Eleventh Circuit District Court Dismisses MAO Private Cause of Action

Medicare Advantage Organizations (MAOs) right to recovery under the private cause of action provision of the Medicare Secondary Payer Act (MSP) continues to be a hot issue in court decisions as more and more Plans seek recovery under this provision.

As you may recall, a private cause of action exists under the Medicare Secondary Payer (MSP) Act when a primary plan fails to pay for Medicare’s conditional payment. Additionally, the private cause of action allows for double damages. See 42 USC §1395y(b)(3)(A). While decisions on this issue continue to fall both ways, currently the Third, Fifth and Eleventh circuits are allowing MAOs a right to recovery under this provision. The provision further requires that a primary plan's responsibility be demonstrated “by a judgment, a payment conditioned upon the recipient's compromise, waiver, or release (whether or not there is a determination or admission of liability) of payment for items or services included in a claim against the primary plan or the primary plan's insured, or by other means.” 42 U.S.C. § 1395y(b)(2)(B)(ii).

The issue of demonstrating responsibility was recently addressed in MSP Recovery, LLC v. Progressive Select Insurance Company, 2015 U.S. Dist. LEXIS 47784 (11th Cir. April 1, 2015). In the case at issue, a Medicare beneficiary held coverage through a Medicare Advantage Plan (MAP) when he was injured in a car accident. The medical bills related to the accident should have been paid through his PIP coverage with Progressive, the Defendant in this case. The Defendant, however, did not immediately pay the related bills. As such, those bills were covered by the MAO. MSP Recovery, LLC, Plaintiff, through assignment by the MAO, filed for recovery against the Defendant’s PIP coverage due to the Defendant’s failure to provide reimbursement. Although the Court followed the Third Circuit’s holding in In re Advandia, and found that the MAO did in fact have a private cause of action under the MSP, the Plaintiff’s claim was eventually dismissed for failure to demonstrate responsibility to reimburse. We will continue to monitor all upcoming decisions for discussions on this issue.

District Court in the Eleventh Circuit Gives Humana a Private Cause of Action Under the MSP

Courts continue to follow the Third Circuit’s lead by finding that Medicare Advantage Organizations (MAO) have a private cause of action to pursue reimbursement under the Medicare Secondary Payer Act (MSP).

In the present case, Humana Med. Plan v. W. Heritage Ins. Co., (2015 U.S. Dist. LEXIS 31875), the United States District Court for the Southern District of Florida followed the direction of the Third Circuit's and, in granting Humana’s Motion for Summary Judgment, found that Humana has a private cause of action under the MSP and is entitled to recover double damages as a result of Western Heritage Insurance Company’s (“Western”) failure to reimburse Humana for medical expenses it advanced on behalf of Ms. Reale, the plaintiff in the prior liability claim.

Especially important is that prior to settlement of the liability claim, Western attempted to resolve the Humana lien by listing Humana as a payee on the settlement check. Due to a disagreement regarding the amount owed on the Humana lien, however, the state court ordered Western to pay the full settlement amount to Ms. Reale and Ms. Reale’s attorney to hold funds in trust to be used to reimburse medical liens. As a result of the state court’s Order, Western paid the full settlement to Ms. Reale with the understanding that she would then satisfy the existing liens, including those with Humana.  When Ms. Reale failed to pay those liens due to continued disagreement of the amount owed, Humana filed the case at hand against Western.

Humana filed the Motion for Summary Judgment seeking a declaration that Western was liable to Humana for charges paid on Ms. Reale’s behalf, despite the fact that the claims were already settled directly with Ms. Reale, and that they are entitled to double damages under the MSP private cause of action provision. The Court began their analysis by discussing the history behind Medicare and the MSP, which led to discussion of the Third Circuit’s analysis of the private cause of action provision in Avandia.

The court relied on the Third Circuit’s interpretation of the MSP’s private cause of action provision in In re Avandia Sales Practices, and Products Liability Litigation, 685 F.3d (3rd Cir. 2012), which held that a plain reading of the MSP statute provided the MAO with a private cause of action and that even if the language were vague, the result would be the same as an ambiguity would require Chevron deference be given to the Centers for Medicare & Medicaid Services, and the same conclusion would be reached.  The Court found the Avandia Court’s analysis persuasive and held that MAOs such as Humana are within the purview of those who may bring a private cause of action under the MSP.  The Court then determined that Western qualifies as a primary payer under the MSP as a result of the settlement agreement between Western and Ms. Reale, in which Western reimbursed Ms. Reale for injuries she sustained. Therefore, even in light of Western’s agreement with Ms. Reale settling all claims, Western is still responsible for repayment to Humana for benefits they paid on Ms. Reale’s behalf.

In addition to finding that Humana has a private cause of action under the MSP and Western’s status as a primary payer, the Court evaluated Humana’s right to recover double damages.  The Court determined that upon settling the case with Ms. Reale, Western, as a primary payer, had a responsibility to reimburse Humana for medical expenses it paid on behalf of Ms. Reale, and failed to do so.  As such, the Court held that Western’s independent obligation to reimburse Humana and their failure to do so entitled Humana to double the amount they paid on behalf of Ms. Reale.

This is the first District Court in the Eleventh Circuit to follow the Third Circuit’s decision in Avandia, and provides further evidence that Medicare Advantage Organizations continue to gain momentum and favor with courts when it comes to their recovery rights.  It should be noted that, similar to the reimbursement rights of Medicare, the reimbursement rights of an MAO will not be bound by the terms of a settlement agreement.

If you are unsure whether a claimant is enrolled in a Medicare Advantage Plan or Part D Prescription Drug Plan, contact us today. We are happy to confirm enrollment and assist with the resolution of any such lien.