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Aranki v. Burwell

United States District Court, D. Arizona

October 19, 2015

Rachel Aranki, Plaintiff,
v.
Sylvia Matthews Burwell, Defendant

         Decided: October 16, 2015

          For Rachel Aranki, a single woman, Plaintiff: Frank Verderame, LEAD ATTORNEY, Plattner Verderame PC, Phoenix, AZ; Michael P Pianin, LEAD ATTORNEY, Pianin & Associates PC, Scottsdale, AZ.

         For 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, AZ.

Page 1039

         ORDER

         Honorable Stephen M. McNamee, Senior United States District Judge.

         Pending 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.

Page 1040

         I. Background and Procedural History

         A. Medicare and " Set-Aside Agreements"

         Medicare, 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).

         To 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, http://www.cms.gov/Medicare/Coordination-of-Benefits/Workers-Compensation-Medicare-Set-Aside-Arrangements/WCMSAP-Overview.html (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.[1] Id.

         B. Plaintiff's Arizona Superior Court Case

         In 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.

         II. ...


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