The Office of General Counsel issued the following opinion on April 14, 2005 representing the position of the New York State Insurance Department.
Re: Health Insurance, Recoupment of Overpayment
Issues
1. Did the health insurer covering an insured and the insured's dependents properly pay certain claims of the insured's domestic partner as if such insurer were the primary insurer?
2. Since the health insurer has subsequently ascertained that the Medicare program should have been primary, should it be required to seek reimbursement from the Medicare program before seeking recoupment from the insured?
3. Is the insureds health insurer estopped from requesting recoupment from the insured?
4. Given the delay in the insurer recognizing that it was secondary and demanding recoupment, may the insured delay in making any required payments?
Conclusions
1. Based upon the facts as represented, the insured's health insurer should have been aware, prior to paying the claims, that, with respect to the insured's domestic partner, the Medicare program was primary.
2. The obligation, if any, of the Medicare program to the insured's health insurer is determined by the Medicare statute, 42 U.S.C.A. 1395y et seq. (West 1992 and 2004 Supplement), and the regulations promulgated thereunder by the United States of Health & Human Services.
3. Issues of estoppel must be determined by a court of competent jurisdiction.
4. The timetable for any required repayments is governed by the policy or contract entered into between the insurer and the insureds employer and the certificate issued to the insured pursuant to such policy or contract.
Facts
The inquirer is employed by a governmental entity and insured under a health insurance program, (hereinafter, the program). In accordance with New York City Administrative Code § 3-241 (2005), the inquirer and another individual registered as Domestic Partners with the New York City Clerk.
After such registration the inquirer notified the inquirer's employer that the inquirer wished to add the inquirer's domestic partner as a dependent. As part of that notification, the inquirer informed the inquirer's employer that the inquirer's domestic partner was retired and entitled to coverage under the Medicare program by reason of age.
In July and August 2003, claims were submitted to the program that provides major medical coverage for services provided to the inquirers domestic partner. Such insurer made payments for such services to the inquirer in accordance with the applicable insurance policy. By letter of March 8, 2005, the insurer indicated, since the Medicare program was primary, that it had made the payments in question in error for the 2003 claims and demanded that the inquirer return the amounts previously paid within 30 days.
Analysis
The rule for coordination of benefits between the Medicare program and private health insurance is set forth in 42 U.S.C.A. § 1395y(b)(1) (West 1992 and 2004 Supplement):
(A) Working aged under group health plans. (i) In general. A group health plan--(I) may not take into account that an individual (or the individual's spouse) who is covered under the plan by virtue of the individual's current employment status with an employer is entitled to benefits under this title . . . and (II) shall provide that any individual age 65 or older (and the spouse age 65 or older of any individual) who has current employment status with an employer shall be entitled to the same benefits under the plan under the same conditions as any such individual (or spouse) under age 65. . . .
(B) Disabled individuals in large group health plans. (i) In general. A large group health plan (as defined in clause (iii)) may not take into account that an individual (or a member of the individual's family) who is covered under the plan by virtue of the individual's current employment status with an employer is entitled to benefits under this title . . . .
As a result of an inquiry by an insurer providing coverage under the inquirer's health insurance plan, the employer wrote to the United States Department of Health and Human Services inquiring about the differing treatment afforded to spouses, domestic partners receiving Medicare as a result of age, and domestic partners receiving Medicare as a result of disability. In its letter, the employer indicated:
Enrollees . . . may cover domestic partners as dependents under their family coverage. A domestic partnership is defined . . . as one in which both partners are 18 years of age or older; unmarried and not related by marriage or blood in a way that would bar marriage; residing together; involved in a committed rather than casual relationship, and mutually interdependent financially. Domestic partners are not covered as spouses . . . separate eligibility standards are required and they are maintained as a separate category on the enrollment files. The coverage they receive, however, is the same as a spouse receives. New York State does not give legal recognition to domestic partners, nor does New York recognize common law marriage. The availability of health benefits for domestic partners of . . . employees was collectively bargained with the unions that represent . . . employees.
By letter of December 27, 1996, the Health Care Finance Administration, subsequently renamed the Center for Medicare and Medicaid Services, of the United States Department of Health and Human Services wrote to the employer concerning the differences in treatment. The Medicare representative indicated that because 42 U.S.C.A. § 1395y(b)(1)(A) drew a distinction between spouses and others, while 42 U.S.C.A. § 1395y(b)(1)(B) did not, and the employer made a distinction between spouses and domestic partners in providing health insurance to employees, there was differing treatment for Medicare priority purposes between domestic partners of employees who were entitled to Medicare by reason of age and those entitled to Medicare by reason of disability. This information was conveyed on January 29, 1997 by the employer to its insurer contractors.
The right, if any, of the insurer to receive reimbursement from the Medicare program is governed by the applicable statutes and the regulations promulgated thereunder. Accordingly, it is outside the scope of the New York Insurance Law.
The doctrine of estoppel is equitable in nature and is designed to prevent one party from making misrepresentations that are relied upon by another party to its detriment. The essential elements are a change in position, A. C. Transportation, Inc. v. Board of Education of the City of New York, 253 App. Div. 2d 330, 687 N.Y.S. 2d 1 (1st Dept. 1999), based upon reliance of a representation made by another, Keane v. Kamin, 257 App. Div. 2d 433, 683 N.Y.S. 2d 250 (1st Dept. 1999), and that the party acting in reliance on the representation would be injured if the party making the representation could disaffirm it, Connelly v. Rodriquez, 73 Misc. 2d 745, 342 N.Y.S. 2d 469 (Sup. Ct. Monroe 1973).
Whether estoppel would prevent the insurer from seeking recoupment from the inquirer would have to be determined by a court of competent jurisdiction. Issues of estoppel aside, the obligation of an insured to make reimbursement of over payments, and the timetable therefore, are governed by the contract or policy between the insurer and the policyholder, in this case the employer, and the certificate issued to the insured in accordance with the policy or contract.
For further information one may contact Principal Attorney Alan Rachlin at the New York City Office.