In North Carolina, insurance companies generally don’t have to be paid back from car wreck claims as there is an anti-subrogation regulation. There are many exceptions to this general rule. One such exception are Medicare Advantage plans. Medicare itself definitely has broad lien rights on personal injury recoveries. However, the Medicare Advantage providers are actually private insurance companies and not the federal government itself. There is some federal legislation that states these Medicare Advantage plans “may” have a lien like Medicare- 42 U.S.C. §1395mm(e)(4). These plans will supposedly have these liens if the plan language with the insured has this lien reimbursement language. So, if the lien language is in there, it appears that there will most likely be a lien.
The larger question is what defenses will apply to this lien? As for Medicare, since is a federal entity, they are able argue that they preempt our state law defenses such as the NC anti-subrogation provisions. What about these private insurance companies? How can a private company preempt state law? The answer is that I don’t know. There is a lot of debate about this issue all over the country. States are allowed to regulate insurance companies. These are insurance companies that are providing Medicare type benefits. The type of benefits they provide doesn’t change what they are- private entities. Therefore, they should not be able to preempt state law. Some of these Medicare Advantage companies are becoming very aggressive and are trying to take large portions of clients’ recovery. This issue will likely be litigated soon.