Medicare Advantage Plans Prevail Again Before a Federal Appeals Court

August 23, 2016

Double Damages and MAPs – What You Need To Know:

On August 8, 2016, the U.S. Eleventh Circuit Court of Appeals upheld an order from the lower federal district court granting summary judgment in favor of Humana[i] regarding Western Heritage Insurance Company’s (Western’s) obligation to reimburse Humana for Medicare benefits paid on behalf of its Medicare Advantage plan enrollee, Mary Reale, and its claim for double damages pursuant to the Medicare Secondary Payer Act (MSP).   In affirming the district court’s order, the Eleventh Circuit specifically agreed with and adopted the Third Circuit Court of Appeals’ reasoning and holding in In re Avandia[ii] a prior successful decision for Medicare Advantage plans

We now have two clear federal appellate court decisions that Medicare Advantage Plans (MAPs) have a right to recover under the MSP Act and are thus entitled to double damages, one from the Third Circuit, which encompasses Pennsylvania, New Jersey and Delaware and now from the Eleventh Circuit, which encompasses Alabama, Georgia and Florida.  Parties to cases arising in these jurisdictions should be especially sensitive to identifying MAPs that may have made payments in the claim and resolving any claim for recovery asserted by the MAP as part of settlement.


In resolving recovery claims by MAPs, the decision makes clear that either assuming the plaintiff or their attorney will repay the MAP from the settlement funds or agreeing to let the plaintiff’s attorney hold funds in trust until the MAP recovery amount can be paid is insufficient.  The court emphasized federal regulation:

If a beneficiary or other party fails to reimburse Medicare within 60 days of receiving a primary payment, the primary plan “must reimburse Medicare even though it has already reimbursed the beneficiary or other party.” 42 C.F.R. § 411.24(i)(1). This regulation applies equally to an MAO. See id. § 422.108(f).

Consequently, indemnification language in a release or settlement agreement will not protect a primary plan, i.e. insurance carrier, from a recovery claim by a MAP.  While such language may allow for a subsequent claim by the carrier against the claimant, and perhaps attorney, to enforce the indemnification agreement pursuing such a claim adds to the cost and time in handling the underlying workers’ compensation or liability claim.  Accordingly, in this light, the value of addressing reimbursement to the MAP at the time of settlement becomes apparent. 

As CMS does not provide a centralized database of Medicare beneficiaries enrolled in a MAP and the name of the MAP if they are so enrolled, the claimant and the attorney, if represented, must be questioned as to whether the claimant is enrolled in a MAP or was enrolled in a MAP during the pendency of the claim.  If so, then the identity of the MAP must be provided and any recovery claim investigated. 

ECS’ services are readily available to investigate and assist in resolving any MAP recovery claim.  Referrals may be made at:


Humana Medicare Advantage plan enrollee, Mary Reale was injured at Hamptons West Condominiums (Hamptons West) in January 2009. Hamptons West was insured for liability coverage by Western. Mrs. Reale’s medical providers billed Humana.

In June 2009, Mrs. Reale and her husband sued Hamptons West. In March 2010, Humana issued Mrs. Reale an “Organization Determination” for $19,155.41 to be reimbursed pursuant to 42 U.S.C. § 1395y(b)(2). In April 2010, the Reales reached settlement with Hamptons West and Western for $115,000. The Reales represented in the settlement agreement that there existed no Medicare lien, and agreed to indemnify Hamptons West and Western against any Medicare or other subrogation lien.

No later than May 2010, Hamptons West and Western became aware of Humana Advantage plan lien and agreed to let the Reales’ attorney hold $19,155.41 in trust until the Humana amount could be confirmed and paid.  Mrs. Reale did not avail herself of her administrative rights to dispute the amount claimed by Humana.

In June 2010, the Reales sued Humana in state court to determine the amount owed.  A Florida state court judge found $3,685.03 due and owing to Humana, not $19,155.41.  Humana appealed.

While the case was pending in Florida state court, in 2011, Humana sued Western for reimbursement since the Reales never released the funds from their attorney’s trust account.  Humana claimed double damages under 42 U.S.C. §1395y(b)(3)(A), requested declaratory relief under MSP statute and regulations, and advanced claims for damages under several state law theories, including unjust enrichment and contract implied by law. Western moved to dismiss all Humana’s claims.  The court dismissed the state claims, but found Humana adequately pled claims for double damages and declaratory relief. In December 2014, Humana moved for summary judgment.

In March 2015, the Court granted summary judgment in favor of Humana finding the MSP private cause of action is available to Medicare Advantage Organizations (MAOs), commonly called Medicare Advantage Plans (MAPs), and that Humana is entitled to double damages in the amount of $38,310.82. Western timely appealed.

In December 2015, the Florida State court ruling for $3,685.03 was reversed for lack of jurisdiction.  The Federal Statue preempts state law and the judge did not have jurisdiction to determine the issue.

This brings us to August 8, 2016 when the 11th Circuit Court of Appeals upheld the order from the district court granting summary judgment in favor of Humana and the award of $38,310.82 for double damages.


The Eleventh Circuit found Humana’s claims comported with CMS regulations, which provide that a MAP will exercise the same rights to recover from a primary plan, entity, or individual that the Secretary exercises under the MSP regulations[iii].

The majority noted CMS regulations clearly identify two causes of action available to the Secretary: one against a primary payer and another against any entity that receives primary payment. Based on these available causes of action, the Court found an MAP may sue a primary plan or a beneficiary under the MSP as the statutory text clearly indicates MAPs are included within the purview of parties who may bring a private cause of action.

MAP plaintiffs under the MSP must suffer actual harm to commence a suit using the MSP private cause of action. Western had actual and constructive knowledge of Humana’s Medicare payments, and the regulations clearly state if the beneficiary or other party fails to reimburse Medicare within 60 days of receiving primary payment, then the primary plan must reimburse Medicare even though it may have already reimbursed the beneficiary or other party[iv]. Citing specific regulatory provisions, the Court ruled this provision applies equally to MAPs[v].

Applying that reasoning, the Court found Western failed to provide Humana “appropriate reimbursement.” Further, the Court found that a beneficiary’s procurement costs do not operate to offset a MAP’s recovery if the MAO must litigate to secure payment[vi]. The Court noted this was the third lawsuit Humana had to file in order to enforce its rights, and could recover the full $19,155.41 claimed. Finally, the Court found double damages were required by statute as the private cause of action provisions use the word “shall” to describe the amount of damages to be awarded.  Therefore, Western was ordered to pay Humana $38,310.82.

At this time it is uncertain whether Western Heritage will seek to appeal the decision to the U.S. Supreme Court.

A copy of the decision may be found here.

[i] Humana Medical Plan, Inc. v. Western Heritage Insurance Company,                       F. 11th                    (11th Cir. 2016)

[ii] In re Avendia Mktg., Sales Practices & Prods. Liab. Litig., 685 F. 3rd 353, (3rd Cir. 2012)

[iii] Subparts B through D of 42 C.F.R. §411

[iv] 42 C.F.R. §411.24(i)(1)

[v] 42 C.F.R. §422.108(f).

[vi] 42 C.F.R. 411.37(e) and 422.108(f)