Opinion ID: 1933172
Heading Depth: 1
Heading Rank: 5

Heading: Roberts v. Total Health Care, Inc

Text: We recently had the opportunity to address HMO subrogation rights in cases limited to services provided as part of a Medical Assistance Program. Roberts v. Total Health Care, Inc., 349 Md. 499, 709 A.2d 142 (1998). Our opinion was carefully structured to apply only to the Medical Assistance Program. We relied on a specific statutory provision not applicable here in order to allow the HMO to recover under a theory of subrogation. Title 15 of the Health-General Article relates to Medical Assistance Programs only. It does not apply to HMOs outside the scope of Medical Assistance Programs. Accordingly, Maryland Code (1982, 1994 Repl.Vol., 1999 Cum.Supp.), section 15-120 of the Health-General Article grants the State a right of subrogation to any cause of action which a program recipient has against a third party for payment of medical services. Roberts, 349 Md. at 503, 709 A.2d at 144. (Emphasis added). Section 15-120(a) provides that: If a Program recipient has a cause of action against a person, the Department shall be subrogated to that cause of action to the extent of any payments made by the Department on behalf of the Program recipient that result from the occurrence that gave rise to the cause of action. Section 15-120 represents a portion of the State of Maryland's effort to comply with the federal law on medical assistance, which requires states to seek reimbursement for medical assistance payments made where a third party is legally liable for that medical care. Roberts, 349 Md. at 504, 709 A.2d at 144. The very existence of section 15-120 of the Health-General Article demonstrates that, even in respect to personal injury claims, subrogation is a right that the Legislature knows how to grant. This section created a statutory right of subrogation in the State; a private health maintenance organization's right to enforce a subrogation claim pursuant to section 15-120 is based on the derivative claim that the State has a legal right to assign its statutory right to other parties. Roberts, 349 Md. 499, 709 A.2d 142, was premised in substantial part on the government's strong interest in keeping its Medicaid program as efficient as possible and limited to its function of being the payor of last resort. Roberts, 349 Md. at 519, 709 A.2d at 152. This supports our holding that there is no general right to reimbursement or subrogation under circumstances such as exist in the case at bar. Prior to 1981, HMOs in Medical Assistance Programs were required to determine whether the enrollee has third-party coverage, [to] seek recovery from that source for any medical services rendered, and [to] refund the payments, excluding Medicare, to the Department. COMAR 10.09.16.09C (1980). In 1981, COMAR was amended and HMOs that paid out medical assistance claims were permitted to keep any funds recovered from subrogation. According to the Secretary of Health and Mental Hygiene, the 1981 Amendments were made to achieve equity in payments to health maintenance organizations. Medical Assistance rates for these organizations are calculated on the assumption that collections from liable third parties will help defray the cost of services to Medical Assistance enrollees. To require instead that these collections be refunded to the Department is to place an undue financial burden on the organization. 8 Md. Reg. 355 (1981). The exception carved out by section 15-120 and subsequent COMAR provisions is a specific subrogation exception that applies only to HMOs when the payments are made as part of a Medical Assistance Program. The intent is to allow the State to continue to provide low cost health care to the Medical Assistance Program enrollees by keeping overall costs down. By allowing the HMO to act as an agent of the State, rates for the program are kept down. This, in turn, keeps the costs of federally funded Medicare and Medicaid programs down. Only under this set of circumstances has Maryland, in respect to services covered under HMO plans, allowed for subrogation for HMOs in respect to personal injury claims under circumstances based on its relationship with its subscribers. This is not the same set of circumstances as the case subjudice. [10] D. Section 11-112 of the Courts & Judicial Proceedings Article Appellee points out 1999 Maryland Laws, Chapter 590, which became effective on October 1, 1999. The title to Chapter 590 states that it is for the purpose of requiring that the amount for which certain persons have a right of subrogation for health care benefits or services paid or payable on behalf of an injured person be reduced by a certain amount related to the amount of attorney's fees incurred by the injured person in a personal injury claim.... Chapter 590 created Maryland Code (1974, 1998 Repl.Vol., 1999 Cum.Supp.), section 11-112 of the Courts & Judicial Proceedings Article, which applies to payors, as defined in section 19-133(k) [11] of the Health-General Article, including HMOs. New section 11-112(b)(1) of the Courts & Judicial Proceedings Article then states that it applies to any right of subrogation under a contract or applicable law for payment of health care benefits or services for an injured person paid or payable by a payor ... if the amount of the subrogee's claim ... is voluntarily paid by the injured person from the injured person's recovery in a claim for personal injury. Appellee argues that, by passing Chapter 590, the General Assembly confirmed that ... HMOs may, through a contractual agreement, be subrogated to their members' claims against tortfeasors. We disagree with this interpretation. The intent behind section 11-112 does not appear to be the confirmation of a right of subrogation for HMOs, but to protect a plaintiff's recovery from being subjected to both the full amount of a health insurer's subrogation claim, if they have the right to a subrogation claim, and the insured's attorney's full fee. [12] First we note that this provision is not a part of Health-General Article, subtitle 7, Health Maintenance Organizations. Instead it is part of the general provisions relating to Judgments of the Courts Article. The language of the act states that it applies to any right of subrogation under a contract or applicable law.... This necessarily implies that it is directed to such rights that are created by valid contracts. More important, the purpose of the statute is not to create subrogation rights, but to limit subrogation rights that do validly exist, in such a fashion that such payments, if validly permitted, take into account the attorneys' fees and expenses of the injured party. Our review of the legislative history of the new statute confirms our belief that it was a statute designed to limit subrogation rights, not to extend them. The inclusion of the language relating to a definition in another statute that included health maintenance organizations, recognized, we suspect, that there were some persons involved in the process, who believed that such rights existed, or might exist, and were attempting to insure that if they existed, they were included in the limitations being imposed. 1999 Maryland Laws, Chapter 590 was Senate Bill 653. The genesis of this issue however was in the House of Delegates, not the Senate. The precursor to Senate Bill 653 was House Bill 91. Its precursor was House Bill 927 filed in the 1998 session, but not enacted into law. House Bill 927's precursor was House Bill 258 filed, but not enacted, in 1997. As first presented, House Bill 258 purported to add a new section to the Courts Article, section 11-111. As introduced there was no reference to describing payor as having the same meaning as in Health General Article, section 19-1501. The bill merely provided that it applied, generally, to any right of subrogation for payment of health care benefits. It then limited any such rights as did exist. Neither the Bill Analysis nor the Fiscal Report referred to any particular entity as having specific rights to subrogation. By the third reader, the reference to Payor being as defined in section 19-1501(h) [13] of the Health-General Article was in the bill. The bill file contains no reference to its origin. Even at this point there was no specific reference to contractual rights. House Bill 258 was passed by the House, but never enacted. The same proposal was introduced in 1998, House Bill 927, but failed to be enacted. Then in 1999 House Bill 91 was introduced in the House. A companion bill, Senate Bill 653 was introduced in the Senate. Most of the limited legislative history of these two bills is found in the bill file in respect to HB 91. The Bill Analysis in respect to HB 91 states that it was intended to limit rights of subrogation. Currently, there is no law that reduces the amount a health insurer or other payor may collect based on the percentage of the personal injury claim that the party pays for attorney's fees. .... The bill reduces the amount a subrogee may recover for health care benefits paid or payable [on] behalf of an insured injured person.... It then noted that the bill only applied where the injured person had voluntarily paid the subrogee's claim. This bill file also contains a recommendation for passage by the Maryland Bar Association providing, in relevant part: The bill reduces the amount recoverable in subrogation proportionately to the attorney's fees incurred by the injured party in pursuing the recovery of damages that led to the fund for reimbursement of the benefits paid by the insurance carrier. In suggesting a deletion the Bar Association stated the purpose of the proposal... is to get more of the amount of the total recovery for the injured party, not the subrogee. The Senate and House bill files contain identical Bill Analyses that note in their summary that: This bill requires a reduction of the amount which may be recovered by a payor (i.e., subrogee) in a subrogation claim against an injured person for health care benefits paid or payable by a payor on behalf of the injured person.... It is clear that the purpose of the act was not to extend subrogation rights to entities that were statutorily limited to methods of compensation, HMOS, but to limit such rights that some of the entities defined as payors in section 19-133(k), might have. Entities such as health insurers, non-profit health service plans, and third-party administrators as defined in section 19-133(k). The Act was not intended to extend subrogation rights where none existed. If the Legislature assumed such a right existed for HMOs, its assumption was an erroneous one. We have held, supra, that, except for Medical Assistance Programs, HMOs have no right of subrogation to personal injury damages claims. In light of the current statutory scheme relating to HMOs, only a statute specifically creating a right to subrogation by HMOs or a statute removing the limitations on compensation could create a right to subrogation, contractual or otherwise. [14] E. Subrogation in the Annotated Code of Maryland Looking at other articles of the Maryland Code, we have noticed that the Legislature has frequently addressed the issue of subrogation. The Legislature knows how to grant a right to subrogate if it chooses to do so. As we noted in our discussion of Roberts, supra, Title 15 of the Health-General Article concerns Medical Assistance Programs. Besides section 15-120, subtitle 1 of Title 15 also concerns subrogation in sections 15-102.2, [15] 15-121.1, 15-121.2, and 15-121.3. [16] The existence of these statutes in comparison to the HMO statutes supports our reasoning that HMOs generally have no right to subrogation claims against subscribers and are only granted an exception, by statute, to do so under unique circumstances not present here. The remainder of subrogation statutes outside the Health-General Article primarily deal with one of three issues: (1) special provisions for the State government, (2) commercial law, or (3) insurance. The statutes that expressly provide for subrogation for State government include: Maryland Code (1992, 1998 Repl.Vol.), section 8-410 of the Business Regulation Article, [17] Maryland Code (1984, 1999 Repl.Vol.), section 12-318 of the State Government Article, [18] and Maryland Code (1957, 1996 Repl.Vol., 1999 Cum.Supp.), Article 27, section 828. [19] All three of these sections grant the State a right to recover money that it may pay out as part of a State funded program. The statutes that concern commercial law include: sections 4-407, [20] 12-309, [21] and 15-401 [22] of the Commercial Law Article. The statutes that concern insurance include: sections 9-309, [23] 9-407, [24] 19-109, [25] 19-507, 19-511, [26] 20-515, and 20-609 [27] of the Insurance Article. By looking to some of the portions of the Maryland Code we have just described, which concern themselves with subrogation, we conclude that the Legislature recognizes subrogation as a potential remedy designed to provide relief against loss and damage to a party who has paid the debt of another. But, in the Maryland HMO Act, the Legislature has limited the use of this remedy to unique factual circumstances not present here. The numerous exceptions where it does grant such a right and the fact that it does not grant such a right to HMOs in the Maryland Health Maintenance Organization Act, leads us to conclude further that the Legislature did not intend for HMOs to have general subrogation rights against members or subscribers.