In a December 26 decision, New York's Appellate Division, Second Department reversed a Brooklyn trial court's decision that had held invalid a health insurer's lien against the personal injury claim of its insured, Janine Trezza.

In rendering its decision, the appellate court first acknowledged that under General Obligations Law 5-335, health insurers, as a general rule, can no longer assert liens against recoveries in personal injury actions. (For more on this topic, please see "When Insurance Companies Can Assert a Lien Against Your NY Injury Claim").

However, in this instance, the Court found that although this health plan was offered by Oxford, an HMO, nevertheless, the particular plan at issue was issued under the Medicare Advantage program, and therefore fell within the ambit of one of the exceptions to this rule. To that end, the Court stated as follows:

"[T]he Medicare Act provides that Medicare Advantage organizations may create a right of reimbursement for themselves in their insurance agreements with Medicare insureds. Moreover, "[t]he standards established under [Part C] shall supersede any State law or regulation ... with respect to [Medicare Advantage] plans which are offered by [Medicare Advantage] organizations under [Part C]" (42 USC § 1395w-26[b][3]), and "[a] State cannot take away [a Medicare Advantage] organization's right under Federal law and the MSP regulations to bill, or to authorize providers and suppliers to bill, for services for which Medicare is not the primary payer" (42 CFR 422.108[f]) ... 

"[W]e hold that General Obligations Law § 5-335, insofar as applied to Medicare Advantage organizations under Part C, is preempted by federal law since it would impermissibly constrain contractual reimbursement rights authorized under the "Organization as secondary payer" provisions of the Medicare Act."

Jonathan Cooper
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