§ 5.3 State Medical Care Cost Recovery Act ("MCCRA") Claims

• Jurisdiction: Arizona

§ 5.3 - State Medical Care Cost Recovery Act ("MCCRA") Claims

Many state employees participate in health plans offered by the State of Arizona or one of its political subdivisions (altogether, the "State"). Although these plans may be administered or provided by private health insurance companies, the State retains rights of recovery under the MCCRA, A.R.S. §§ 12-961 through 12-964. See Arizona Dep't of Admin. v. Cox, 222 Ariz. 270, 273-74 ¶¶ 10-12, 213 P.3d 707, 710-11 (App. 2009).

a. The Scope of State MCCRA Claims

The MCCRA provides broad rights of recovery against tortfeasors or injured persons (to the extent such persons receive money) for the reasonable value of medical care. The nature of these rights includes subrogation and direct rights of recovery.

In relevant part, the MCCRA provides that, "under circumstances creating tort liability upon a [tortfeasor]," the State "may recover from the [tortfeasor] or the injured . . . person the reasonable value of the medical care and treatment." A.R.S. § 12-962(A) (emphasis added). This subsection then continues, "[t]o the extent of this right," the State "is subrogated to the injured . . . person's . . . estate . . . or survivors with reference to any right or claim they might have against the [tortfeasor]." A.R.S. § 12-962(A) (emphasis added).

This means the State "stands in the shoes" of the injured party against a tortfeasor "to the extent" such injured party (including their estate or survivors) could make a claim for recovery of medical expenses from a tortfeasor. See, e.g., Nationwide Mut. Ins. Co. v. AHCCCS, 166 Ariz. 514, 517-18, 803 P.2d 925, 928-29 (App. 1990). Section 12-962 creates this interest as a matter of law, and no perfection is required.

The mechanisms for enforcing these recovery rights are found in § 12-962(B). Subsections (B)(1) and (B)(2) allow the State to intervene in any action "against the [tortfeasor] who is liable for the injury," or directly "institute and prosecute legal proceedings against the [tortfeasor] who is liable for the injury . . . for which the medical care and treatment were furnished." A.R.S. §§ 12-962(B)(1) and (2). In addition, subsection (B)(3) provides the State may "[r]ecover the cost of care from the injured . . . person . . . to the extent that such person has received money . . . [from] the [tortfeasor]." A.R.S. § 12-962(B)(3).

b. Limitations on State MCCRA Claims

Although the scope of recovery rights under the MCCRA are quite broad, there are significant limitations applicable to MCCRA claims. As discussed below, some of these limitations are still the subject to some dispute.

i. Nature of the Recovery

The MCCRA only applies to "circumstances creating tort liability upon a [tortfeasor]." A.R.S. § 12-962(A). As a result, it only applies to third-party liability claims. Cox, 222 Ariz. at 278 ¶ 35, 213 P.3d at 715 n.6. It does not apply to uninsured or underinsured motorist claims. See id.

ii. Equitable Compromise

Principles of equitable compromise are infused into the MCCRA. For example, A.R.S. § 36-2915(14) provides that "[a] public entity shall compromise a claim it has pursuant to . . . [§] 12-962 [of the MCCRA] . . . if, after considering the factors listed in subsection I of this section, the compromise provides a settlement of the claim that is fair and equitable." A.R.S. § 36-2915(H).

The cross-referenced subsection I states that, in making a fair and equitable compromise, a public entity must consider: (a) the nature and extent of a patient's injury; (b) the sufficiency of insurance or other source of indemnity available to the injured person; and (c) any other...