§ 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 either intervene in any action “against the [tortfeasor] who is liable for the injury,” or if no action is filed within six months of medical care being provided, 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 directly “[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 subject to some dispute.

i. Creation of Right to Recover

The MCCRA provides: “If this state . . . provides medical care and treatment . . . under circumstances creating tort liability upon a third person, the state . . . may recover from the third person or the injured or diseased person . . . .” A.R.S. § 12-962(A) (emphasis added). Thus, the language creating the right is merely permissive, and may not be self-executing. See State Farm Mut. Auto. Ins. Co. v. Lindsey, 182 Ariz. 329, 331, 897 P.2d 631, 633 (1995) (“[Statutory provision] is not self-executing because its wording is merely permissive.”); see also Parra v. PacifiCare of Ariz., Inc., 715 F.3d 1146 (9th Cir. 2013) (holding Medicare Part C authorization provision does not by itself require reimbursement, but merely authorizes plans to include reimbursement provisions in plan documents); Estate of Ethridge v. Recovery Mgmt. Sys., Inc., 235 Ariz. 30, 34 ¶¶ 12-13, 326 P.3d 297, 301 (App. 2014), review denied (Nov. 6, 2014), cert. denied 135 S. Ct. 1517 (2015) (agreeing with Parra and noting the plan documents advised enrollees that it could seek reimbursement). As such, the state or its political subdivisions may be required to include language in MCCRA health plans creating subrogation and reimbursement rights to take advantage of the permissive rights offered by the MCCRA. See Lindsey, 182 Ariz. at 331, 897 P.2d at 633 (“[A]dditional policy language is...