C. The Most Common Entities Seeking Repayment of Expenses in a Personal Injury Action

• Jurisdiction: New York

C. The Most Common Entities Seeking Repayment of Expenses in a Personal Injury Action

The following entities commonly seek recovery of medical expenses in a personal injury action.

1. Medicare

There is a statutory right of recovery running to the U.S. government for Medicare payments conditionally made to an injured party pending payment by a liability insurer or other primary plan.¹²⁹⁵ We discuss Medicare liens in detail at section XIV.

2. Medicaid

This is a statutory right of recovery running to the states and administered through local districts for medical assistance and other services, asserted by notice of lien under SSL § 104-b and assignment of benefits by the Medicaid recipients as a condition of receiving payments and services.¹²⁹⁶ Effective October 1, 2017, WOS v. E.M.A. ex rel. Johnson¹²⁹⁷ and Arkansas Department of Health & Human Servs. v. Ahlborn¹²⁹⁸ have been legislatively overruled. Congress did not extend a stay of implementation on that portion of the Bipartisan Budget Act of 2013 which made Medicaid liens recoverable on a dollar for dollar basis.

3. Health Insurance Contracts

Private health insurers claim rights of reimbursement for injury related medicals provided through their health insurance contracts. General Obligations Law § 5-335(a) now bars these claims when a plaintiff settles with a tortfeasor.¹²⁹⁹

4. Self-Funded Private Employer Health Plans

Self-funded private employer health plans seek to recoup their payment of injury related medical service payments to their private employees. This right of recovery arises under the Employer Retirement Income Security Act of 1974 (ERISA) to recoup all expenses irrespective of the recovery amount, or the equity of such recoupment from the injured plaintiff's recovery.¹³⁰⁰ Case law has held that GOL § 5-335 does not apply to these statutory rights of reimbursement.¹³⁰¹

In US Airways v. McCutchen,¹³⁰² the U.S. Supreme Court held that an injured party could not assert equity defenses such as the "make whole" doctrine against an ERISA recovery action based on an equitable lien by agreement, i.e., the Plan language. But, the Supreme Court found that due to gaps in the Plan language at bar, traditional equity principles could fill those gaps. The gap pertained to whether the Plan had to share part of the fees and costs incurred in getting the recovery. Lower courts have followed McCutchen to uphold full recovery under ERISA plans where there are no gap fillers.¹³⁰³

The Supreme Court on January 20, 2016 held that when an ERISA fund participant dissipates an entire settlement on nontraceable items, such as food, the fiduciary of the ERISA plan cannot bring a suit to attach the participant's general assets...