In 1999 Joseph Seguna enrolled in and began receiving coverage under Medicare Parts A and B. Medicare Part A provides coverage for hospital, post-hospital, home health, and hospice expenses, whereas Part B provides supplemental coverage for certain additional medical expenses. Originally, Seguna’s benefits under Parts A and B were paid directly by the federal government through the Medicare fee-for-service program. However, in 2014 Seguna elected pursuant to Medicare Part C to begin receiving his benefits through a private insurer that is certified by, and under contract with, the federal government. Such certified and contracted private insurers providing Medicare benefits pursuant to an election made under Medicare Part C are referred to as a Medicare Advantage Plans (a.k.a. Medicare+Choice programs). They are statutorily required to provide the same benefits that a person would receive under the original fee-for-service program, including benefits under Medicare Parts A and B.
Subsequently, the Michigan Legislature amended the no-fault automobile insurance act to abrogate the mandate that all Michigan motorists maintain unlimited PIP coverage for “allowable expenses.” Allowable expense PIP benefits cover such things as medical care, attendant care, and other products, services, and accommodations that are reasonably necessary for a person’s care, recovery, or rehabilitation related to injuries arising out of motor vehicle accidents. Thus, allowable expense PIP benefits often provide coverage duplicative of the coverage provided under Medicare Parts A and B. Before the no-fault act was amended, a person having both no-fault allowable expense PIP coverage and coverage under Medical Parts A and B was entitled to receive from his or her no-fault insurer allowable expense PIP benefits for reasonable charges for medical care exceeding the benefits recoverable under Medicare Parts A and B.
Instead of mandating that all Michigan motorists maintain unlimited allowable expense PIP coverage, the amended no-fault act now enables persons who purchase or renew no-fault policies to select varying levels of allowable expense PIP coverage in exchange for correspondingly reduced premiums. Moreover, in order to obtain an even more significant premium reduction a person can “elect not to maintain” no-fault allowable expense PIP coverage – but only so long as the person is a “qualified person.” The no-fault act defines “qualified person” to mean a person having a specified type of “qualified health coverage,” being “[c]overage under Parts A and B of the federal Medicare program . . . .”
In December of 2020, Seguna applied for a no-fault policy from MemberSelect Insurance Company, which is a member of the Auto Club Insurance Association. As mandated by the no-fault act, Seguna completed a form approved by Michigan’s Department of Insurance & Financial Services electing not to maintain coverage for allowable expense PIP benefits. Moreover, as also mandated by the no-fault act, Seguna provided MemberSelect with a copy of his Medicare insurance card verifying that he possesses coverage under Medicare Parts A and B. MemberSelect thus issued Seguna a no-fault policy that excluded coverage for allowable expense PIP benefits.
Seguna thereafter suffered a lumbar vertebrae fracture in a motor vehicle accident and underwent a spinal fusion surgery performed by University Neurosurgical Associates, P.C. d/b/a Michigan Head & Spine Institute. Since Seguna had elected not to maintain PIP coverage as allowed by the amended no-fault act, University Neurosurgical Associates was limited to the amount that Medicare would pay. Unhappy with the amount that it would be paid under Medicare, and wanting instead to be paid the higher amount that it would receive if Seguna had unlimited allowable expense PIP coverage, University Neurosurgical Associates brought suit against MemberSelect.
Specifically, University Neurosurgical Associates claimed that Seguna was not a “qualified person,” arguing that Seguna’s Medicare coverage was being provided “under” Medicare Part C rather than “under” Medicare Parts A and B. In other words, University Neurosurgical Associates argued that Seguna’s election pursuant to Medicare Part C to have his Medicare benefits provided by the Medicare Advantage Plan, rather than provided directly by the federal government pursuant to the traditional fee-for-service program, rendered Seguna’s subsequent election not to maintain allowable expense PIP coverage ineffective, thus meaning that MemberSelect was required to provide Seguna with unlimited allowable expense PIP coverage.
But, like the Circuit Court, the Court of Appeals rejected University Neurosurgical Associates’ argument in the published decision of University Neurosurgical Associates v Auto Club Insurance Association. The Court of Appeals explained that “a Medicare Advantage Plan obtained under Part C of Medicare is qualified health coverage under the [no-fault act] since Medicare Advantage Plans provide coverage for services required under Medicare Parts A and B, albeit through a private health insurance company. . . . In other words, a person like Seguna who is enrolled under Part C receives the benefits that are required under Parts A and B, but just not directly from the government (as would one who elected to receive those benefits through [the traditional fee-for-service program].” The Court of Appeals further explained that “the dispositive question is not whether Seguna elected to receive benefits under Parts A and B (and have them paid by the government), but whether he was receiving the benefits provided ‘under’ Parts A and B of the Medicare statute.” And, the Court of Appeals agreed with Auto Club that “in the view of the federal government, if an individual is enrolled in [a] Medicare Advantage program, that individual is still considered to be in the federal Medicare program. As such, a person who is enrolled in Medicare Advantage receives their Medicare Part A and Part B benefits through the Medicare Advantage Program.”
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Sarah Nadeau, Editor of The Garan Report Publication, is a Shareholder in our Detroit Office. Sarah can be reached at 313.446.1530 or snadeau@garanlucow.com