§ 5.13 Federal Medical Care Recovery Act (“FMCRA”) Claims

JurisdictionArizona

§ 5.13 – Federal Medical Care Recovery Act (“FMCRA”) Claims

The FMCRA, 42 U.S.C. §§ 2651 to 2653, is one of several federal statutes implicated in cases where the United States furnishes medical care to an injured person in circumstances giving rise to “tort liability.” See generally 32 C.F.R. §§757.11 to 757.20. In addition to the FMCRA, the United States has concurrent authority to pursue recovery under the federal “third party payer” statute, 10 U.S.C. § 1095, in cases where the United States furnishes medical care to an injured person. E.g., 32 C.F.R. § 199.12(a)(2)(i) (noting the United States has concurrent authority to recover costs under either law); see infra
§ 5.14. The United States may also pursue recovery for services rendered to an injured veteran pursuant to 38 U.S.C. § 1729. See infra § 5.15.

In some cases, FMCRA recovery claims will arise as a result of healthcare obtained from a federal facility, such as a military hospital or Indian Health Service facility. In other cases, FMCRA recovery claims will involve persons who obtained medical benefits through a federal health benefits program, such as TRICARE or CHAMPVA. See infra § 5.13(e)

a. The Scope of FMCRA Claims

The FMCRA provides the United States with recovery rights consisting primarily of direct rights of recovery and subrogation rights for claims against third persons or their insurers pursuant to 42 U.S.C. § 2651(a) and (b), and a hybrid “third-party beneficiary and subrogation right” pursuant to § 2651(c). The nature and scope of these rights have long been in dispute, so to understand them it is necessary to understand a bit of FMCRA history.

Subsection 2651(a) of the FMCRA was enacted in 1962 as part of the original Act. See Pub. L. 87-693, §?1, Sept. 25, 1962, 76 Stat. 593. It provides the United States with recovery rights from circumstances creating “tort liability upon some third person” and repeatedly references the right to recover and assert a claim against a “third person.” 42 U.S.C. § 2651(a).

Specifically, § 2651(a) gives the United States an “independent right” of action to recover from a “third person” or their insurer the “reasonable value” of medical care “furnished,” “paid for,” “to be furnished,” or “to be paid for.” Id. This subsection also provides the United States is subrogated to any right or claim for damages the injured person, his estate, or survivors has against “such third person” and may require an injured person, his estate, or survivors to “assign” to the United States the injured person’s “claim or cause of action against the third person to the extent of that right or claim.” Id. (emphasis added).

There is no doubt the federal government’s rights provide a right of recovery against a tortfeasor. “All courts which have considered the question have agreed that the statute gives the United States an independent right of recovery against the tortfeasor.” United States v. Housing Auth. of Bremerton, 415 F.2d 239, 241 (9th Cir. 1969).

There is controversy, however, about whether the federal government’s
§ 2651(a) rights extend to settlement proceeds obtained from a tortfeasor or their insurer. The leading case on this issue is Holbrook v. Andersen Corp., 996 F.2d 1339, 1341-42 (1st Cir. 1993) (emphasis added), which concluded:

If the United States wishes to invoke the [FMCRA] to recover its medical payments in this case, we think that under the plain language of the statute it must proceed against [the tortfeasor or its insurer] and seek to establish [their] tort liability. The language of the statute does not authorize the government to collect under the [FMCRA] out of a settlement negotiated between the injured person and the tortfeasor. Nor is there any case law that permits such a recovery absent an express agreement designating for the government a portion of the settlement. 34

See also United States v. Farm Bureau Ins. Co., 527 F.2d 564, 566 (8th Cir. 1976) (“The language of the Act is clear and unambiguous. It authorizes the Government to institute legal proceedings only against a person [or their insurer] liable in tort.”).

Subsections 2651(b) and (c) of the FMCRA were enacted in 1996.35 See Pub. L. 104-201, div. A, title X, §?1075(a), (b), Sept. 23, 1996, 110 Stat. 2661. Subsection 2651(b) implicates only active military injured by third persons. 42 U.S.C. § 2651(b). It extends the federal government’s independent right of action to pursue a claim for wages against a third person or their insurer for the period such military service member is unable to perform their normal military duties and not assigned to other military duties. Id.

Subsection 2651(c) is more complicated and unusual. In relevant part, this subsection provides “the United States shall be deemed to be a third-party beneficiary” of “a policy of insurance” established under “a system of compensation or reimbursement” for someone injured “as a result of tortious conduct of a third person.” 42 U.S.C. § 2651(c)(1) (emphasis added). The second portion of this subsection provides “the United States shall be subrogated” to “any right or claim” the injured person, his estate, or survivors have “under [such] a policy.” 42 U.S.C. § 2651(c)(2)(C).

There is no reported case interpreting the “third-party beneficiary” and “subrogation” provisions in § 2651(c), but the amendment was surely directed at capturing first-party contractual benefits under no-fault and similar policies that had been the subject of some ongoing controversy before the 1996 amendment. Compare Heusle v. Nat’l Mut. Ins. Co., 628 F.2d 833, 837 (3rd Cir. 1980) (holding the original statute did not extend recovery rights to “exclusively contractual” first-party medical expense coverage under a state law no-fault statute) and United States v. Traveler’s Indem. Co., 729 F.2d 735, 737 (11th Cir. 1984) (same) and Gov’t Employees Ins. Co. v. Andujar, 773 F. Supp. 282 (D. Kan. 1991) (holding the United States was not an “insured” or “third-party beneficiary” under an uninsured motorist policy) and United States v. Jackson, 572 F. Supp. 181 (W.D. Mich. 1983) (holding the United States was not a “third-party beneficiary” under a no-fault policy) with United States v. Gov’t Employees Ins. Co., 440 F.2d 1338 (5th Cir. 1971) (holding the original statute made the United States an “insured” under an uninsured motorist policy) and Gov’t Employees Ins. Co. v. United States, 376 F.2d 836 (4th Cir. 1967) (same); see also United States v. Allstate Ins. Co., 910 F.2d 1281 (5th Cir. 1990) (“The United States vigorously argues that in this setting [i.e., whether PIP coverage is subject to the FMCRA] it should be deemed a third-party beneficiary of the insurance proceeds. This argument has compelling equitable force.”).

Although it is not clear whether uninsured or underinsured motorist policies are considered established under “a system of compensation or reimbursement” as contemplated by § 2651(c)(1), even before the 1996 amendments, an Arizona court had concluded, pursuant to the FMCRA’s “right of action” provision in § 2651(a), the United States was “an insured” under the terms of an uninsured motorist policy defining “an insured” as “[a]ny person, with respect to damages he is entitled to recover because of bodily injury . . . sustained by an insured [who is covered by the policy].” Transnational Ins. Co. v. Simmons, 19 Ariz. App. 354, 357, 507 P.2d 693, 696 (App. 1973) (emphasis in original).

While the terms of uninsured and underinsured insurance policies will vary, e.g., United States v. Allstate, Ins. Co., 306 F. Supp. 1214 (N.D. Fla. 1969) (holding the United States was not “an insured” under an uninsured motorist policy with different terms), in light of the amendments expanding the federal government’s recovery rights in § 2651(c) it seems highly likely a reviewing court in Arizona would extend the federal government’s FMCRA recovery rights to first-party claims provided the government is considered “an insured” under the applicable policy.

Notwithstanding this and for the same reasons the United States is not entitled to...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT