104 A.D.3d 37
N.Y. App. Div.2012Background
- Plaintiff injured in automobile accident; Medicare Advantage organization Oxford paid plaintiff's medical expenses ($37,787.64).
- Plaintiff settled personal injury action for $75,000 total (PIP $25,000 plus $50,000 vehicle liability).
- Oxford sought reimbursement from plaintiff’s settlement for incurred medical expenses under contract and federal law.
- General Obligations Law § 5-335 (Nov. 12, 2009 effective) prohibits subrogation/reimbursement rights absent statutory right of reimbursement.
- Trial court granted plaintiff’s motion to extinguish Oxford’s lien/reimbursement claim, relying on § 5-335; court then addressed preemption by federal law.
- Court concludes § 5-335 is preempted as applied to Medicare Advantage organizations under Part C of the Medicare Act.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 5-335 is preempted by the Medicare Act for MA plans. | Plaintiff argues no statutory right of reimbursement exists; § 5-335 extinguishes contractual rights. | Oxford contends MA plans have statutory rights of reimbursement under federal law. | Yes; § 5-335 preempted for MA plans under Part C. |
| Whether Medicare Part C creates a private right of action or statutory reimbursement for MA plans. | Medicare Act does not create a private reimbursement right; rights arise from contract. | Medicare Act permits MA organizations to contract for subrogation/reimbursement rights. | Medicare Part C authorizes but does not require reimbursement rights; preemption applies to restrain state law. |
| Does federal preemption apply based on Part C's comprehensive preemption provision and MSP regulations? | State law should control since no private federal remedy exists. | Part C standards supersede state law; MSP regs preempt § 5-335. | Yes; § 5-335 preempted by federal law to the extent applied to MA plans. |
Key Cases Cited
- Heckler v. Ringer, 466 U.S. 602 (U.S. (1984)) (statutory interpretation of Medicare Act; preemption not explicit but cited for broader framework)
- Nott v. Aetna U.S. Healthcare, Inc., 303 F. Supp. 2d 565 (E.D. Pa. 2004) (Medicare Act did not create private enforcement; private right to subrogation exists via contract)
- Care Choices HMO v. Engstrom, 330 F.3d 786 (6th Cir. 2003) (Medicare Act does not establish private right of action for subrogation)
- Cotton v. StarCare Med. Group, Inc., 183 Cal. App. 4th 437, 107 Cal. Rptr. 3d 767 (Cal. App. 2010) (Part C preemption context; standards under CFR/Medicare Act preempt state law)
- Do Sung Uhm v. Humana, Inc., 620 F.3d 1134 (9th Cir. 2010) (interprets Part D preemption analogies; supports broad preemption interpretation under Part C)