Medicare Advantage Organization Seeks More than Double Damages

Medicare Advantage Organization Seeks More than Double Damages: Aetna Life Ins. Co. v. Guerrera, 2020 U.S. Dist. Lexis 139949

In Aetna Life Ins. Co. v. Guerrera, the U.S. District Court for Connecticut determined that a liability insurance carrier was responsible for conditional payments associated with a settlement with a Medicare beneficiary. In the circumstances of this case, a Medicare Advantage Organization “MAO” made the conditional payments. 

Because the MAO had to file suit for recovery of its payments, the Court required the liability insurance carrier to pay twice the amount of the conditional payments. This is sometimes referred to as the “double damages” provision of the Medicare Secondary Payer Act. This resulted in the liability carrier being ordered to pay $19,708.32. 

In Aetna, the MAO asserted that the liability carrier was responsible for conditional payments made associated with a settlement.  In February 2015, Guerrera slipped and fell while at Big Y store (Big Y is self-insured). Aetna, an MAO, made payments associated with the slip and fall ($9,854.16).

In September of 2015, Aetna had notified Big Y and Guerrera of its payments and reimbursement rights.

On March 10, 2016, Big Y purportedly agreed to hold the settlement funds and reimburse conditional payments with the settlement funds. However, in September 2016, settlement documents were signed for $30,000.00, but Big Y tendered the entire settlement to the plaintiff without waiting for the demand from Aetna. Neither Big Y nor Guerrera reimbursed Aetna.

This case has two interesting facts that should not be missed:

  • Aetna arguably had the option of seeking reimbursement from claimant or Big Y based upon settlement, but sought reimbursement from Big Y.
  • Aetna raised additional claims/damages: Breach of Contact and Fiduciary Duty

Aetna argued that Guerrera and their attorney breached a contract (policy) and fiduciary duty with respect to reimbursement of MAO payments. The District Court found that the attorney did not have a contract with the MAO nor had a fiduciary duty for repayment from the settlement.

However, the Court did find that there was a factual dispute to whether Guerrera breached its contract with Aetna for failure to reimburse the conditional payments. The Court determined summary judgement was not appropriate over this issue and remanded the matter for further development.

These additional claims for Breach of Contract and Fiduciary duty, increased the amount of money the MAO can recover from the parties associated with settlement. Although the MAO was not entirely successful on these issues, I would expect others to continue to advance these and other recovery theories.

In this case, the parties recognized Medicare’s interests, but failed to follow through with the conditional payment resolution process. Because of this, the self-insured was required to make a payment of $19,708.32 to Aetna in addition to its original $30,000.00 settlement. Furthermore, the claimant may be facing additional damages regarding a breach of contract claim.  As more cases develop, we will keep you posted.