New York Cannot Extinguish Medicare Provider’s Subrogation Lien

In 2009, New York enacted legislation in an attempt to limit the ability of medical care payors to recover payments they made to or on behalf of injured individuals (the legislation did not limit any recovery of property damage payments). The legislation prevented companies that held contractual (as opposed to statutory) liens from bringing subrogation actions.  The law provides, in part:  “Except  where there is  a statutory right of reimbursement, no party entering into [] a settlement [of a personal injury or wrongful death action] shall be subject to a subrogation claim or claim for reimbursement by a benefit provider and a benefit provider shall have no lien or right of subrogation or reimbursement against any such settling party...” [1]    Payment of additional first party benefits was excluded from this statute. The legislation was backed by personal injury attorneys who wanted to prevent medical care providers from obtaining a piece of personal injury settlements and awards.  The law became effective November 12, 1999.

Janine Trezza was injured while a passenger in an automobile driven by her husband, which collided with another vehicle.  She commenced a personal injury lawsuit, which settled for $75,000. [2]   Oxford Health Plans, through Rawlings, had made nearly $38,000 in Medicare Advantage (formerly known as “Medicare Part C”) benefits on behalf of the Ms. Trezza for medical bills not covered by no-fault. Ms. Trezza’s attorneys filed a motion to extinguish Oxford’s claimed lien.  The trial judge agreed with the injured plaintiff and extinguished the lien. The appellate court (Second Department) reversed.  [3]  In a decision dated December 26, 2012, the Second Department ruled that federal Medicare law preempts New York state law and, therefore, New York law cannot extinguish the right of Medicare providers to pursue recovery of amounts they paid.  The Court decision sets forth a history of the Medicare legislation, noting that the Act and its regulations set up a system whereby the federal government contracts with private health care organizations to provide individuals with Medicare benefits.  The federal legislation allows (but does not require) a private company paying Medicare benefits to provide for a right of reimbursement in their insurance policy contracts with Medicare recipients.   In the case of Ms. Trezza, the Court noted that Oxford in fact had contained reimbursement language in her Medicare insurance policy/contract.  Therefore, because the federal law allowed for the possibility of reimbursement, and because New York law cannot preempt federal law, New York could not extinguish Oxford’s lien against the proceeds of Ms. Trezza’s personal injury suit.

Bottom Line:  This is the first major decision determining whether the effects of the 2009 New York law and its impact on insurance company lienholders.  Stay tuned to see if any other carriers are successful in limiting this attempt to limit subrogation rights of carriers.

[1]  General Obligations Law § 5-335.
[2]  She received the $25,000 personal injury protection insurance policy limit of the policy covering the vehicle in which she was a passenger, and the $50,000 policy limit of the policy covering the second vehicle
[3]  Trezza v. Trezza. Second Department, 2012 NY Slip Op 09048 (12/26/12).

Dan Coffey is a member of the National Association of Subrogation Professionals (“NASP”), serves on the NASP amicus committee and is admitted to practice in all New York State courts.  He specializes in the area of fire property subrogation recovery.  Contact Dan at (519) 268-1916 or This email address is being protected from spambots. You need JavaScript enabled to view it. .

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