Medicare Advantage Organization Recovery Rights

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In published opinion filed on March 18, 2019, the United States Court of Appeals for the 11th Circuit affirmed the district court’s dismissal of MSPA Claims 1, LLC (MSPA) for failure  to sue a “primary plan” pursuant the private cause of action provisions in the Medicare Secondary Payer Act (MSP Act).

In MSPA Claims1, LLC v. Tenet Florida, Inc. ( No.18-11816 (11th Cir. 2019) an enrollee in Florida Healthcare Plus, Inc. (FHCP), a Medicare Advantage Organization (MAO), was involved in a motor vehicle accident in 2013 and received medical treatment at St. Mary’s Medical Center, Inc. (St. Mary’s) hospital.  St. Mary’s billed the enrollee’s private insurer and FHCP for the same medical treatment and several months later St. Mary’s reimbursed FHCP for approximately $286.

FHCP thereafter assigned its MSP claims to La Ley Recovery Systems, Inc. (La Ley) who in turn assigned those claims to MSPA.  MSPA sued St. Mary’s and its parent hospital group Tenet Florida, Inc. for the delayed $286 payment.  A motion to dismiss filed by defendants in district court was granted and MSPA then appealed to the 11th Circuit.

On appeal, after an analysis of whether MSPA had standing to bring the action, which the Court found it did, and whether there was an injury-in-fact, which the Court determined there was due to the delay alone, the Court dismissed the suit based upon the limited language in the MSP private cause of action provisions.  The Court made a distinction between the government’s cause of action under the MSP Act and the rights of other private parties like MAOs to bring suit under the private cause of action provision of the Act.

The Court noted that unlike Medicare, MAOs’ recovery is limited to the private cause of action provisions in the MSP, 42 U.S.C. Sec. 1395y(b)(3)(A), which only allows a recovery against a primary plan.  Because the language of the statute was clear and unambiguous, the Court would not defer to CMS regulations stating that MAOs have the same recovery rights as Medicare.

This case is significant for several reasons.  First, it limits MAOs’ recovery rights to only primary plans and no other entities such as medical providers.  Second, although the amount in controversy was small, the Court found that the delay alone was enough to establish an injury-in-fact.

For additional questions, please contact the NuQuest Settlement Consultant Team.

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