | Estate argues anti-subrogation remains valid and not preempted by Part C. | Yes; Part C preempts anti-subrogation, allowing recovery. |
| Do Part C provisions and regulations create a private reimbursement right for MA plans? | Part C and CMS regs grant MA plans reimbursement rights from primary payers and settlements. | No explicit private right; reimbursement arises only under traditional MSP framework. | Part C regs confer a reimbursement right to MA plans. |
| Is the preemption scope broad enough to preempt common law? | Part C preemption covers all state laws and common law, not just statutes. | Sprietsma limits preemption to positive enactments, not common law. | Preemption extends to state common law, including anti-subrogation. |
| How does the regulatory history support preemption? | CMS revisions and memoranda affirm the right to recover from primary payers. | Regulatory history is ambiguous and not dispositive. | Regulatory history supports preemption and rights to reimbursement for MA plans. |
| Does federal jurisdiction or case law affect the result here? | Federal cases show preemption and reimbursement rights apply to MA plans in state actions. | Other federal decisions did not resolve MA reimbursement in state court. | Not control; preemption analysis under Part C governs, leading to reversal. |
Key Cases Cited
- Sprietsma v. Mercury Marine, 537 U.S. 51 (U.S. 2002) (preemption scope depends on whether common law is included)
- Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677 (U.S. 2006) (express preemption and federal jurisdiction considerations under FEHBA context)
- Parra v. Pacifi-Care of Ariz., Inc., 715 F.3d 1146 (9th Cir. 2013) (Part C preemption scope and reimbursement rights)
- Uhm v. Humana, Inc., 620 F.3d 1134 (9th Cir. 2010) (interpretation of Part C preemption including 'any' language)
- CSX Transp., Inc. v. Easterwood, 507 U.S. 658 (U.S. 1993) (statutory preemption framework and plain-language analysis)
- Cipollone v. Liggett Group, Inc., 505 U.S. 504 (U.S. 1992) (broader preemption principles and avoidance of surplusage)
- Zinman v. Shalala, 67 F.3d 843 (9th Cir. 1995) (MSP secondary payer concepts informing reimbursement rights)