In 1997 film “As Good As it Gets,” there was a great exchange between Carol, the Helen Hunter character, and a doctor sent to properly diagnose and treat her sickly son following her HMO’s cheap incompetence:
Carol Connelly: F#&king H.M.O. bastard pieces of sh#!
Beverly Connelly: Carol!
Carol Connelly: Sorry.
Dr. Martin Bettes: It's okay. Actually, I think that's their technical name.
Coincidently, that was the same year that Congress established Medicare Advantage, which allows Medicare recipients to obtain benefits directly from HMOs. Why on earth would anyone….? Anyway, companies that participate in Medicare Advantage have never been shy about their avarice, that’s for sure. From the beginning,
When Congress created Medicare Advantage, the program that allows private insurers to offer Medicare to seniors, it agreed to pay for-profit insurers about 12 percent more per patient than traditional Medicare would spend if it were covering those patients directly. Add up those extra payments and they amount to a $16-billion-a-year subsidy for the health insurance industry.
Why the sweetener? Lobbyists argued that the government would have to pay more to persuade for-profit insurers to join the Advantage program. Moreover, they promised that the insurers would use the $16 billion to offer patients extra benefits like acupuncture and eye exams that they would not receive under traditional Medicare. And Congress agreed. Now, think about this for a minute: legislators agreed to use our tax dollars to help for-profit insurers draw customers away from a government program that most people liked—and that cost taxpayers less...
As furtherance of their insatiable appetite for dough, these companies also have not been shy about suing to recapture money they’ve already paid out. To illustrate, here are two interesting cases that recently intersected.
First, last week, the U.S. Supreme Court let stand a 3rd. Circuit ruling that allowed Humana to sue GlaxoSmithKline “for healthcare costs related to the use of Plaxo’s diabetes drug Avandia,” which caused heart attacks and strokes, resulting in “$2.3 billion in settlements with 40,000 people who took Avandia.” GSK had “argued unsuccessfully that the Medicare Advantage program doesn’t give insurers the power to file lawsuits.” Silly GSK. Human’s an insurance company. Of course they can sue! Indeed, this decision “gave private insurers providing Medicare benefits the same right as the government” when it comes to suing for reimbursement “from a third party that commits a tort and causes an injury.” And that means double damages!
Ah, but turns out there may be actual limits to this power. Medicare Advantage company PacifiCare of Arizona Inc, now UnitedHealthcare West, tried – in fact, relying on the Humana case – but failed “under the federal Medicare Act to sue a deceased man's survivors for auto insurance proceeds to recover what PacifiCare had paid for the man's medical expenses.” The man was struck while walking in a parking lot, suffered terrible injuries and then died. Writes Reuters, “The Medicare Advantage plan that Parra was enrolled in paid $137,000 for his medical expenses. After Parra later died from his injuries, his relatives obtained $500,000 in wrongful death damages in a settlement with the driver's auto insurer, Geico. PacifiCare claimed a right to $137,000 it had paid for Parra's medical care from the auto insurance proceeds.” The lower court found “that PacifiCare had no private right to sue them under the federal law, and the 9th Circuit agreed.” Explained the Court,
The private right to sue under the Medicare Secondary Payer Act applies if a primary plan, such as Geico, fails to provide primary payment, the court noted.
“But here, PacifiCare makes no claim against Geico, the primary plan, nor has that plan failed to provide for payment,” Judge Andrew Hurwitz wrote for the three-judge panel. Rather, the company's claim was against Parra's survivors and therefore not authorized by the federal Medicare law.
[That means], “PacifiCare will have to go to state court to sue Parra's family members under a theory of breach of contract, which could be difficult, given that they were not a party to the Medicare Advantage contract.”
Thank goodness for small victories like this. This family deserves an actual happy ending, no?