Medicare Advantage Plan Obtains Victory on Conditional Payment Recovery in Ohio

a medical device over hundred dollar bills

Recently, the Northern District of Ohio issued decisions regarding a Medicare Advantage Plans right to seek reimbursement for conditional payments: MSP Recovery Claims, Series LLC v. Phoenix Insurance Company, 19cv00436, (motion to dismiss denied 12/12/2019); MSP Recovery Claims, Series LLC v. Grange Insurance Company, 19vc00219, (motion to dismiss denied 12/12/2019); MSP Recovery Claims, Series LLC v. Progressive Corporation, 18cv2273 (motion to dismiss denied 9/17/19).

In the circumstances of the three cases, a Medicare Advantage Plan (SummaCare) made payments for treatment that was alleged to be associated with a particular non-group health plan settlement. Phoenix, Grange and Progressive were the carriers associated with the non-group health plan settlement. 

SummaCare assigned its rights to collection of conditional payments it had made to MSP Recovery Claims, Series, LLC.  MSP Recovery Claims, Series, LLC is sued Phoenix Insurance, Grange Insurance and Progressive Corporation for reimbursement of the payments made.

In all three decisions, the Court held a Medicare Advantage Plan has a right to sue under the private cause of action statute of 42 U.S.C. 1395(b)(3)(A). The court followed the rationale and reasoning In re Avandia Marketing, Sales Practices and Products Liability Litigation,685 F.3d 353 (3rd Cir. 2012). This private cause of action can allow recovery up to twice the amount of the payments made, more commonly referred to as “double damages.”  This means if MSP Recovery goes to trial and wins, it could obtain a judgment for twice the amount SummaCare paid for medical treatment.

The adoption of In re Avandia, is interesting enough, but the Court in Grange Insurance Company and the Progressive Corporation also dealt with the “presentment” argument outlined by 42 U.S.C. 1395y(b)(2)(B)(vi), which states:

Notwithstanding any other time limits that may exist for filing a claim under an employer group health Plan, the United States may seek to recover conditional payments in accordance with this subparagraph where the request for payment is submitted to the entity required or responsible under this subsection to pay with respect to the item or service (or any portion thereof) under a primary plan within the 3-year period beginning on the date on which the item or service was furnished.

The Court in Phoenix, Grange and Progressive held that 42 U.S.C. 1395(b)(2)B)(vi), only applies to claims by Medicare against employer group health plan. The Court’s decisions does not reconcile why the word “entity” or “primary plan” is used instead of “employer group health” in the remaining portions of the statute. An employer group health plan, entity or primary plan may have additional time limits, but not withstanding those time limits, the United States has three years from the date of service to request repayment. 

For example, a state’s workers’ compensation law may preclude reimbursement by the workers’ compensation carrier if the date of treatment is more than two years from last payment of benefit. In this circumstance, Medicare would have an additional year to request repayment. This statute precludes a non-group health plan of raising its own policy or state’s claim filing laws to preclude Medicare from requesting repayment. However, Medicare should still be limited to making that request within three years of the date of service. 

Further, although the Court in Phoenix, Grange and Progressive found that 42 U.S.C. 1395y(b)(2)(B)(vi) does not provide limitations within its provisions and is not a prerequisite to file suit for recovery of conditional payments, the MSP act itself does not have complete control over the contents of a claim for reimbursement or when that claim for reimbursement is an enforceable final agency decision:

  • 42 C.F.R. 405.900, et. seq sets out the administrative appeal process that must be exhausted before a suit can be filed in court. These regulations set out the rules Medicare must follow and the information required to be provided by Medicare in its initial determination, redetermination, reconsideration, ALJ and MAC decision.
  • Federal regulation 31 C.F.R. §285.12(c)(3)(i) requires a decision by Medicare to be a final agency decision before the debt can be referred to U.S. Treasury for collection.
  • This means there first has to be a final agency decision before a conditional payment debt can be referred to U.S. Treasury for collection. Without a final agency decision, the U.S. Treasury does not have an enforceable decision under the Medicare regulations.

For Medicare Part A and B, once the matter has been referred to U.S. Treasury for collection, the federal government can consider suing for reimbursement of conditional payments or other avenues of administrative collection. This is because without a final agency decision, the U.S. Treasury does not have an enforceable decision under the Medicare regulations. 

Medicare has also provided guidance for a grievance and appeal process to Medicare Advantage Plans. This can be found on the Medicare website here. If this grievance and appeal process does not apply to conditional payments, Medicare has provided its own administrative appeal process that Medicare must follow for collection of conditional payments.

From reviewing these decisions, it is unclear what administrative appeal process was afforded to Phoenix, Grange or Progressive and whether or not the initial demands from SummaCare complied with Medicare’s regulations and guidance.

Regardless of the outcomes of these cases, the important take aways are to respond to a Medicare Advantage Plan’s request for reimbursement timely and to investigate the potential Medicare Advantage Plan as early as practical.

As these cases continue to develop, we will keep you updated. Thank you.