Opinion ID: 858527
Heading Depth: 4
Heading Rank: 1

Heading: The MAO Statute

Text: PacifiCare contends that because the MAO Statute allows a MAO to charge a primary plan for conditional payments made on behalf of a plan participant, that statute grants it a private right of action to recover those payments as well. We find the argument unavailing. On its face, the MAO Statute does not purport to create a cause of action. Rather, it simply describes when MAO coverage is secondary to other insurance, and permits (but does not require) a MAO to include in its plan provisions allowing recovery against a primary plan, as PacifiCare did here. In considering 42 U.S.C. § 1395mm(e)(4), a provision virtually identical to the MAO Statute governing privatelyrun health maintenance organizations (“HMOs”),2 the courts 2 Section 1395mm(e)(4) provides: Notwithstanding any other provision of law, the eligible organization may (in the case of the provision of services to a member enrolled under this section for an illness or injury for which the member is entitled to benefits under a workmen’s compensation law or plan of the United States or a State, under an automobile or liability insurance policy or plan, including a selfinsured plan, or under no fault insurance) charge or authorize the provider of such services to charge, in accordance with the charges allowed under such law or policy— 12 PARRA V. PACIFICARE OF ARIZONA have consistently concluded that Congress did not intend to create a federal cause of action thereby. Care Choices HMO v. Engstrom, 330 F.3d 786 (6th Cir. 2003), is particularly instructive. In Care Choices, the Sixth Circuit unanimously rejected an HMO’s invocation of federal question jurisdiction in a suit against one of its insureds, holding that § 1395mm(e)(4) merely permitted HMOs to create a contractual right of reimbursement. Id. at 788–90; accord Nott v. Aetna U.S. Healthcare, Inc., 303 F. Supp. 2d 565, 571 (E.D. Pa. 2004) (“[W]hile granting statutory permission to include recovery provisions in their contracts, Congress did not create a mechanism for the private enforcement of subrogation rights of Medicare substitute[s].”). We agree. The MAO Statute simply allows PacifiCare to provide via its contracts that its insurance is secondary to other available plans and allows recovery from a primary plan that refuses to reimburse the MAO for payments made on behalf of a participant. In the end, the MAO’s claim thus arises by virtue of its decision to include provisions allowing such recovery in its contract with plan participants. PacifiCare also argues that the MAO Statute creates a federal cause of action by cross-referencing § 1395y(b)(2)(B)(iii), which provides, in part, that the “United States may bring an action against any or all entities that are or were required or responsible . . . to make payment (A) the insurance carrier, employer, or other entity which under such law, plan, or policy is to pay for the provision of such services, or (B) such member to the extent that the member has been paid under such law, plan, or policy for such services. PARRA V. PACIFICARE OF ARIZONA 13 with respect to the same item or service . . . under a primary plan.” PacifiCare contends that because this provision creates a cause of action in favor of the United States, the reference to it in the MAO Statute means that a federal claim is also created for MAOs. We are not persuaded. The cross-reference to § 1395y(b)(2)(B)(iii) in the MAO Statute simply explains when MAO coverage is secondary to a primary plan – “under circumstances in which payment under this subchapter is made secondary pursuant to section 1395y(b)(2)” – that is, under the same circumstances when insurance through traditional Medicare would be secondary. The crossreference defines when MAO coverage is secondary, and does not create a federal cause of action in favor of a MAO. PacifiCare also cites 42 C.F.R. § 422.108(f), which provides that MAOs exercise “the same rights to recover from a primary plan, entity, or individual that the Secretary exercises under the MSP regulations.” The regulation adds nothing to a MAO’s claim to a private right of action. See Alexander v. Sandoval, 532 U.S. 275, 291 (2001) (“Language in a regulation may invoke a private right of action that Congress through statutory text created, but it may not create a right that Congress has not.”); Opera Plaza Residential Parcel Homeowners Ass’n v. Hoang, 376 F.3d 831, 836 (9th Cir. 2004) (“[I]t is the relevant laws passed by Congress, and not rules or regulations passed by an administrative agency, that determine whether an implied cause of action exists.”).