Federal law protects the funding used by Medicare to cover healthcare costs of injured beneficiaries. When another entity - a primary insurance or healthcare plan (the primary payor, or PP) - has a legal obligation to cover those costs, the Medicare Secondary Payor Act (MSP) authorizes Medicare to obtain reimbursement from that PP entity of any payments made by Medicare on behalf of Medicare members before that payor's involvement. Further, the MSP specifically allows Medicare to seek double its damages via a "private right of action" against a primary payor if it is compelled to sue for recovery of its conditional payments.
In recent years, several Medicare Advantage Plans (MAPs) have attempted to invoke the MSP private right of action to obtain double damages from primary plans that allegedly owe them reimbursement funds. Defendants, usually the PP entity and litigants in the underlying injury case, have pushed back, claiming that MAPs are not Medicare and that they don't have a comparable MSP right to a private right of action nor the right to double damages. The resulting confusion in the nation's Circuit Courts is causing heartburn for every MSP participant, as they try to sort out where their obligations and opportunities lie.
The private cause of action and its double damages rule is vested in Medicare via the MSP statute, and it's used to discourage PPs from trying to avoid reimbursing the federal agency for payments it made on its member's behalf. Simply by making the reimbursement payment to the federal agency, the payor eliminates the risk of having to pay it twice (as well as the added costs of litigating the issue).
Confusion was wrought, however, when the MAPs organizations invoked the MSP private right of action and its companion double damages claim, while defendants declared them to be ineligible to do so because they are not Medicare. The challenges instigated a series of federal court fights to determine when, if ever, and under what circumstances a MAPs agency had the standing to invoke the MSP private right of action rule. So far, three federal circuit courts have weighed in on the issue, and other courts in both federal and state jurisdictions are watching to see how the concern ultimately rolls out.
At least in the 2nd, 3rd, and 11th Circuit Court districts, MAP entities can sue primary plans via the MSP rule for recovery of conditional payments and claim double damages in the process. In the most recent opinion, issued March 13, 2018, by the 2ndU.S. District Court of Connecticut in Aetna Life Ins. Co v. Guerrera, the Court concurred with the 3rd and 11th District Courts, each of which had previously held that a MAP has the same private right of action for recovery of conditional payments as Medicare proper, and therefore, it also can claim double damages under the law. The court rightfully distinguishes the main differencebetween Medicare, which is a representative of the United States, and MAPs, which are private companies. It then points to Title 42 of the Code of Federal Regulations § 422.108(f), which provides that a " ... [MAP] will exercise the same rights to recover from a primary plan, entity, or individual that the (Medicare) Secretary exercises under the MSP regulations . . . .” The Court also cited the findings of both the 3rd Circuit (Pennsylvania, In re Avandia Marketing, Sales Practices, &Products Liability Litigation (In re Avandia), 685 F.3d 353 (3d Cir. 2012)) and the 11th Circuit (Florida,Humana Med. Plan, Inc. v. W. Heritage Ins. Co., 832 F.3d 1229, 1238 (11th Cir. 2016), and affirmed that it, too, would follow their reasoning allowing the MAP to pursue the private cause of action and its double damages opportunity.
Even with these concurring decisions, the dissent in the Western Heritage case still gives one pause before assuming that the MAP's private cause of action right is now firmly established. In that dissenting opinion, Judge Gerald Tjoflatargued that the distinctions between a government agency and a private insurer should preclude the use of federal rules to protect the interests of private entities. Among other concerns, he argues:
There may yet be other justices out there that find these arguments compelling.
Further, cases coming out of the 5th and 6th Circuits continue to add depth to the 'MSP private cause of action' discussion:
It appears likely that both individual and corporate plaintiffs will continue to bring federal cases to test the scope of the MSP private right of action rule. By doing so, they are giving the court system more opportunities to clarify just when, when and by and against whom those claims can be made.
Until the issue is settled on all elements, best practices remain: