B-199489.OM, NOV 17, 1980

B-199489.OM: Nov 17, 1980

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

WE CONCLUDE THAT THERE IS NO CLEAR ANSWER WHETHER THE PUBLIC HEALTH SERVICE CAN PURSUE THIRD PARTY NON-TORTFEASORS (PRINCIPALLY THE BENEFICIARY'S HEALTH INSURANCE COMPANY) FOR THE COSTS IT INCURS TO PROVIDE MEDICAL CARE TO BENEFICIARIES OF THE PUBLIC HEALTH SERVICE. A DETAILED ANALYSIS OF THE SUBJECT IS ATTACHED. A QUESTION WAS RAISED REGARDING PHS' RECOVERY OF MEDICAL CARE COSTS FROM THIRD PARTIES (PRINCIPALLY INSURANCE COMPANIES) NOT COMING WITHIN THE SCOPE OF THE FEDERAL MEDICAL CARE RECOVERY ACT. OUR ANALYSIS OF THIS MATTER IS THAT SUCH RECOVERY IS NOT CERTAIN. B. CASE LAW - NON-RECOVERY THE LEADING CASE CITED IN OPPOSITION TO A RIGHT OF GOVERNMENTAL RECOVERY IS UNITED STATES V. THAT CASE INVOLVED A VETERAN WHO WAS TREATED FOR POLIO IN A VETERANS HOSPITAL.

B-199489.OM, NOV 17, 1980

SUBJECT: PUBLIC HEALTH SERVICE COST RECOVERY FROM THIRD-PARTY NON-TORTFEASORS (FILE B-199489)

GROUP DIRECTOR, HRD - ROBERT V. FARABAUGH:

AS AGREED, WE RESEARCHED THE SUBJECT MATTER IN CONNECTION WITH YOUR REVIEW OF SELECTED PUBLIC HEALTH SERVICE ACTIVITIES.

WE CONCLUDE THAT THERE IS NO CLEAR ANSWER WHETHER THE PUBLIC HEALTH SERVICE CAN PURSUE THIRD PARTY NON-TORTFEASORS (PRINCIPALLY THE BENEFICIARY'S HEALTH INSURANCE COMPANY) FOR THE COSTS IT INCURS TO PROVIDE MEDICAL CARE TO BENEFICIARIES OF THE PUBLIC HEALTH SERVICE. RATHER, THE ANSWER NOW DEPENDS LARGELY UPON THE SPECIFIC LANGUAGE OF THE INSURANCE POLICY AND THE CONTRACT LAW OF THE STATE APPLICABLE TO EACH CASE.

A DETAILED ANALYSIS OF THE SUBJECT IS ATTACHED.

ATTACHMENT

PUBLIC HEALTH SERVICE RECOVERY OF COSTS OF PROVIDING HEALTH SERVICES FROM NON-TORTFEASOR THIRD PARTIES

DIGEST:

CASE LAW AND STATUTORY ANALYSIS INDICATE NO CLEAR ANSWER WHETHER THE PUBLIC HEALTH SERVICE CAN RECOVER COST OF PROVIDING MEDICAL CARE TO PHS BENEFICIARIES FROM NON-TORTFEASOR THIRD PARTIES LIABLE FOR SUCH COSTS IF CARE HAD NOT BEEN PROVIDED FREE OF CHARGE BY PHS.

BACKGROUND:

IN CONNECTION WITH A HUMAN RESOURCES DIVISION REVIEW OF SELECTED ACTIVITIES OF THE PUBLIC HEALTH SERVICE (PHS), A QUESTION WAS RAISED REGARDING PHS' RECOVERY OF MEDICAL CARE COSTS FROM THIRD PARTIES (PRINCIPALLY INSURANCE COMPANIES) NOT COMING WITHIN THE SCOPE OF THE FEDERAL MEDICAL CARE RECOVERY ACT.

OUR ANALYSIS OF THIS MATTER IS THAT SUCH RECOVERY IS NOT CERTAIN, BUT DEPENDS LARGELY ON THE CIRCUMSTANCES APPLICABLE TO EACH CASE. A DETAILED DISCUSSION FOLLOWS.

ANALYSIS:

A. STATUTORY PROVISIONS

THE PUBLIC HEALTH SERVICE ACT OF 1944, CH. 373, 58 STAT. 682, AS AMENDED, AUTHORIZES THE PUBLIC HEALTH SERVICE (PHS) TO PROVIDE HEALTH CARE SERVICES WITHOUT CHARGE TO VARIOUS CLASSES OF BENEFICIARIES, INCLUDING SEAMEN, 42 U.S.C. SEC. 249, COAST GUARD PERSONNEL AND EMPLOYEES OF THE COAST AND GEODETIC SURVEY, 42 U.S.C. SEC. 253, AND EMPLOYEES OF THE LIGHTHOUSE SERVICE, 42 U.S.C. SEC. 253B. THE FEDERAL MEDICAL CARE RECOVERY ACT, 42 U.S.C. SEC. 2651 ET SEQ., CREATES A RIGHT OF RECOVERY IN THE UNITED STATES AGAINST THIRD PARTY TORTFEASORS FOR EXPENSES INCURRED IN PROVIDING THESE SERVICES. FN1 HOWEVER, NO STATUTORY PROVISION SPECIFICALLY AUTHORIZES THE PHS TO PURSUE RECOVERY OF ITS COSTS TO PROVIDE MEDICAL CARE TO PHS BENEFICIARIES AGAINST NON TORTFEASOR THIRD PARTIES - PRINCIPALLY INSURANCE COMPANIES - WHICH WOULD BE LIABLE IF THE EXPENSES AND CARE HAD BEEN BORNE BY A MEDICAL CARE PROVIDER OTHER THAN PHS. FN2

WITH RESPECT TO HEALTH INSURERS GENERALLY, IT SEEMS REASONABLE TO ALLOW PHS COST RECOVERY WHEN PHS HAS FURNISHED OR PAID FOR CARE RECEIVED BY ONE OF THE COMPANY'S INSUREDS. RECOVERY FOR EXPENSES INCURRED BY PHS IN THOSE CIRCUMSTANCES WOULD AVERT A WINDFALL TO THE INSURER, BY PREVENTING IT FROM AVOIDING LIABILITY UNDER A POLICY PROVISION FOR WHICH IT HAD CHARGED A PREMIUM. SEE, E.G., UNITED STATES V. GOVERNMENT EMPLOYEES INSURANCE CO., 461 F.2D 58, 60 (5TH CIR. 1972).

B. CASE LAW - NON-RECOVERY

THE LEADING CASE CITED IN OPPOSITION TO A RIGHT OF GOVERNMENTAL RECOVERY IS UNITED STATES V. ST. PAUL MERCURY INDEMNITY CO., 238 F.2D 594 (8TH CIR. 1956). THAT CASE INVOLVED A VETERAN WHO WAS TREATED FOR POLIO IN A VETERANS HOSPITAL. THE VETERAN WAS THE BENEFICIARY OF A "POLIOMYELITIS EXPENSE POLICY," UNDER WHICH THE INSURER AGREED TO PAY FOR "EXPENSES ACTUALLY INCURRED" BY THE INSURED. THE VETERANS ADMINISTRATION OBTAINED AN ASSIGNMENT FROM THE INSURED OF HIS RIGHTS UNDER THE POLICY, AND SUED TO ENFORCE THE ASSIGNMENT. THE COURT DISALLOWED RECOVERY BY THE UNITED STATES ON GROUNDS THAT THE INSURED HAD NOT "ACTUALLY INCURRED" ANY EXPENSES WHICH WOULD TRIGGER THE INSURER'S LIABILITY UNDER THE POLICY, SINCE HE WAS UNDER NO OBLIGATION TO PAY FOR THE MEDICAL SERVICES FURNISHED BY THE GOVERNMENT. ID. AT 598. AT A MINIMUM, THE ST. PAUL CASE DEMONSTRATES THE CRITICAL IMPORTANCE OF THE SPECIFIC POLICY LANGUAGE TO GOVERNMENTAL RECOVERY.

C. PRO-RECOVERY CASES - THIRD PARTY BENEFICIARY DOCTRINE

SEVERAL THEORIES HAVE BEEN ADVANCED IN SUPPORT OF THE RIGHT OF THE UNITED STATES TO RECOVER IN THE NON-TORTFEASOR CONTEXT, BUT THESE HAVE MET WITH VARYING DEGREES OF ACCEPTANCE BY THE COURTS. THE PRINCIPAL THEORY OF RECOVERY IS THE THIRD PARTY BENEFICIARY DOCTRINE. FN3

AS A GENERAL PROPOSITION, THE THIRD PARTY BENEFICIARY DOCTRINE RECOGNIZES THE RIGHT OF A THIRD PARTY TO SUE ON A CONTRACT IF THE CONTRACT CLEARLY MANIFESTS AN INTENTION TO CONFER A BENEFIT ON THE THIRD PARTY. 17 AM. JUR. 2D CONTRACTS, SEC. 304 (1964). THUS, EXAMINATION OF THE SPECIFIC INSURANCE POLICY UNDER WHICH BENEFITS ARE CLAIMED IS CRUCIAL TO DETERMINING WHETHER A THIRD PARTY BENEFICIARY RELATIONSHIP IS CREATED BY THE CONTRACT.

THERE ARE A NUMBER OF COURT OPINIONS SUSTAINING THE GOVERNMENT'S RIGHT TO RECOVER UNDER THE THIRD BENEFICIARY DOCTRINE. OUR RESEARCH SHOWS THAT ALL INVOLVED VIRTUALLY IDENTICAL POLICY LANGUAGE; SPECIFICALLY, THE POLICIES PROVIDED FOR PAYMENT OF MEDICAL EXPENSES "INCURRED TO OR FOR THE INSURED," AND AUTHORIZED PAYMENT TO ANY "PERSON OR ORGANIZATION RENDERING THE SERVICES" TO THE INSURED. UNITED STATES V. AUTOMOBILE CLUB INSURANCE CO., 522 F.2D 1, 3 (5TH CIR. 1975); UNITED STATES V. GOVERNMENT EMPLOYEES INSURANCE CO., SUPRA AT 59; UNITED STATES V. STATE FARM MUTUAL AUTOMOBILE INSURANCE CO., 455 F.2D 789, 791 792 (10TH CIR. 1972); UNITED STATES V. UNITED SERVICES AUTOMOBILE ASSOC., 431 F.2D 735, 737 (5TH CIR. 1970). THE CITED CASES DISTINGUISH ST. PAUL ON THE GROUND THAT THIS ADDITIONAL AND BROADER LANGUAGE WAS ABSENT FROM THE INSURANCE POLICY AT ISSUE IN ST. PAUL. E.G., UNITED STATES V. AUTOMOBILE CLUB INSURANCE CO., SUPRA.

IN A MORE RECENT CASE, INVOLVING LANGUAGE NARROWER THAN IN THE AUTOMOBILE CLUB LINE OF CASES, THE COURT FOUND THE CLAIM OF THE UNITED STATES AS THIRD PARTY BENEFICIARY WAS SUFFICIENT TO ALLOW IT TO SURVIVE A MOTION TO DISMISS. UNITED STATES V. DAIRYLAND INSURANCE CO., 485 F. SUPP. 539 (D.N.D. 1980). THE POLICY IN THAT CASE PROVIDED FOR PAYMENT OF MEDICAL EXPENSES "INCURRED WITH RESPECT TO BODILY INJURY SUSTAINED BY" THE INSURED. ID. AT 542.

DESPITE APPARENT JUDICIAL ACCEPTANCE OF THE THIRD PARTY BENEFICIARY DOCTRINE, NOT ALL COURTS HAVE PERMITTED GOVERNMENTAL RECOVERY BASED SOLELY UPON POLICY LANGUAGE. THUS, A POLICY PROVIDING PAYMENT FOR EXPENSES "INCURRED TO OR FOR" THE INSURED WAS FOUND, PER SE, INSUFFICIENT TO INDICATE AN INTENT THAT A PROVIDER OF MEDICAL CARE (THE GOVERNMENT) WAS AN INTENDED BENEFICIARY OF THE INSURANCE CONTRACT. UNITED STATES V. NATIONWIDE MUTUAL INSURANCE CO., 499 F.2D 1355 (9TH CIR. 1974). THE APPELLATE COURT IN NATIONWIDE HELD THAT THE INTENT OF THE INSURED REGARDING THE GOVERNMENT AS A THIRD PARTY BENEFICIARY TO THE INSURANCE POLICY WAS A MATTER DEMANDING RESOLUTION. SINCE THE TRIAL COURT DID NOT ADDRESS THIS ISSUE, THE CASE WAS REVERSED AND REMANDED TO THE DISTRICT COURT FOR FURTHER ACTION.

D. LESSONS LEARNED

A NUMBER OF POINTS WHICH ARE RELEVANT TO PHS' RIGHT OF RECOVERY IN SIMILAR CIRCUMSTANCES EMERGE FROM THE CASES. FIRST, IT IS CLEAR THAT THE SPECIFIC POLICY LANGUAGE IS CRITICAL TO EVENTUAL SUCCESS ON A THIRD PARTY BENEFICIARY THEORY. WHERE THE LANGUAGE REGARDING THE INSURER'S LIABILITY IS AS BROAD AS THAT PRESENTED IN THE AUTOMOBILE CLUB LINE OF CASES, IT IS REASONABLE TO ASSUME THAT PHS WOULD LIKEWISE BE SUCCESSFUL IN AN ATTEMPT TO RECOVER ITS COSTS. CONVERSELY, THE PRIMARY UNCERTAINTY REGARDING PHS' ABILITY TO RECOVER FROM AN INSURANCE COMPANY STEMS FROM THE FACT THAT LANGUAGE IN INSURANCE POLICIES IS PROBABLY NOT SUFFICIENTLY STANDARDIZED TO GUARANTEE RECOVERY IN EACH CASE UNDER THE THIRD PARTY BENEFICIARY DOCTRINE.

SECOND, THE SCOPE AND DEFINITION OF THE THEORY OF THIRD PARTY BENEFICIARY HAS GENERALLY BEEN FOUND TO DEPEND ON THE SUBSTANTIVE CONTRACT LAW OF THE STATE WHERE THE INSURANCE CONTRACT WAS ENTERED INTO. SEE, E.G., UNITED STATES V. STATE FARM MUTUAL AUTOMOBILE INSURANCE CO., SUPRA AT 791. THUS, THERE IS A POTENTIAL FOR DIVERGENT INTERPRETATIONS OF THE LIMITS OF THE DOCTRINE, DEPENDING ON WHICH STATE'S LAW APPLIES IN A GIVEN CASE.

THIRD, MANY INSURANCE POLICIES ROUTINELY CONTAIN AN EXCLUSIONARY CLAUSE PURPORTING TO BAR PAYMENT BY AN INSURER TO THE EXTENT THAT MEDICAL EXPENSES ARE PAID ON BEHALF OF THE INSURED UNDER A WORKERS' COMPENSATION OR DISABILITY PROGRAM, OR "ANY SIMILAR LAW". THE COURTS HAVE CONSISTENTLY HELD THAT THIS TYPE OF CLAUSE DOES NOT ALONE BAR RECOVERY BY THE UNITED STATES UNDER THE INSURANCE POLICY, BECAUSE THE STATUTES UNDER WHICH THE MEDICAL SERVICES ARE FURNISHED ARE NOT CONSIDERED EQUIVALENT TO WORKERS' COMPENSATION OR SIMILAR LAWS. E.G., UNITED STATES V. AUTOMOBILE CLUB INSURANCE CO., SUPRA AT 4. FN4

FINALLY, WE NOTE THAT THE PUBLIC HEALTH SERVICE ACT AND ITS IMPLEMENTING REGULATIONS PROVIDE FOR CHARGING FOR MEDICAL SERVICES UNDER CERTAIN CIRCUMSTANCES. SPECIFICALLY, DEPENDENTS OF COAST GUARD AND NATIONAL OCEAN SURVEY PERSONNEL AND PHS OFFICERS ARE CHARGED FOR HOSPITALIZATION COSTS ON A PER DIEM BASIS, 42 U.S.C. SEC. 253AB); 42 C.F.R. SEC. 31.10; FEDERAL EMPLOYEES AUTHORIZED TO RECEIVE TREATMENT AT REMOTE PHS TREATMENT FACILITIES AND WHO ARE NOT ENTITLED TO FREE TREATMENT UNDER ANY OTHER PROVISION OF LAW ARE TO BE CHARGED FOR THOSE SERVICES, 42 U.S.C. SEC. 251(B); AND CHARGES MAY BE ASSESSED FOR PHS SERVICES TO INDIAN BENEFICIARIES WHO ARE ABLE TO PAY FOR THEM. 42 C.F.R. SEC. 36.13. PHS' RIGHT OF RECOVERY FROM LIABLE THIRD PARTIES SEEMS INDISPUTABLE IN THESE SITUATIONS; HOWEVER, REQUESTING AN ASSIGNMENT OF RIGHTS FROM THE BENEFICIARY, AS IS DONE IN THE VETERANS ADMINISTRATION REGULATIONS, 38 C.F.R. SEC. 17.48(D), MIGHT EXPEDITE COLLECTION.

ON THE OTHER HAND, REQUESTING AN ASSIGNMENT OF RIGHTS UNDER THEIR INSURANCE POLICIES FROM THOSE BENEFICIARIES WHO RECEIVE SERVICES WITHOUT CHARGE MIGHT WELL BE OF LIMITED UTILITY SINCE PHS, AS ASSIGNEE, WOULD RECEIVE ONLY THOSE RIGHTS BELONGING TO THE BENEFICIARY UNDER THE POLICY. THUS, THE SAME THRESHOLD PROBLEM PRESENTED IN THE ST. PAUL MERCURY INDEMNITY CO. CASE COULD CONCEIVABLY ARISE, NAMELY, THAT THE INSURED HIMSELF INCURRED NO ACTUAL COSTS, AND SO HAS NOTHING TO ASSIGN TO PHS.

CONCLUSIONS:

THE QUESTION OF PHS' RIGHT OF RECOVERY FROM NON-TORTFEASOR THIRD PARTIES DOES NOT HAVE A CLEAR "YES" OR "NO" ANSWER. ALTHOUGH A SUBSTANTIAL NUMBER OF COURTS HAVE ALLOWED RECOVERY BY THE UNITED STATES AGAINST INSURERS ON THE BASIS OF A THIRD PARTY BENEFICIARY CLAIM, THOSE CASES ARE NOT DEFINITIVE SINCE DIFFERENCES IN INSURANCE POLICY LANGUAGE WILL AFFECT THE RESULT IN EACH CASE. MOREOVER, THE INTENTION OF THE INSURED TO ALLOW THE GOVERNMENT TO ACT AS A THIRD PARTY BENEFICIARY TO THE POLICY MAY WELL BE CALLED INTO QUESTION.

REQUESTING AN ASSIGNMENT OF RIGHTS FROM A BENEFICIARY OF AN INSURANCE POLICY IS NOT LIKELY TO BE USEFUL IN MOST CASES, ALTHOUGH ASSIGNMENT MAY BE HELPFUL IN THE CONTEXT OF WORKERS' COMPENSATION STATUTES OR OTHER REIMBURSEMENT PROGRAMS. AGAIN, THERE IS NO DEFINITIVE CASE LAW WHICH WOULD ENSURE PHS SUCCESS IN RECOVERING ON SUCH A THEORY.

THE CLEAREST SOLUTION APPARENTLY WOULD BE TO PROVIDE SPECIFIC STATUTORY AUTHORITY FOR PHS TO RECOVER AGAINST NON-TORTFEASOR THIRD PARTIES. FN5 THE FEDERAL MEDICAL CARE RECOVERY ACT IS A CLEAR PRECEDENT FOR SUCH A STATUTE, AND, IN FACT, COULD BE AMENDED TO CREATE A SPECIFIC CAUSE OF ACTION FOR PHS AND OTHER AGENCIES. A SUITABLE MODEL FOR SUCH A PROVISION IS FOUND IN FORMER 42 U.S.C. SEC. 254BB)(2)(C), SEE N.2, SUPRA, WHICH PROVIDED IN PART AS FOLLOWS:

"IF A FEDERAL AGENCY, AN AGENCY OF A STATE OR LOCAL GOVERNMENT, OR OTHER THIRD PARTY WOULD BE RESPONSIBLE FOR ALL OR PART OF THE COST OF THE CARE OR SERVICE PROVIDED UNDER THIS SECTION IF SUCH CARE OR SERVICE HAD NOT BEEN PROVIDED UNDER THIS SECTION, THE SECRETARY SHALL COLLECT, ON A FEE-FOR-SERVICE OR OTHER BASIS, FROM SUCH AGENCY OR THIRD PARTY THE PORTION OF SUCH COST FOR WHICH IT WOULD BE SO RESPONSIBLE."

FN1 IT SHOULD BE NOTED THAT EMPLOYERS OF SEAMEN TREATED UNDER 42 U.S.C. SEC. 249 ARE SPECIFICALLY EXCLUDED FROM THE STATUTE. 42 U.S.C. SEC. 2651(A). THE EXCLUSION REFLECTS AN APPARENT CONGRESSIONAL INTENT TO LEAVE UNDISTURBED THE UNIQUE RELATIONSHIP AMONG SEAMEN, THEIR EMPLOYERS AND THE UNITED STATES REGARDING MEDICAL CARE. S. REP. NO. 1945, 87TH CONG., 2D SESS., REPRINTED IN (1962) U.S.C. CONG. & AD. NEWS 2637, 2641.

FN2 THE NATIONAL HEALTH SERVICE CORPS (NHSC), A DIVISION OF PHS, ORIGINALLY WAS AUTHORIZED TO COLLECT ITS COSTS FROM ANY RESPONSIBLE FEDERAL, STATE, OR LOCAL AGENCY, OR OTHER THIRD PARTY. 42 U.S.C. SEC. 254BB)(2)(C). THAT SECTION WAS REPEALED IN 1976, HOWEVER. ACT OF OCT. 12, 1976, 90 STAT. 2268, 2278. ALTHOUGH EQUIVALENT SUBSTANTIVE PROVISIONS REGARDING THE NHSC WERE SUBSEQUENTLY ENACTED AS 42 U.S.C. SEC. 254D ET SEQ., THE PROVISION AUTHORIZING RECOVERY OF COSTS BY NHSC WAS NOT INCLUDED. INSTEAD, LOCAL ENTITIES ARE REQUIRED TO AGREE TO MAKE REASONABLE EFFORTS TO COLLECT FOR SERVICES RENDERED FROM THE LIABLE THIRD PARTY. 42 U.S.C. SEC. 254GA)(2). IN ANY EVENT, INTERPRETATION OF THE FORMER SEC. 254B AS EVIDENCING CONGRESSIONAL INTENT TO WITHHOLD SUCH AUTHORITY FROM OTHER PHS DIVISIONS WOULD BE MERELY SPECULATIVE, SINCE NO COMMENT ON THIS PROVISION WAS MADE IN THE LEGISLATIVE HISTORY. FN3 APPARENTLY, BECAUSE OF ITS INTERPRETATION OF THE INSURANCE POLICY, THE COURT IN ST. PAUL DID NOT HAVE TO ADDRESS THE THIRD PARTY BENEFICIARY DOCTRINE.

FN4 ALTHOUGH CLAIMS AGAINST INSURANCE COMPANIES REPRESENT THE TYPICAL SITUATION UNDER WHICH THE UNITED STATES PURSUES RECOVERY, CLAIMS ALSO HAVE ARISEN WHERE MEDICAL SERVICES ARE PROVIDED FOR AN EMPLOYMENT-RELATED INJURY FOR WHICH THE BENEFICIARY IS ENTITLED TO REIMBURSEMENT UNDER A WORKERS' COMPENSATION PLAN. IN UNITED STATES V. BENDER WELDING & MACHINE CO., 558 F.2D 751 (5TH CIR. 1977) AND TEXAS EMPLOYERS' INSURANCE ASSOC. V. UNITED STATES, 558 F.2D 766 (5TH CIR. 1977), RECOVERY BY THE UNITED STATES WAS ALLOWED BASED ON AN ASSIGNMENT OF RIGHTS RECEIVED FROM THE BENEFICIARY. IN BOTH CASES, THE BENEFICIARY WAS A VETERAN TREATED FOR INJURIES COMPENSABLE UNDER WORKERS' COMPENSATION STATUTES. THE COURT, RELYING ON THE FACT THAT THE VETERANS ADMINISTRATION WAS OBLIGATED TO PROVIDE FREE MEDICAL CARE ONLY IF THE VETERAN WAS UNABLE TO PAY FOR IT, TREATED THE BENEFICIARY'S ELIGIBILITY UNDER THE WORKERS' COMPENSATION STATUTE AS GIVING HIM THE ABILITY TO DEFRAY THE COSTS HIMSELF. THUS, THE COURT CONCLUDED THAT THE VETERANS ADMINISTRATION WAS UNDER NO OBLIGATION TO PROVIDE FREE SERVICES, AND CONSEQUENTLY COULD CHARGE FOR THEM. SINCE THE VETERANS ADMINISTRATION SERVICES WERE NOT FREE, THE EMPLOYER HAD A DUTY UNDER THE WORKERS' COMPENSATION STATUTE TO PAY FOR THEM. UNITED STATES V. BENDER WELDING & MACHINE CO., SUPRA AT 736; TEXAS EMPLOYERS' INSURANCE ASSOC. V. UNITED STATES, SUPRA AT 768-769.

THE APPLICABILITY OF THE BENDER RATIONALE TO PHS IS LIMITED BECAUSE, UNLIKE THE VETERANS ADMINISTRATION STATUTE, THE PUBLIC HEALTH SERVICE ACT ESTABLISHES AN ABSOLUTE RIGHT TO FREE SERVICES, WITHOUT REGARD TO A BENEFICIARY'S ABILITY TO PAY. HOWEVER, THE BENDER COURT'S APPROACH - FOCUSING ON STATUTORY INTENT - MAY BE RELEVENT IN AREAS OTHER THAN INSURANCE COVERAGE, WHERE A BENEFICIARY HAS SOME INDEPENDENT STATUTORY ENTITLEMENT TO COMPENSATION FOR MEDICAL CARE. (IT IS INTERESTING TO NOTE THAT THE VETERANS ADMINISTRATION REGULATIONS SPECIFY THAT TWO ADDITIONAL CLASSES OF BENEFICIARIES - VETERANS OVER AGE 65 AND THOSE RECEIVING DISABILITY COMPENSATION - WILL BE CHARGED FOR MEDICAL SERVICES IF THEY ARE COVERED UNDER PRIVATE INSURANCE POLICIES OR WORKERS' COMPENSATION STATUTES. 38 C.F.R. SEC. 17.48(D). INABILITY TO PAY IS NOT A PREREQUISITE TO MEDICAL CARE BEING AFFORDED THESE TWO TYPES OF BENEFICIARIES, HOWEVER. SEE 38 U.S.C. SECS. 610(A)(3), (A)(4). THE COURT IN THE BENDER CASE DID NOT ADDRESS THIS ASPECT OF THE STATUTE AND REGULATIONS.)

FN5 SUCH A STATUTE WOULD APPLY ONLY WHERE THE INSURER OR OTHER THIRD PARTY IS LIABLE TO THE INSURED FOR HIS MEDICAL COSTS; CLEARLY IT WOULD NOT CREATE LIABILITY FROM THE INSURER TO THE GOVERNMENT WHERE NONE EXISTS BETWEEN THE INSURER AND THE INSURED.