AMY RATHBUN et al. v. HEALTH NET OF THE NORTHEAST, INC., SC 18928

Judicial District of Waterbury

Medicaid; Subrogation; Whether General Statutes § 17b-265 Authorizes Defendant Insurer to Bring Action Against Medicaid Recipient to Recover its Collateral Source Payments.  The department of social services (department) contracted with the defendant insurer to administer the Medicaid managed care program.  General Statutes § 17b-265 (a) provides that the department is subrogated to any right of recovery that a Medicaid enrollee has against a third party for medical costs.  Subsection (b) of § 17b-265 authorizes the department to assign that subrogation right to a designee or health care provider participating in the Medicaid program.  The department assigned its statutory right to subrogation to the defendant.  The plaintiffs are members of the defendant's Medicaid managed care plan.  They incurred medical expenses as a result of motor vehicle accidents, and the defendant paid those expenses.  After the plaintiffs began pursuing tort claims in connection with the accidents, they were notified of the defendant’s claim to reimbursement of the medical expenses from any recovery the plaintiffs made from responsible third parties.  The plaintiffs brought this putative class action, seeking a declaration that the defendant was not authorized to seek reimbursement directly from Medicaid recipients.  The trial court found for the defendant, concluding that the defendant, as the assignee of the department, was not required to bring a separate action against a third party tortfeasor to recover medical expenses paid on behalf of a Medicaid recipient.  The plaintiffs appealed, and the Appellate Court (133 Conn. App. 202) affirmed the judgment, rejecting their claim that § 17b-265 (a) required the defendant to seek reimbursement through subrogation directly from a third party only.  The court noted that the statute requires that a Medicaid enrollee make a subrogation assignment to the department or its designee and that it would be inequitable to allow the insured to bypass the dictates of the statute by securing a settlement or judgment and ultimately recovering a double payment.  The court concluded that an insurer such as the defendant who possesses a subrogation right has the right to seek reimbursement from the insured if the insured has effected a settlement or judgment with a responsible third party.  The Supreme Court will decide whether the Appellate Court properly concluded that § 17b-265 permits the defendant to bring an action against the plaintiffs to recover its collateral source payments.