Private Insurers that Offer Medicare Advantage Plans Can Sue Primary Insurers Under the Medicare Secondary Payer Act
In a matter of first impression, the Eleventh Circuit Court of Appeals recently addressed the issue of whether the Medicare Secondary Payer Act (“MSP”) private cause of action permits a Medicare Advantage Organization (“MAO”) to sue a primary payer that refuses to reimburse the MAO for a secondary payment.
In Humana Medical Plan, Inc. v. Western Heritage Insurance Company, Mary Reale (“Mrs. Reale”) was injured at a condominium in Florida. Mrs. Reale’s medical providers billed Humana, her Medicare Advantage provider, $19,155.41—which Humana paid. In 2009, the Reales sued Hamptons West Condominium Association, Inc. (“Hamptons West”) for Mrs. Reale’s injury. While the lawsuit was pending, Humana sent Mrs. Reale a reimbursement request in the amount of $19,155.41 based upon the MSP, which provides that Medicare payments are secondary and reimbursable if any other insurer is liable. Mrs. Reale settled her suit with Hamptons West. In the settlement agreement, Mrs. Reale represented that there was no Medicare or other lien or right to subrogation, and she agreed to indemnify the condominium and its insurer. Humana tried, but failed to get its reimbursement from Mrs. Reale.
Because Humana was unsuccessful in obtaining reimbursement from the Reales, it sued Western. The district court held that the MSP private cause of action was available to an MAO and that Humana was entitled to double damages in the amount of $38,310.82, and thus granted Humana’s motion for summary judgment. Western subsequently appealed.
The Eleventh Circuit Court first discussed Humana’s argument that an MAO can sue a primary plan under the MSP private cause of action. The Court agreed with Humana and wrote that Centers for Medicare & Medicaid Services (“CMS”) regulations provide that an MAO “will exercise the same rights to recover from a primary plan, entity, or individual that the secretary exercises under the MSP regulations . . .” 42 C.F.R. § 422.108(f). Moreover, the Court agreed with the district court and the Third Circuit’s analysis of the MSP private cause of action; the district court held that “the statutory text of the MSP Act clearly indicates that MAOs are included within the purview of parties who may bring a private cause of action.”
The Court then discussed how an MAO fits within the MSP scheme and whether an MAO may avail itself of the MSP private cause of action in paragraph (3)(A). The Court rejected Western’s argument that the MSP does not govern MAOs and that the MAO right-to-charge provision instead governs. The Court wrote that paragraph (2)(A) unambiguously refers to all Medicare payments—both traditional Medicare and Medicare Advantage plans. Although the Court recognized that paragraph (2)(b) refers only to the Secretary, the Court analyzed paragraphs (2)(A) and (3)(A) and held that a primary plan that fails to make a primary payment has failed to do so “regardless of whether the secondary payer is the Secretary or an MAO.” 42 U.S.C. § 1395y(b)(3)(A). The Court further stated that neither the MSP nor case law restricts the class of plaintiffs to whom the MSP private cause of action is available. Because the court found that a primary plan’s failure to make primary payment or to reimburse causes the MAO an injury in fact, the court ruled that an MAO “may avail itself of the MSP private cause of action when a primary plan fails to make primary payment or to reimburse the MAO’s secondary payment.” Thus, the Court affirmed the district court’s order granting Humana’s summary judgment.