Update on Humana Medicare Advantage Plan Litigation

    As we previously reported, last year Humana filed lawsuits in four federal district courts seeking recovery of medical expenses paid by Humana Medicare Advantage Plans.  In its complaints, Humana asserted private causes of action under the Medicare Secondary Payer Act seeking double damages or, alternatively, payment for the full amount that would have been paid by the defendants under no-fault and med pay policies if the defendants had issued payment directly to the providers for the charges asserted.  In addition, Humana sought a declaratory judgment finding that Medicare Advantage Plans are secondary to no-fault and med pay insurance and that the defendants must reimburse a Medicare Advantage Plan in situations when the defendants are a primary payer.  Further, Humana requested that each court order the defendants to provide broad restitution to Humana for medical expenses paid for any Humana plan enrollee when the defendants were the primary payer and had no-fault or med pay coverage.

    Initially, the parties submitted a joint motion to the U.S. Judicial Panel on Multidistrict Litigation seeking a transfer of venue for all cases to the Eastern District of Tennessee.  While the motion was pending, Humana voluntarily dismissed the lawsuits in the Eastern District of Tennessee, the Western District of Missouri, and the District of Kansas, which left only the case in the Western District of Texas still pending.  The defendants filed a motion to dismiss, and the court referred the defendants’ motion to a Magistrate Judge for review.

    Recently, the Magistrate Judge issued a Report and Recommendation advising the court to dismiss Humana’s claims under the Medicare Secondary Payer Act (“MSPA”), agreeing with the defendants’ position that the private cause of action under the MSPA does not apply to Medicare Advantage Plans.  The judge considered the decision of the Third Circuit Court of Appeals in In re: Avandia Marketing, Sales Practices, and Products Liability Litigation, 685 F.3d (3rd Cir. 2012), which held that Medicare Advantage plans may assert a private cause of action against a primary plan under the MSPA.  However, the judge noted that the Third Circuit’s decision was not binding authority outside the Third Circuit and found the Avandia decision unpersuasive.  In reaching the conclusion that Congress did not intend to extend the private cause of action to Medicare Advantage Plans, the judge pointed to the lack of reference to Medicare Advantage Plans in the statutory text of the private cause of action as well as the lack of any provision in the Medicare Advantage statute creating a right for Medicare Advantage Plans to sue primary plans.  As such, the judge determined, Humana’s claims under the MSPA should be dismissed.

    Following the Magistrate Judge’s Report and Recommendation, Humana filed an objection with the district court, which is currently pending review.  Regardless of the outcome of the district court’s decision, the case will very likely be appealed to the Fifth Circuit Court of Appeals.  If the Fifth Circuit agrees that Medicare Advantage Plans may not assert a private cause of action under the MSPA, the split between the Fifth and Third Circuits could be enough for the U.S. Supreme Court to grant certiorari and finally provide clarity to the still unsettled issue of the recovery rights of Medicare Advantage Plans.