Ninth Circuit Holds That a Tribal Health Care Provider Cannot Recover Against Patient's Settlement with Third Party Insurers

The United States Court of Appeals for the Ninth Circuit has ruled against the Alaska Native Tribal Health Consortium (ANTHC) in a case holding that § 206 of the Indian Health Care Improvement Act (IHCIA), 25 U.S.C. § 1621e, does not authorize ANTHC to recover against insurance proceeds paid to a patient in settlement of an automobile accident claim.

In Blatchford v. Alaska Native Tribal Health Consortium, No. 10-35785 (9th Cir. May 19, 2011), ANTHC sought reimbursement of its costs for treating an Alaska Native patient injured in an automobile accident. ANTHC filed a lien under Alaska law (Alaska Statutes §§ 34.35.450-.482) against any money that the patient receives from third parties related to injuries for which ANTHC treated her. ANTHC also filed a Notice of Federal Health Services Lien citing § 1621e. The patient received an insurance settlement which was disbursed to her except for the amount subject to ANTHC’s liens.

The patient filed an action in state court for a declaratory judgment that ANTHC’s liens were not valid. The case was removed to Federal district court and ANTHC filed a counter claim asserting that under § 1621e, the patient must remit the remaining settlement funds to ANTHC. The Federal district court granted summary judgment for ANTHC, holding that ANTHC has the right to recover the money spent on the patient’s medical care under § 1621e.

On appeal, the Ninth Circuit reversed, holding that § 1621e is not applicable to this situation because the patient is not a “third party” within the scope of the statute. The Court reasoned that § 1621e provides a right of recovery only against third parties, not against a patient, because the wording of the statute presupposes that ANTHC “stands in the shoes of the individual [patient] who, naturally enough, would not be receiving reimbursement or indemnification from herself.” The Court also observed that the statute provides only two ways for enforcement of the right to recover: (1) by joining a civil action filed by the individual or (2) if the individual does not file an action, by filing a separate action against the third party. Finally, the Court observed that while not controlling, because of the issue of retroactive effect, Congress recently amended
§ 1612e(a) to specify that a tribal organization shall have the right to recover from “an insurance company, health maintenance organization, employee benefit plan, third party tortfeasor, or any other responsible third party.” This list does not include the individual who received the services.

What this decision means in practical terms is that § 1621e does not authorize a tribal provider to recover against a patient who has received a settlement with a third party. A tribal provider must either (1) join a patient’s suit against a third party, or (2) in the absence of such a suit, pursue its own action against the third party. If the tribal provider waits until the patient has received a settlement, it cannot recover under § 1621e from the settlement proceeds which the patient has received from the third party.

The Court noted that the tribal health care provider is not necessarily left empty handed. It can file an action against the relevant third parties under § 1621e or pursue its remedies under Alaska’s medical lien laws. Please let us know if we may provide additional information regarding this Ninth Circuit decision.