The 11th Circuit Court of Appeals recently affirmed a decision from the United States District Court for the Southern District of Florida, holding that the Medicare Secondary Player (MSP) permitted the insurance carrier, Medicare, as Medicare Advantage Organization (MAO), to bring a private cause of action against the tortfeasor’s liability insurer seeking reimbursement for secondary payments. This decision essentially confirmed that MOAs can sue primary payers in Federal Court and are entitled to receive double damages.
Mary Reale, the plaintiff, who was enrolled in the Humana Medicare Advantage plan, was injured at the Hamptons West Condominiums in January 2009 and sought medical treatment for her injury. The plaintiff’s medical providers billed Humana, which ended up paying $19,155.41. Humana provides Medicare Part C coverage (also referred to as a Medicare Advantage plan) to Medicare-eligible enrollees. In return, Humana receives a per capita fee from the Centers for Medicare & Medicaid Services (CMS).
Reales Settlement
The Reales sued and settled with Western Heritage for $115,000. As part of the settlement agreement, the Reales represented that no Medicare lien or right to subrogation existed, and the Reales agreed to indemnify Hamptons West against Medicare or any other lien or right subrogation.
Humana, therefore, eventually sued Western Heritage and its liability insurer, Western, in the United States Federal Court in the Southern District of Florida, requesting reimbursement under the MSP, which states that Medicare payments are secondary and reimbursable if another insurer is liable. See 42 U.S.C. § 1395y(b)(2).
Under 42 USC 1395y(b)(3)(A), private actors can seek a federal remedy should a primary plan fail its obligation to pay and undermine the secondary-payer scheme. The court stated that “[w]e see no basis to exclude MAOs from a broadly worded provision that enables a plaintiff to vindicate harm caused by a primary plan’s failure to meet its MSP primary payment or reimbursement obligations.”
Pursuant to existing regulations, the court stated that the primary plan must reimburse Medicare, regardless of whether the primary plan has already reimbursed the beneficiary or some other party, if that beneficiary or other party “fails to reimburse Medicare within 60 days of receiving primary payment.” Therefore, Western failed to extinguish its reimbursement obligation to Humana even though Western paid Ms. Reale or another party, such as her attorney. Under the CMS regulations, the Court held that Western was obligated to provide for “appropriate reimbursement” to Humana. Therefore, the Eleventh Circuit granted summary judgment for Humana, holding a private cause of action existed because the insurance carrier, Western, had paid the Plaintiffs.
After deciding that Humana was entitled to damages, Humana also argued that it should recover double damages under the MSP. The court held that under the private cause of action provision, Western was required to pay Humana double damages. “Unlike the Government’s cause of action, the private cause of action uses the mandatory language ‘shall’ to describe the damages amount.” Therefore, Western had to reimburse Humana $38,310.82, which was double the amount Western initially owed. This means that if an insurer fails to reimburse MOA within 60 days, that insurer is then required to pay double the amount that would have initially been awarded in the settlement agreement.
Two circuit courts have grappled with whether the MOA can pursue double damages against primary payers in Federal Court. Both cases have held that MOAs have a private cause of action to recover double damages under the MSP. The circuit courts’ rulings in Humana Med. Plan, Inc. v. W. Heritage Ins. Co., No. 15-11436, 2016 WL 4169120 (11th Cir. Aug. 8, 2016) and In re Avandia Mtkg., Sales Practices & Prods. Liab. Litig., 685 F.3d (3rd Cir. 2012), therefore, suggest that claims with Medicare beneficiaries should be handled differently.
After the court’s holding in Humana, it is apparent that any lien interests must be resolved within the stipulation and paid directly by the insurer as part of the settlement agreement. Therefore, from the onset of a pending case, whether there is a request for payment regarding an Advantage Plan should be discovered. The settlement agreement should also clarify whether the insurance carrier or defendant are paying the Medicare Advantage Plan.
If you have any questions or need assistance, please contact one of our experienced attorneys at Hansen Dordell by phone (651) 482-8900.