Medicare Advantage plans have, in many areas, moved aggressively to wield the Medicare Secondary Payer “private cause of action” and obtain reimbursement for payments that they have made. Rarely have they run into a brick wall, but a recent case in the Eleventh Circuit Court of Appeals defies that trend.
The case, MSPA Claims I, LLC v. Tenet Florida Inc., arose from an auto accident involving a Medicare beneficiary who was enrolled in Medicare Advantage Plan Florida Healthcare Plus (FHCP). Following treatment at a Tenet healthcare facility, Tenet billed both the auto carrier and FHCP for the same medical treatment resulting in an overpayment to Tenet in the amount of $286. Tenet later reimbursed FHCP for the $286 overpayment about seven months later. Subsequently, FHCP assigned its Medicare Secondary Payer (MSP) recovery rights to La Ley Recovery Systems, Inc., who in turn assigned their rights to MSPA Claims I (MSPA). Litigation was initiated by MSPA in the United States District Court for the Southern District of Florida for the delayed repayment under the private cause of action of the MSP Act. The District Court dismissed the case on a motion by Tenet for failure to state a claim.
On appeal, the Eleventh Circuit agreed with MSPA that it had standing to sue in federal court as a valid assignee of FHCP. The court also determined that FCHP suffered a concrete “injury-in-fact” despite the fact that Tenet ultimately repaid FCHP in full and despite the fact that only $286 was overpaid. The case turned, however, on the question of whether Tenet was even an appropriate defendant for this type of claim.
The Eleventh Circuit focused on the plain language of MSP’s private cause of action provision which is available “in the case of a primary plan which fails to provide for primary payment (or appropriate reimbursement)” 42 U.S.C § 1395y (b) (3) (A) (emphasis added). Tenet Florida, Inc. is a healthcare provider and it is not a “primary plan” within the meaning of the Medicare Secondary Payer statute. To refresh, a primary plan is any entity that may be required or responsible to pay for a Medicare beneficiary’s medical treatment – a workers’ compensation insurer, no-fault insurer, liability insurer or group health. Ultimately, the Eleventh Circuit upheld the District Court’s dismissal, but on separate grounds related to Tenet’s status as a healthcare provider as opposed to a primary plan under the MSP. Because only primary plans may be sued under the private cause of action provision, the claim against providers like Tenet must fail.
This Florida case represents another ruling both clarifying and carving out the private cause of action rights under the MSP Act. It is the most noteworthy case yet involving a court that has refused to extend the private cause of action to non-primary plan entities. The reasoning in MSPA Claims I v. Tenet tracks closely with a prior decision from a federal court in Connecticut Aetna v. Guerrera. We wrote about Aetna v. Guerrera last year as a rare example of a Medicare Advantage plan losing (in part) in federal court.
Where does this leave us?
One of the key hallmarks of Medicare Secondary Payer compliance is that all parties to a settlement are equally responsible to ensure that Medicare is repaid. If a beneficiary is the target of a recovery action, and that beneficiary defaults, federal law allows Medicare to turn right around and sue the insurance company or defendant who paid the settlement – even if subsequent recovery by Medicare would effectuate a double payment by the defendant. The parties may not like the rules of engagement, but they are well known and fairly applied.
The Eleventh Circuit’s decision in MSPA Claims I, LLC v. Tenet Florida, Inc. potentially leads to disparate enforcement and results where Medicare Advantage is concerned. The Eleventh Circuit holding clearly indicates that “primary plans” are the only proper target of a private cause of action lawsuit in that circuit. Following this decision, liability, workers’ compensation, and no-fault insurers should take heed and exercise vigilance for aggressive tactics where Medicare Advantage plans may be involved.