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.

CMS Issues Final Rule Implementing Conditional Payment Appeals Process for Applicable Plans

On February 26th, 2015, CMS issued a final rule implementing provisions of the Strengthening Medicare and Repaying Taxpayers Act (the SMART Act), establishing a right of appeal and formal Medicare Secondary Payer (MSP) appeals process for applicable plans. The appeals process is for situations when Medicare seeks to recover payments from applicable plans, including liability insurance (including self-insurance), no-fault insurance, and workers’ compensation laws or plans. 




Some things to note regarding the final rule:

- The applicable plan cannot appeal unless and until an initial demand has been issued.
- Medicare has the right to recover conditional payments from the beneficiary, the primary payer, or any other entity that has the proceeds from payment by the primary plan; therefore, Medicare’s decision regarding the entity it is pursuing recovery from will not be   subject to appeal.
- The right to appeal is limited to the identified debtor, not a potential identified debtor. 
- The SMART Act provision amended only the MSP provisions for Medicare Part A and Part B (section 1862(b) of the Act) and does not apply to Part C or Part D plans pursuing an MSP based recovery. 

These regulations will become effective on April 28, 2015.  The posting on the Federal Register can be found here.

CMS Update: WCMSA Life Expectancy Calculations

As of April 1, 2015, CMS will begin referencing the CDC's Table 1: Life Table for the total population: United States, 2010, for WCMSA life expectancy calculations.  A copy of the CDC’s 2010 Life Table is available here.

Alert: CMS Issues Updated Section 111 NGHP User Guide

On February 2, 2015, CMS issued an updated Section 111 NGHP User Guide incorporating the following language from the August 19, 2014, Alert addressing liability cases involving exposure, ingestion, or implantation and December 5, 1980:

Any operative amended complaint (or comparable supplemental pleading) must occur prior to the date of settlement, judgment, award, or other payment and must not have the effect of improperly shifting the burden to Medicare by amending the prior complaint(s) to remove any claim for medical damages, care, items and/or services, etc.

Where a complaint is amended by Court Order and that Order limits Medicare’s recovery claim based on the criteria contained in this alert, CMS will defer to the Order. CMS will not defer to Orders that contradict governing MSP policy, law, or regulation.

The August 19, 2014, Alert also provides that Medicare will assert a recovery claim if "[e]xposure, ingestion, or the alleged effects of an implant on or after December 5, 1980, is claimed, released, or effectively released in the most recently amended operative complaint or comparable supplemental pleading" (emphasis added).  In addition, the Alert states that one of the conditions that must be met for Medicare to not assert a recovery claim is that "[e]xposure, ingestion, or an implant on or after December 5, 1980, has not been claimed in the most recently amended operative complaint (or comparable supplemental pleading) and/or specifically released" (emphasis added).

The new CMS User Guide does not include the underlined language above.  However, we have contacted CMS and confirmed that this language was left out inadvertently and the August 19, 2014, alert is still in effect.  We expect to see a new User Guide issued in the near future including the underlined language above and we will let you know when it has been issued.

The current User Guide is available here.

Upcoming Events: February

Carr Allison Medicare 

Compliance Group 

will be exhibiting at these upcoming conferences, stop by our booth and say hello!

ASIA Winter Workshop 

February 5-6, 2015

Sheraton-Birmingham, AL

IWCF- DWC Conference 

February 9-10, 2015

LAX Marriott-Los Angeles, CA

Carr Allison Medicare Compliance Group is now on Twitter!

Follow us at:

@carrallisonmsa

Reminder: Free CEU Webinar January 22

January 22, 2015

 @ 1:00 PM CST

JOIN US this Thursday for a one hour webinar during which attorney Melisa Zwilling, Chair of the Medicare Compliance Group at the law firm of Carr Allison, will discuss recent developments in Medicare Compliance, Medicare Secondary Payer issues and important court decisions that may affect you. In addition, she will discuss how you can save big dollars on both conditional payment claims and MSAs.



Register today:

https://www4.gotomeeting.com/register/279820751

*Attendees will receive one CEU credit for the states of AL, AR, FL, GA, IN, KY, LA, MS, NC, NH, OK, OR, and TX, if needed.

US District Court: Adequacy of a Medicare Set-Aside in Liability Case

In Berry v. Toyota Motor, No. 1:11-CV-01611, 2015 U.S. Dist. LEXIS 3319, (W.D. La. January 10, 2015), a products-liability case, the United States District Court for the Western District of Louisiana was presented with a Joint Motion requesting a determination of whether Medicare's interests were adequately protected in the parties' settlement agreement and, specifically, whether a Medicare Set-aside (MSA) would be necessary. The plaintiff, Mr. Berry, was injured in a motor vehicle accident while driving his Toyota Corolla. The parties reached a confidential settlement agreement which was contingent upon the court finding that no MSA was required and that Medicare's interests were adequately protected.

In reaching its decision, the court considered affidavits from treating physicians confirming that treatment for the injuries related to the accident, had been completed and no future treatment was anticipated. The court also reviewed correspondence from Medicare confirming that all conditional payment claims paid by Medicare had been reimbursed. Based upon the evidence presented, the court held that an MSA was not necessary and Medicare's interests were adequately protected in the settlement.

Issues related to the Medicare Secondary Payer Act are typically handled through administrative remedies. However, the court validated its authority to rule on these issues by pointing out that the United States was not a party to the suit and it was not a dispute or appeal of any decision made by the Centers for Medicare and Medicaid Services (CMS). Additionally, the court noted that unlike workers' compensation cases, liability cases do not have clear-cut guidelines for parties to follow and review may not be available. Thus, without other means to establish that Medicare's interests are adequately protected in settlement, parties must look to the courts to hear motions like the one in this case.