As Medicare Advantage Plans (MAPs) continue to aggressively pursue recovery rights under the Private Cause of Action provisions of the Medicare Secondary Payer Act (MSP), 42 USC § 1395y(b)(3)(A), courts are being presented with more and more novel arguments by MAPs to establish these rights. Such is the case in Ocean Harbor Cas. Ins. v. Claims, 2018 Fla. App. LEXIS 13569 (September 26, 2018), when the Florida Third Circuit Court of Appeals was asked to determine whether the mere existence of a no-fault insurance contract was enough for MAPs to establish primary plan liability under the MSP.
MSPA Claims 1, LLC (MSPA), as an assignee of a defunct Medicare Advantage Organization (MAO) seeking to represent 37 other MAOs, sought to bring a class action suit to recoup double damages under the MSP against no-fault automobile insurer Ocean Harbor Casualty Insurance Company. MSPA asserted that Ocean Harbor’s liability as a primary payer under the MSP was established not through a settlement or judgement, but by showing that the MAOs made payment for a Medicare beneficiaries’ medical expenses; the beneficiaries had no-fault insurance coverage through Ocean Harbor; and Ocean Harbor failed to reimburse the payment. Citing to Humana Med. Plan, Inc. v W. Heritage Ins. Co., 832 F3.D 1229 (11th Cir. 2016) and In re Avandia Mktg., Sales Practices & Prod. Liab. Litig., 685 F.3d 353 (3d Cir. 2012), MSPA argued that its reimbursement rights and the rights of similarly situated MAOs was essentially automatic.
Although the trial court agreed with MSPA’s arguments and granted the class certification, the Florida Third Circuit Court reversed on appeal finding that class certification was not appropriate and each MAP recovery right would need to be assessed on a case-by-case basis. The Court determined that the MSP was never intended, nor did it supersede, state insurance law. The Court noted that for MSPA to assert a recovery action, it must not only demonstrate that it made a proper conditional payment, but that Ocean Harbor was also required to make a payment under Florida no-fault law.
The Court also rejected MSPA’s argument that Ocean Harbor was required to, and failed to, exhaust its administrative remedies to appeal the MSPA’s organizational determination regarding the conditional lien pursuant to 42 C.F.R. § 422.566, et seq., Significantly, the Court determined that there was nothing in this regulation or subsequent legislation that required a primary plan to appeal an organizational determination and administrative appeals were only applicable to traditional Medicare liens.
This case illustrates not only the due process requirements for MAP recovery rights, but also the application of these recovery rights in the context of state law and the MSP. It also illustrates the difficulty primary payers may have in challenging these rights when a formal appeal process is not applicable to these plan as is required under traditional Medicare lien recovery. As more and more recovery actions are brought by MAPs, it is important for primary payers to not only properly identify MAP liens, but to understand how and when to satisfy these liens to prevent future liability.