United States District Court, D. Arizona
October 16, 2015
Rachel Aranki, a single woman, Plaintiff: Frank Verderame,
LEAD ATTORNEY, Plattner Verderame PC, Phoenix, AZ; Michael P
Pianin, LEAD ATTORNEY, Pianin & Associates PC, Scottsdale,
Sylvia Mathews Burwell, in her official capacity as Secretary
of Health and Human Services, Defendant: Adam Ryan Smart,
LEAD ATTORNEY, U.S. Attorneys Office - Phoenix, AZ, Phoenix,
Stephen M. McNamee, Senior United States District Judge.
before the Court are Defendant Sylvia Matthews Burwell's
Motion to Dismiss for Lack of Subject Matter Jurisdiction
(Doc. 10), Plaintiff Rachel Aranki's Motion to Amend
Complaint (Doc. 14), and Plaintiff's Request for Order to
Amend Complaint (Doc. 17). The parties have responded and the
motions are fully briefed. Having reviewed the parties'
briefing, the Court will grant Defendant's motion to
dismiss and deny both of Plaintiff's pending motions.
Background and Procedural History
Medicare and " Set-Aside Agreements"
a program enacted by the U.S. federal government to provide
health insurance benefits to eligible aged and disabled
persons, is administered by the Centers for Medicare and
Medicaid Services (" CMS" ), a component of the
U.S. Department of Health and Human Services ("
HHS" ). See Title XVIII of the Social Security Act; 42
U.S.C.A. § 1395-1395ccc (West 2015). Due to the strain
on the federal budget from increased Medicare claims,
Congress enacted the Medicare Second Payer (" MSP"
) statute, 42 U.S.C. § 1395y. The MSP statute ensures
that Medicare payment obligations are subrogated to other
payment plans, such as automobile or liability insurance or
workers' compensation. Id.; see Zinman v.
Shalala, 67 F.3d 841, 843 (9th Cir. 1995). Simply put,
" Medicare serves as a back-up insurance plan to cover
that which is not paid for by a primary insurance plan."
Thompson v. Goetzmann, 337 F.3d 489, 496 (5th Cir.
2003); see Estate of Ethridge v. Recovery Mgmt. Sys.,
Inc., 235 Ariz. 30, 33, 326 P.3d 297 (Ct.App. 2014),
review denied (Nov. 6, 2014), cert. denied, 135 S.Ct. 1517,
191 L.Ed.2d 433 (2015).
comply with the provisions outlined in the MSP statute, in
workers' compensation cases CMS mandates the creation of
a Medicare " set aside" (" MSA" )
account. 42 C.F.R. § 411. The purpose of a MSA is to
allocate a portion of a workers' compensation award to
pay potential future medical expenses resulting from the
work-related injury so that Medicare does not have to pay.
Workers' Compensation Medicare Set Aside Arrangements,
Center for Medicare & Medicaid Services,
(last visited Sept. 30, 2015); see In re Arellano,
524 B.R. 615, 624 (Bankr. M.D. Pa. 2015); Sipler v. Trans
Am Trucking, Inc., 881 F.Supp.2d 635, 638 (D.N.J. 2012).
However, no federal law or CMS regulation requires the
creation of a MSA in personal injury settlements to cover
potential future medical expenses. Id.
Plaintiff's Arizona Superior Court Case
2009, Plaintiff Rachel Aranki, a Medicare beneficiary, was
injured in a medical malpractice incident that left her
partially paralyzed and in chronic pain. (Doc. 1) Plaintiff
filed a medical malpractice action in Arizona state court
against the doctors who treated her. (Id.) A
settlement agreement was reached in that case. (Doc. 10) The
final consummation of that settlement agreement was stalled,
however, because the issue arose whether CMS would mandate
the creation of a MSA. (Doc. 1.) Plaintiff petitioned CMS,
who did not respond. (Id.) The Arizona Superior
Court Judge presiding over that case, nonetheless, enforced
the settlement agreement and also ordered Plaintiff to file a
declaratory judgment action in federal court on the MSA
issue. (Id.) Plaintiff subsequently brought this
action against Defendant Ms. Burwell, the current United
States Secretary of HHS.