Providers May Assert Private Cause of Action Against NGHPs

In Michigan Spine & Brain Surgeons, PLLC v. State Farm, 2014 F. App’x 0154P (6th Cir. July 16, 2014), the Sixth Circuit Court of Appeals held that a health care provider could assert a private cause of action under the Medicare Secondary Payer Act against a non-group health plan.  State Farm had no-fault coverage for its insured and denied payment to Michigan Spine & Brain Surgeons on the basis that the treatment provided was related to a pre-existing condition rather than the insured’s accident.  Medicare subsequently paid for the treatment at issue, and Michigan Spine then filed a lawsuit against State Farm asserting a private cause of action under the Medicare Secondary Payer Act.

The Sixth Circuit previously held in Bio-Medical Applications of Tenn., Inc. v. Cent. States Southeast & Southwest Areas Health & Welfare Fund, 656 F.3d 277 (6th Cir. 2011) that health care providers could assert a private cause of action against a group health plan.  Michigan Spine argued that the Sixth Circuit’s holding in Bio-Medical Applications should extend to non-group health plans as well.  State Farm, however, argued that the private cause of action could not apply to non-group health plans based on the statutory language.  The Medicare Secondary Payer Act specifies that “[t]here is established a private cause of action for damages (which shall be in an amount double the amount otherwise provided) in the case of a primary plan which fails to provide for primary payment (or appropriate reimbursement) in accordance with paragraphs (1) and (2)(A).”  State Farm argued that the private cause of action should not apply to non-group health plans because only group health plans can fail to meet the requirements of both paragraphs (1) and (2)(A) of the Medicare Secondary Payer Act, since paragraph (1) only applies to group health plans.  The court, however, declined to adopt State Farm’s strict interpretation of the statute.  The court decided that Congress must have intended the private cause of action to be read broadly to both group health plans and non-group health plans.  The court took the position that it would not make sense to interpret the statute as requiring a non-group health plan to fail to comply with paragraph (1) in order to be subject to the private cause of action.  Therefore, the court held, a private cause of action could be asserted against a non-group health plan.  The Sixth Circuit remanded the case to the district court for further proceedings.

Although the Sixth Circuit did not mention it specifically, the Michigan Spine decision has the effect of overruling the Western District of Kentucky’s holding in Estate of Clinton McDonald v. Indem. Ins. Co. of North America, 3:12-CV-577, 2013 U.S. Dist. LEXIS 138068 (W.D. Ky. Sept. 25, 2013) that the private cause of action only applies to group health plans.