Governmental immunity?

Posted by Matthew Garretson

Question:
I represent a handicapped client who was injured by the negligence of a RTA employee. The adjuster is of the opinion that no one, including Medicare, is entitled to reimbursement for payment of medical bills since RTA is a governmental agency. I am of the opinion that governmental immunity does not apply to federal liens such as Medicare and ERISA. Please advise as to which of us is correct with authority for same.

-Ohio Attorney

Answer:
Without researching, I would say it is unlikely that immunity applies, for the simple reason that political subdivisions generally use insurance companies and have plan administrators who are responsible for health insurance payments and coverage issues. Under that structure, the "plan administrator" would fall within the definitions of ERISA and likely the MSP statutes. This is really a question of the ERISA and MSP definitions of what constitutes a plan for recovery purposes and what RTA actually uses. My experience is that in this battle the Feds always win. My rationale follows:

Medicare has both a direct priority right of recovery and subrogation rights based upon Federal law. CMS has a direct right of action to recover its payments from any entity, including a beneficiary, provider, supplier, physician, attorney, State agency, or a private insurer that has received a third party payment, 42 CFR 411.24. Additional regulations regarding reimbursement of conditional payments can be found in 42 CFR §411.23, 411.26,411.37,411.50,411.52, and 411.54. Medicare's recovery claim is superior to the recovery claims of any other entities. Medicare will not honor a settlement that may have been made to prevent Medicare from recovering its payment.

In addition to judicial decisions establishing the Federal right of recovery, Congress, in enacting the Deficit Reduction Act of 1984 (Pub. L 98-369), specifically established the right of the United States to bring direct legislative action against any entity responsible for primary payment and clarified the ability of the United States to be subrogated to "any right of an individual or any other entity to payment."

Another modification to the enforcement abilities of the United States in regard to Medicare as a secondary payer came about with the passage of the Omnibus Reconciliation Act of 1986 (Pub. L. 99-509, Stat, 1974(1986). This act amended 1862(b) of the Social Security Act to create a private cause of action for damages " in law or plan, automobile or liability insurance policy or plan or no-fault insurance plan, group health plan, or large group health plan" which has been deemed primary and "fails to provide from primary payment (or appropriate reimbursement)..." 42USC ss1395(b), 1985. In Colonial Penn Ins. Co. v. Heckler, 721 F. 2d 432 (3rd Cir. 1983) and Abrams v. Heckler, 582 F. Supp 1155 (S.D. New York 1984). These cases recognized the congressional intent to establish Medicare as a residual rather than primary payer, and recognized that any State Law, which would interfere with this intent, would be superseded.