Review of recent Southern District of Florida, U. S. District Court Orders in MSP Private Cause of Action cases

The U.S. District Courts in the Southern District of Florida have recently reviewed several claims that were filed on behalf of Medicare Advantage Organizations against personal injury protection (PIP)/no-fault insurers under the private cause of action (PCA) provision set forth in the Medicare Secondary Payer (MSP) Act, 42 U.S.C. Section 1395 y(b)(2)(B)(iii). Their Orders suggest a return to a more conservative interpretation of the PCA provision and will be reviewed in this article.

In order to fully understand the significance of these Court orders, an overview of the pertinent MSP provisions is needed. The PCA provision of the MSP Act states as follows:

“ There is established a private cause of action for damages ( which shall be in an amount double the amount otherwise provided) in the case of a primary plan which fails to provide for primary payment ( or appropriate reimbursement) in accordance with paragraphs (1) and (2)(A).”

Paragraph (1) outlines situations where group health plans must pay for medical items and services while paragraph (2)(A) outlines situations where payment may not be made by Medicare except as provided in subparagraph (B).

Medicare may not make payment for services “when (i) payment has been made, or can reasonably be expected to be made, with respect to the item or service as required under paragraph (1) or (ii) payment has been made or can reasonably be expected to be made under a workmen’s compensation law or plan of the United States or a State or under an automobile or liability insurance policy or plan ( including a self-insured plan) or under no fault insurance.” (Paragraph (2)-(A).

Medicare may however make a conditional payment in a claim when the above primary plan “has not or cannot reasonably be expected to make payment with respect to such item or service promptly (as determined in accordance with regulations). Any such payment by the Secretary shall be conditioned on reimbursement to the appropriate Trust Fund in accordance with the succeeding provisions of this subsection.” ( Subparagraph (B)).

Reimbursement is required from: “(ii) A primary plan, and an entity that receives payment from a primary plan, ….. if it is demonstrated that such primary plan has or had a responsibility to make payment with respect to such item or service. A primary plan’s responsibility for such payment may be demonstrated by a judgment, a payment conditioned upon the recipient’s compromise, waiver, or release (whether or not there is a determination or admission of liability) of payment for items or services included in a claim against the primary plan or the primary plan’s insured, or by other means.”

The interpretation of a “primary plan’s responsibility” for the conditional payment reimbursement has been the subject of much litigation over the years. Our April of 2015 blog discussed the MSP Recovery, LLC v Progressive Select Insurance Co. 1:15-cv-20208 case that was filed in the U.S. District Court for the Southern District of Florida. This case involved a Medicare Advantage Organization (MAO) enrollee who was injured in a car accident. Although the enrollee had a personal injury protection (PIP) policy issued by Progressive, her injury related medical expenses were paid by the MAO. MSP Recovery, LLC on behalf of the MAO, filed a private right of action claim under 42 U.S.C. section 1395y (b) (3) (A) against Progressive Select Insurance seeking double damages.

In granting Progressive’s Motion to Dismiss the claim for failure to state a cause of action, the Court pointed to MSP Recovery’s failure to allege that Progressive’s responsibility to pay had been demonstrated by any means. The Court’s April 1, 2015 Order also referenced the Glover v Liggett Grp., Inc., 459 F.3d 1304 (11th Cir. 2006) decision that interpreted Section 1395y (b) (3) (A)’s private right of action to require a prior “demonstration” of a primary plan’s responsibility to pay as a condition precedent to bringing suit. In light of the conclusory allegations noted in the MSP Recovery LLC complaint, the significance of this Order was debatable.

The following month however the U.S. District Court for the Southern District of Florida Miami Division reviewed another MSP Recovery, LLC vs Progressive Select Insurance Co 15-20616-CIV case and reached the same conclusion. This nearly identical case involved another enrollee in a MAO that was injured in a car accident. Although the MAO paid the medical expenses, it sought reimbursement for them from Progressive, presumably the enrollee’s PIP insurer. When Progressive rejected the claim, MSP Recovery, LLC, on behalf of the MAO, filed a claim under the Medicare Secondary Payer (MSP) Act for double damages. Progressive filed a Motion to Dismiss the claim.

The Court in its May 18, 2015 Order reviewed the MSP Act noting that a primary plan has a duty to reimburse a secondary-payer for conditional payments only “if it is demonstrated that such primary plan has or had responsibility to make payment…”42 U.S.C. section 1395y(b)(2)(B)(ii). It also cited the Glover, (459 F.3d 1304, 1310 (11th Cir. 2006) case finding that there is only a private cause of action under the MSP Act once liability is established by a separate adjudication or agreement. In this case, since Progressive disputed its obligation to reimburse the MAO, the Court held that there should be a primary adjudication or finding of liability demonstrating that Progressive is liable for the medical costs. In light of this, it granted Progressive’s Motion to Dismiss with leave to re-file once MSP Recovery can establish the necessary pre-requisite.

The need for a finding of liability prior to bringing an MSP private cause of action was reiterated by the U. S. District Court for the Southern District of Florida in the recent MSPA Claims , 1 LLC, v Liberty Mutual Insurance (1:15-cv-21417) case. In this case, an MAO enrollee was injured in a car accident. Her bills were initially paid by the MAO instead of by Liberty Mutual Fire Insurance Company, the PIP insurance provider. MSPA Claims 1, LLC, on behalf of the MAO, brought a private cause of action for double damages against Liberty Mutual Insurance. Although Liberty moved to dismiss the cause of action on several grounds, the July 22, 2015 Order mostly focused on the issue of whether Liberty’s responsibility to pay was adequately demonstrated in the MSPA Claims 1, LLC amended complaint.

The Court reviewed the MSP Act noting that “a primary plan, and any entity that received payment from a primary plan shall reimburse (Medicare) with respect to an item or service if it is demonstrated that such primary plan has or had a responsibility to make payment with respect to such item or service. “(42 U.S.C. section 1395y(b)(2)(B)(ii)). It also looked to the Glover decision which held that the demonstration of responsibility is a condition precedent to bringing a claim. Although Glover involved a tortfeasor, its rationale applied to contract cases as well since an insurer “should still be able to contest contractual liability without being exposed to double damages”. In the instant case, the Florida PIP statute recognized that an insurer would be able to “assert the claim was unrelated, not medically necessary or was unreasonable”. The Court also explained that its holding was not inconsistent with 42 C.F.R. section 411.22 (b)(3) which provides that a primary payer’s responsibility may be demonstrated by “other means, including a contractual obligation” , since the regulation still required a demonstration of the responsibility for payment. “Simply alleging the existence of a contractual or statutory obligation does not mean that a responsibility to pay has been demonstrated” (p 6). The Court dismissed the Plaintiff’s amended complaint with leave to refile once the Plaintiff can establish the necessary prerequisite by pursuing a subrogation or breach of contract claim in state court.

A different interpretation of the “demonstration of responsibility” language is noted in the MSP Recovery, LLC vs Allstate Insurance Company, U.S. District Court , Southern District of Florida (15-2-788-CIV) case ( June 24, 2015). In this factually similar case, the Court granted Allstate’s motion to dismiss the PCA for failure to state a cause of action under the MSP Act. Allstate, relying on the Glover case, argued that its responsibility for payment had not been demonstrated by a judgment or settlement agreement, while MSP Recovery, LLC alleged that the PIP plans responsibility to pay was based on the contractual obligation or “other means” language in the MSP statute. Although the Court granted the motion to dismiss the claim, it disagreed with Allstate’s interpretation of the Glover holding, finding it limited to a tortfeasor situation. It noted that in order for Allstate to be responsible for the enrollee’s medical bills, the bills must be reasonable, necessary and related to the automobile accident. Since MSP Recovery, LLC had not pled this in the complaint, it had not demonstrated that Defendant was responsible based on a contractual obligation. The motion to dismiss was granted with leave to replead.


The Southern District of Florida U.S. District Courts appear cognizant of the need to balance the rights of a PIP/no-fault insurer to challenge a claim and the rights of Medicare Advantage Organizations to recover conditional payments in order to prevent a miscarriage of justice. Of the four recent PCA claims reviewed by the Southern District of Florida U.S. District Courts, the Courts granted all of the motions to dismiss. The majority of these cases also recognize the need for the MAO to demonstrate that the PIP / no-fault insurer is actually liable for the bills as a condition precedent to pursuing the PCA claim. This recognition may help to deter the filing of frivolous MSP PCA claims against PIP/no-fault insurers. We will keep you advised of further developments in this area.

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