Humana Insurance Company vs Farmers Texas County Mutual Insurance Company and Mid-Century Insurance Company of Texas

Humana Insurance Company vs Farmers Texas County Mutual Insurance
Company and Mid-Century Insurance Company of Texas Cause No. 13-CV-611-
LY, U. S. District Court for the Western District of Texas, Austin Division (filed
September 24, 2014)

The question presented in Humana Insurance Company v. Farmers Texas County Mutual
Insurance Company and Mid-Century Insurance Company of Texas included, among
other things, whether MAOs, such as Humana, may pursue a private cause of action
under 42 U.S.C. § 1395y(b).

Humana made conditional payments for medical treatment its MAO enrollees received
due to injuries sustained in separate motor vehicle accidents. The six enrollees were, at
the time of their accidents, insured by Farmers. Humana sought reimbursement from
Farmers and filed suit when Farmers refused to reimburse Humana, contending it had a
right of recovery under the Medicare Secondary Payer Act (MSP).

On February 26, 2014, the United States Magistrate Judge issued a Report and
Recommendation recommending that the court grant the motion to dismiss Humana’s
federal claims asserting it has a private cause of action under the MSP. Humana’s
objections and Farmer’s response were filed. The United States District Court for the
Western District of Texas reviewed the entire case de novo and on September 24, 2014
published its opinion.

In its opinion, the court noted the plain language of the MSP establishes two separate
causes of action against noncompliant primary plans: (1) a federal cause of action and (2)
a private cause of action with no particular plaintiff specified.

As the Fifth Circuit had not addressed the issue presented here, the court relied on In re
Avandia Mktg., 685 F.3d 353 (3d Cir. 2012), which held that the text of § 1395y(b)(3) (A) “unambiguously provides Humana with a private cause of action.” Id. at 365. The
Third Circuit found that any private plaintiff may bring an action for damages where a
primary plan fails to appropriately reimburse a secondary payer for conditional payments
made as this provision’s broad scope placed no limitations on which entity may file suit
for reimbursement and double damages. The court found this analysis persuasive enough
to reject the magistrate judge’s recommendation to grant Farmers’ motion to dismiss
Humana’s cause of action for double damages under § 1395y(b)(3)(A).