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:: Pennsylvania HMO’s Exempt From Anti-Subrogation Statute

In resolving a question certified to it by the United States Court of Appeals for the Third Circuit (“the Third Circuit”), the Pennsylvania Supreme Court has ruled that a health maintenance organization (HMO) is exempt, by virtue of the Pennsylvania Health Maintenance Organization Act (40 P.S. § 1560(a)), from complying with the anti-subrogation provision of the Pennsylvania Motor Vehicle Financial Responsibility Law (MVFRL), 75 Pa.C.S. § 1720.

The plaintiff in the case, Jonathan Wirth, received medical care through an HMO for injuries he sustained in an automobile accident. The HMO contract specified that “[i]f HMO provides health care benefits under this Certificate to a Member for injuries or illness for which a third party is or may be responsible, then HMO retains the right to repayment of the full cost of all benefits provided by HMO on behalf of the Member that are associated with the injury or illness for which the third party is [or may be responsible].”

After reimbursing Aetna $2,066.90 to obtain the release of its subrogation lien, Wirth then filed a class action suit against Aetna, issuer of the HMO contract. Wirth alleged unjust enrichment, among other things, and that the subrogation lien violated Section 1720 of the MVFRL.

That statute provides that:

[i]In actions arising out of the maintenance or use of a motor vehicle, there shall be no right of subrogation or reimbursement from a claimant’s tort recovery with respect to workers’ compensation benefits, benefits available under section 1711 (relating to required benefits), 1712 (relating to availability of benefits) or 1715 (relating to availability of adequate limits) or benefits paid or payable by a program, group contract or other arrangement whether primary or excess under section 1719 (relating to coordination of benefits). 75 Pa.C.S. § 1720.

Aetna removed the suit to federal district court, asserting that Wirth’s suit was a civil action under ERISA to recover benefits, and filed a motion to dismiss based upon the doctrine of complete preemption, and upon the grounds that HMO’s are exempt from Section 1720 of the MVFRL because of Section 1560(a) of the HMO Act, which provides:

Except as otherwise provided in this act, a health maintenance organization operating under the provisions of this act shall not be subject to the laws of this State now in force relating to insurance corporations engaged in the business of insurance nor to any law hereafter enacted relating to the business of insurance unless such law specifically and in exact terms applies to such health maintenance organization. For a health maintenance organization established, operated and maintained by a corporation, this exemption shall apply only to the operations and subscribers of the health maintenance organization. 40 Pa.C.S. § 1560(a).

Though the district court agreed with Aetna, and granted the motion to dismiss, on appeal, the Third Circuit concluded that the matter of conflict between the statutes should be resolved by the Pennsylvania Supreme Court. That court reconciled the apparent conflict in the following way:

The General Assembly enacted the HMO Act in 1972 and the MVFRL in 1984. Wirth asserts that to the extent that the HMO Act and the MVFRL are in conflict, the anti-subrogation provision of the MVFRL should control over the earlier adopted HMO Act. Section 1936 of the Statutory Construction Act, 1 Pa.C.S. § 1936, provides that whenever statutes enacted by different General Assemblies are irreconcilable, the latest enactment prevails. However, the position of Wirth directly conflicts with the intent of the General Assembly as set forth in Section 1560(a), which provides that an HMO is exempt from laws “hereafter enacted relating to the business of insurance unless such law specifically and in exact terms applies to such health maintenance organization.” (emphasis added). Thus, it is clear that in this instance the Legislature intended that statutes promulgated after 1972 would not apply to HMOs unless they so provided in specific and exact terms.

Based upon this statutory analysis, the court held that Pennsylvania HMO’s are indeed exempt from the anti-subrogation provision of the MVFRL.

Wirth v. Aetna U.S. Healthcare, — A.2d —-, 2006 WL 2408747 (Pa.) (August 22, 2006)