Author Archives: Settlement Solutions

2nd Circuit Dismisses Pro Se’s PCA Claim for Lack of Allegation of Injury-in-Fact

By Rafael Gonzalez, Esq.
Vice President, Strategic Solutions

LawOn October 30, 2015, the United States Court of Appeals for the Second Circuit published its opinion on Plante v. Dake, McDermott, Stewart’s Shop Corp concluding that although the District Court below erred in ruling that it lacked federal-question jurisdiction over Plante’s MSP claims, since it is a federal statute which confers the Court with federal-question jurisdiction, the District Court nonetheless properly dismissed Plante’s complaint for lack of subject-matter jurisdiction because Plante lacked Article III standing to bring the MSP claims.

Plaintiff-appellant Joan Patricia Plante (Plante), proceeding pro se, appeals the United States District Court for the Northern District of New York’s judgment dismissing her complaint against Gary Dake, President of the Stewart’s Shops Corp., Joanne McDermott, Consumer Affairs Director of the Stewart’s Shops Corp., and the Stewart’s Shops Corp. (defendants), arising out of an alleged incident where Plante sustained injuries on Stewart’s Shops Corp. premises. The District Court dismissed Plante’s complaint for lack of subject-matter jurisdiction and entered judgment August 4, 2014. On appeal, Plante contends that the Court erred by dismissing her case for lack of subject-matter jurisdiction. She argues that one of her claims–under the Medicare Secondary Payer Act–confers federal-question jurisdiction on the Court.

Plante commenced an action against defendants on January 30, 2014, alleging that she sustained injuries as a result of defendants’ negligence after she slipped, tripped, and fell on the morning of January 31, 2011, at a Stewart’s Shop in Gansevoort, New York, on asphalt affected by a buildup of ice. Plante’s First Amended Complaint (“FAC”), filed February 26, 2014, asserted six causes of action sounding in state-law theories of common-law negligence and violations of New York’s Premises Liability Law. She also asserted a claim under the private cause of action provided in the Medicare Secondary Payer Act (MSP), 42 U.S.C. § 1395y(b)(3)(A), which, according to Plante, required defendants to reimburse Medicare for past and future medical bills resulting from the slip and fall.

Defendants moved to dismiss the FAC on March 3, 2014, under Rules 12(b)(1) and 12(b)(6), arguing that the District Court lacked subject-matter jurisdiction and that Plante failed to state a claim upon which relief could be granted. Plante filed an opposition on March 28, 2014, and the same day filed a second amended complaint without leave of court. After defendants objected to the second amended complaint in their reply brief, Plante sought leave of court on April 9, 2014, to file a third amended complaint.

On August 1, 2014, the District Court dismissed Plante’s FAC, ruling that it lacked subject-matter jurisdiction over the case. Specifically, the Court ruled that it lacked federal-question jurisdiction because Plante “had not fulfilled the condition precedent for bringing a MSP claim,” i.e., demonstrating that defendants were indeed responsible for payments to Medicare for Plante’s medical costs. The Court declined to exercise supplemental jurisdiction over Plante’s state-law claims, and denied Plante’s request for leave to amend, finding that amendment would be futile. This appeal followed.

The Circuit Court concludes that the District Court erred in dismissing Plante’s FAC for lack of federal-question jurisdiction because Plante asserts claims under the MSP, which is a federal statute. However, even if an MSP claim can confer federal-question jurisdiction, the Circuit Court finds that the District Court lacked subject-matter jurisdiction because Plante did not have Article III standing to bring the claim.

The Circuit Court indicates that “Article III standing consists of three ‘irreducible’ elements: (1) injury-in-fact, which is a ‘concrete and particularized’ harm to a ‘legally protected interest’; (2) causation in the form of a ‘fairly traceable’ connection between the asserted injury-in-fact and the alleged actions of the defendant; and (3) redressability, or a non-speculative likelihood that the injury can be remedied by the requested relief.” Thus, a plaintiff must have suffered an injury-in-fact in order to have standing under Article III of the Constitution.

In the present case, Plante lacks Article III standing to bring the MSP claim because the FAC does not allege that Plante suffered an injury-in-fact. The FAC alleges that Medicare alone has suffered an injury as a result of the defendants’ purported failure to pay Medicare for Plante’s medical bills resulting from the slip and fall. The injury to Plante, however, is predicated on tort liability alleged in the very same complaint. Plante’s injuries from the trip and fall cannot be traced back to defendants’ alleged nonpayment to Medicare, and therefore do not support standing to bring an MSP claim.

Given the allegations set forth in the FAC, the Circuit Court concludes in this case that Plante lacks standing to bring the MSP claims. Because Plante lacks Article III standing to bring the MSP claims, the Court does not consider any question regarding statutory standing to bring a private cause of action against a tortfeasor under the MSP.

Having considered Plante’s remaining arguments, the Court finds them to be without merit, and therefore affirms the August 4, 2014, judgment of the District Court.

As we have all seen from the various decisions rendered by the USDC for the Southern District of Florida throughout 2015, appropriately pleading a Medicare Secondary Payer private cause of action is not easy. As this decision by the USDC for the Northern District of New York and the USCA for the Second Circuit make clear, pleading such matters must include not only allegations that the primary payer is responsible for payment or reimbursement of the outstanding medical bills related to the claim by way of settlement, agreement, judgment, award, payment, or other means, but must also include a recitation of how the non-payment of such bills by the primary payer affects or injures the claiming party or parties. Although it would seem innate that non-payment of such medical bills by the primary or responsible payer would mean that the plaintiff claiming such payment or reimbursement would then have to make such payment or reimbursement out of his/her settlement proceeds or damages awarded, the Court here makes it clear that such injury-in-fact must be plead with specificity, clarity, and detail in order to survive a motion to dismiss. Count on Helios Settlement Solutions to keep you updated on the evolution of MSP compliance, and especially the ever changing landscape of private causes of action.

Florida Federal Court Again Allows Assignee to Bring MSP PCA, and Again Dismisses it Due to Lack of Facts Establishing Insurer’s Responsibility to Pay Medical Expenses

Rafael Gonzalez, Esq.
Vice President, Strategic Solutions

073115_1834_FloridaFede1.jpgOn October 6, 2015, the United States District Court for the Southern District of Florida published its opinion on MSP Recovery, LLC v. Allstate Insurance Company, finding that Plaintiff has again failed to adequately allege the minimal facts to support its claims. Thus, the Court concludes that Defendant’s motion to dismiss is granted with leave for Plaintiff to replead some of its counts. The Court warns Plaintiff that this will be its last chance to plead its case. If Plaintiff fails to adequately allege its claims in a Third Amended Complaint, the Court will dismiss with prejudice.

This is yet another one of those cases where Florida Healthcare Plus (FHCP), a health maintenance organization (HMO) and a participant provider in the Medicare Advantage Plan (MAP) program, provided Medicare Advantage coverage to Enrollee. As in the other similar 5 cases published by this same court in 2015, FHCP assigned all of its rights with respect to claims for the recovery of amounts owed to FHCP to La Ley Recovery. La Ley Recovery, in turn, assigned all the recovery and reimbursement rights it received from FHCP to MSP Recovery LLC (Plaintiff).

On June 19, 2014, Enrollee was a passenger in a car which was struck from behind. Enrollee suffered bodily injury, received medical care for such injuries and incurred medical bills. Florida FHCP, as Enrollee’s MAP, paid Enrollee’s medical expenses. Allstate (Defendant) was Enrollee’s PIP and no-fault automobile insurer and, therefore, should have been the primary payer for the medical expenses arising from the automobile accident. However, FHCP and Plaintiff were unaware Allstate was Enrollee’s PIP and no-fault auto insurer. After learning about Defendant, Plaintiff sent several notices demanding reimbursement for the medical services paid for by FHCP, totaling $2,869.00, which Defendant refused to pay.

As a result of such denial, Plaintiff filed a Complaint alleging among other claims, a private cause of action under the MSPA for double damages. Defendant subsequently filed a Motion to Dismiss Plaintiff’s Complaint, which the Court granted, giving Plaintiff leave to amend its claim under the MSPA. The Court specifically noted that, while a contractual obligation may be sufficient to demonstrate Defendant’s responsibility for payment of the medical bills, Plaintiff had failed to adequately allege Defendant’s contractual responsibility because Plaintiff had not alleged the medical bills for which it sought repayment were reasonable, necessary, and related to the automobile accident. Plaintiff therefore filed its Second Amended Complaint.

The Court indicates that when a complaint is challenged under Rule 12(b)(6), a court will presume that all well-pleaded allegations are true and view the pleadings in the light most favorable to the plaintiff. However, once a court “identifies pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth,” it must determine whether the well-pled facts “state a claim to relief that is plausible on its face.” A complaint can only survive a 12(b)(6) motion to dismiss if it contains factual allegations that are “enough to raise a right to relief above the speculative level, on the assumption that all the factual allegations in the complaint are true.” However, a well-pled complaint survives a motion to dismiss “even if it strikes a savvy judge that actual proof of these facts is improbable, and “that a recovery is very remote and unlikely.”

Defendant again moved to dismiss Plaintiff’s MSPA claim on several grounds. The first, that Plaintiff must first obtain a judgment or settlement agreement to demonstrate Defendant’s responsibility for payment, was previously raised by Defendant and rejected by this Court. Despite the recent decisions by Judges King and Scola, which Defendant brought to the Court’s attention in two Notices of Supplemental Authority, the Court sees no reason to revisit these arguments and its prior holding, which rejected this argument.

Defendant next argues that Plaintiff has failed to adequately plead its MSPA claim because it has not pled any facts to establish Defendant’s responsibility to pay. Defendant argues that Plaintiff does nothing more than make conclusory statements that the medical bills it paid were reasonable, necessary, and related to the auto accident. Defendant argues that Plaintiff has not pled any underlying facts, no allegations regarding what type of injuries Plaintiff suffered in the accident, what injuries were treated, what services the medical bills paid by FHCP were for, the amounts of the individual bills that were paid, or whether the amounts of the bills were reasonable. Defendant urges that while Plaintiff alleges that Enrollee’s medical providers determined that the injuries sustained by Enrollee were directly the result of the use of the motor vehicle, it is not clear that the medical services actually paid for by FHCP were for these same injuries. Therefore Defendant argues Plaintiff’s conclusory allegations, coupled with its allegation that Defendant paid some medical bills for Enrollee that resulted from the auto accident, are simply a formulaic recitation of the elements of its claim and are, thus, insufficient to meet the pleading standard. Thus, Defendant argues Plaintiff has not adequately “demonstrated” Defendant’s responsibility to pay the bills based on its contractual obligations.

The Court agrees and grants Defendant’s motion to dismiss the MSPA claim with leave to replead for Plaintiff to allege facts supporting its conclusion that the payments made to Enrollee’s medical providers were reasonable, necessary, and related to the auto accident.

Regarding Plaintiff’s breach of contract claim, the Court indicates that Plaintiff must also establish that the assignor was a third-party beneficiary of the contract that Plaintiff now seeks to enforce. While Plaintiff has alleged that Enrollee’s medical providers are intended third-party beneficiaries of the no-fault insurance contract, the Court finds Plaintiff has alleged no facts to support this conclusory allegation. Since Plaintiff has not provided the no-fault policy, quoted its language, or otherwise pled the content of the policy that would establish that the medical providers were intended third-party beneficiaries of the policy, the Court concludes Plaintiff has not adequately pled a breach of contract claim based on the assignment of rights from the medical providers to FHCP because Plaintiff has not adequately pled that the providers were third-party beneficiaries of Enrollee’s no-fault insurance contract with Defendant. Accordingly, the Court dismisses this claim with leave to replead.

Defendant also seeks to dismiss Plaintiff’s allegations regarding “bad faith” and Plaintiff’s request for relief that seeks a determination that Defendant acted in bad faith. Despite these allegations and the request for a finding that Defendant acted in bad faith, Plaintiff did not actually alleged a claim for bad faith. Defendant argues dismissal would be appropriate because the allegations are immaterial and impertinent given the absence of a bad faith claim. The Court agrees. The Court indicates that because Plaintiff has not pled a claim for bad faith and the allegations are irrelevant to the claims pled by Plaintiff, it dismisses the bad faith allegations with prejudice, as is Plaintiff’s request for relief asking for a declaration that Defendant acted in bad faith.

As we have been doing throughout 2015, Helios Settlement Solutions will continue to report on the evolution of this issue and the case law deciding whether MAP assignees have the authority to bring an MSP private cause of action for double damages when primary payers have denied payment or reimbursement of medical bills paid by the MAP and what evidence and facts are needed in order to show and plead such primary payers’ responsibility. Stay tuned!

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Florida Federal District Court Again Allows Assignees to Bring MSP PCA and Again Dismisses Case as No Evidence of Responsibility Shown

Rafael Gonzalez, Esq.
Vice President, Strategic Solutions

Stethoscope and GavelOn September 22, 2015, the United States District Court for the Southern District of Florida published its opinion on MSP Recovery, LLC v. Allstate Insurance Company, concluding that before a private cause of action exists under the Medicare Secondary Payer Act, a plaintiff must demonstrate the defendant’s responsibility to pay a patient’s medical costs. Because MSP Recovery put the cart before the horse and sued Allstate under the Act before establishing Allstate’s obligation to reimburse certain medical expenses, the Court grants Allstate’s Motion to Dismiss as it relates to MSP Recovery’s claims.

Medicare Enrollee is covered by Florida Healthcare Plus, a Medicare Advantage Plan (MAP). In January 2013, Medicare Enrollee was in a car accident. As a result of the accident, the Enrollee suffered bodily injuries and incurred expenses for medical care. Florida Healthcare Plus made “prompt conditional payments to Enrollee’s healthcare providers.”

As has been the case with several similar cases recently filed and decided by the Southern District Court of Florida, sometime thereafter Florida Healthcare Plus assigned its Medicare Secondary Payer right of reimbursement to La Ley Recovery Systems, Inc., which also owns MSP Recovery, LLC. All three parties are mentioned as the plaintiffs in this matter.

After making the medical payments, “Plaintiff learned of the existence of Enrollee’s no fault coverage” from Allstate. MSP Recovery alleged in its Second Amended Complaint, “Allstate issued a policy of insurance to Enrollee, which provided personal injury protection benefits, medical, and extended medical expense coverage,” and was in full force and effect when the accident occurred. The Medicare Advantage Plan, administered by FHP and under which Enrollee’s medical expenses were paid, “was the secondary plan.”

MSP Recovery sued Allstate in Florida state court for Allstate’s alleged refusal to reimburse the medical payments made on Enrollee’s behalf. Allstate removed to this Court. Now, in its Second Amended Complaint, MSP Recovery raises the following claims: Count I: Declaratory Judgment; Count II: Private Cause of Action for Double Damages; Count III: Accounting; Count IV: Breach of Contract; and Count V: Equitable Subrogation. MSP Recovery’s first two causes of action rely on the Medicare Secondary Payer Act; its final three are state law claims.

Allstate argues that MSP Recovery lacks standing to bring this lawsuit and, further, each of its claims fails as a matter of law. The Court finds that MSP Recovery’s allegations–accepted as true for the purpose of a motion to dismiss–establish its standing to bring this lawsuit. However, the Court also finds that until MSP Recovery demonstrates Allstate’s liability for the Enrollee’s medical expenses, MSP Recovery cannot bring claims under the Medicare Secondary Payer Act. And without its claims under the Act, MSP Recovery’s remaining claims must be remanded to state court.

MSP Recovery’s standing arises from a series of assignments. First, FHP, a Health Maintenance Organization and Medicare participant, assigned its claims to recover amounts owed to it to La Ley Recovery Systems, Inc. After taking assignment from FHP, La Ley Recovery Systems, Inc. assigned its rights to MSP Recovery. Though Allstate argues there “are simply no non-conclusory allegations whatsoever to support the existence of any assignment of rights related to the claimed amounts for services provided to the patient at issue,” at this stage, the Court must accept MSP Recovery’s allegations concerning the assignments as true. See MSP Recovery, LLC v. Progressive Select Ins. Co., Case No. 15-20213-UNGARO (S.D. Fla. Apr. 3, 2015) (finding Plaintiff’s allegations regarding standing sufficient in a nearly identical case involving the same parties and assignments); MSP Recovery, LLC v. Progressive Select Ins. Co., Case No. 15-20208-UNGARO (S.D. Fla. Apr. 1, 2015) (citing Edwards v. Prime, Inc., 602 F.3d 1276, 1291 (11th Cir. 2010)). Having found that MSP Recovery adequately alleged its standing, the Court must consider whether MSP Recovery’s claims may proceed.

The Medicare Secondary Payer Act creates “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).” Glover v. Ligett Group, Inc., 459 F.3d 1304, 1308 (11th Cir. 2006) (citing 42 U.S.C. § 1395y(b)(3)) (emphasis added). The Eleventh Circuit recognizes that there is a private right of action under the Act but only once liability is established by a separate adjudication or agreement. Glover, 459 F.3d at 1310; see also MSP Recovery, LLC v. Progressive Select Ins. Co., Case No. 15-20616-MORENO (S.D. Fla. May 18, 2015); MSP Recovery, LLC v. Progressive Select Ins. Co., Case No. 15-20213-UNGARO (S.D. Fla. Apr. 3, 2015); MSP Recovery, LLC v. Progressive Select Ins. Co., Case No. 15-20208-UNGARO (S.D. Fla. Apr. 1, 2015).

The crux of MSP Recovery’s claims is that Allstate is liable for medical payments made on Enrollee’s behalf. But Allstate’s liability has not yet been established. Though MSP Recovery states that “as the primary insurer in this case, Allstate, being the no fault carrier pursuant to its insurance contract with Enrollee is responsible for payment of Enrollee’s claims resulting from the accident,”, this allegation is a legal conclusion that the Court need not accept as true when considering a motion to dismiss. Until MSP Recovery demonstrates–by judgment or other agreement–Allstate’s obligation to pay Enrollee’s medical expenses, MSP Recovery cannot proceed with claims under the Medicare Secondary Payer Act. Thus, MSP Recovery’s Count I for declaratory relief and Count II for double damages, must be dismissed.

Having found that MSP Recovery’s claims under the Medicare Secondary Payer Act fail, its only remaining claims are Count III: Accounting; Count IV: Breach of Contract; and Count V: Equitable Subrogation. As MSP Recovery notes, the Court has only “supplemental jurisdiction over” those claims. Independent of MSP Recovery’s federal claims, the Court does not have jurisdiction over its final three claims. Because the Court has disposed of MSP Recovery’s federal claims, it declines to retain jurisdiction over its remaining claims and remands them to state court, where they originated.

As in previous similar cases, although the Court once again finds that MSP Recovery has not, by way of judgment or other agreement, established Allstate’s liability for the Enrollee’s medical expenses, as prior to allowing MSP Recovery to pursue claims against Allstate arising from the Medicare Secondary Payer Act, there should be a primary showing of Allstate’s liability to pay the Enrollee’s medical costs, the Court settles the issue as to whether MSP Recovery has standing to bring this lawsuit. By finding that entities which have been assigned such reimbursement rights such as La Ley Recovery Systems, Inc., or MSP Recovery, LLC, the Court may have officially given birth to a cottage industry which will focus on assisting MAPs and other secondary payers chase after reimbursement from primary payers. So, primary payers beware! In addition to Medicare, the Medicare beneficiary, medical providers, and Medicare advantage plans, add entities assigned such reimbursement rights to the growing long list of folks who may be chasing after primary payers for double damages under the Medicare Secondary Payer private cause of action.

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Tennessee Federal District Court Allows MAP PCA Against No-Fault Insurer

By Rafael Gonzalez, Esq.
Vice President, Stragetic Solutions

073115_1834_FloridaFede1.jpgOn September 1, 2015, the United States District Court for the Eastern District of Tennessee published its opinion on Cariten Health Plan, Inc. v. Mid-Century Insurance Company, concluding that since MAP has pleaded sufficient facts to support an inference that PIP carrier violated §1395y(b)(2)(A) when it failed to pay Enrollee’s medical expenses as a primary payer under the Medicare Statute and thereafter refused to reimburse MAP for payment of those expenses, because §1395y(b)(3)(A) provides for a federal right of action in this instance, the MAP has stated a plausible claim to relief, thereby allowing MAP’s claim to move forward.

Plaintiff, Cariten Health Plan, Inc., is a Medicare Advantage Organization (MAO) that provides benefits to Medicare beneficiaries who elect to enroll in privately-administered Medicare Advantage Plans (MAP). Defendant, Mid-Century Insurance Company, is a no-fault insurance provider that offers Personal Injury Protection (PIP), Medical Payments (Med Pay), and Guaranteed Benefits Coverage (GBC) to individuals in accordance with its insurance policies.

Plaintiff alleges that Enrollee 1 received Medicare benefits through a MAP administered by plaintiff and held a no-fault insurance policy with defendant. Plaintiff alleges that on or about October 17, 2012, Enrollee 1 was injured in an automobile accident in Greeneville, Tennessee, and received medical treatment for those injures. Enrollee 1 was charged at least $55,378.70 by her medical service providers as a result of this medical treatment. Plaintiff discharged the medical providers’ bills with a payment of benefits in the amount of $15,799.43.

Plaintiff further alleges that after making these medical payments, plaintiff learned that defendant held a no-fault insurance policy with defendant, which was effective at the time of the accident. Plaintiff notified defendant on multiple occasions of plaintiff’s payment of the medical charges for Enrollee 1’s injuries and requested reimbursement from defendant. Defendant responded to these requests with a form letter from the Farmers National Document Center in Oklahoma City, Oklahoma, stating that its no-fault coverage of Enrollee 1 was first party coverage, and therefore, plaintiff had no subrogation rights.

Plaintiff initiated this action on October 8, 2014, seeking a declaration that the no-fault insurance coverage issued by defendant is primary to Medicare benefits advanced by MAOs such as plaintiff, and that when an MAO such as plaintiff has advanced benefits in which its payments are secondary to defendant’s payment obligations, defendant is obligated to make appropriate reimbursement to the MAO. Plaintiff also claims that it is entitled to double damages from defendant for the payment of $15,799.43 it made to discharge Enrollee 1’s medical bills, pursuant to the private right of action provided by 42 U.S.C. §1395y(b)(3)(A), or in the alternative, recovery of the entirety of the $55,378.70 in charges submitted by Enrollee 1’s medical providers, pursuant to a federal common law right of action. Additionally, plaintiff brings a claim for restitution or unjust enrichment pursuant to Tennessee law. Finally, plaintiff seeks an equitable accounting of the amounts that defendant owes plaintiff for medical claims that plaintiff paid, but which defendant’s no-fault insurance coverage made defendant a primary payer. Defendant’s motion to dismiss followed.

The Court here indicates that although most Medicare-eligible individuals receive Medicare benefits directly from the government, individuals can elect instead to receive their benefits through private insurance companies that contract with the government to provide Medicare Advantage plans. In re Avandia Mktg., Sales Practices & Prods. Liab. Litig., 685 F.3d 353, 355 (3d Cir. 2012) (citing 42 U.S.C. §1395w-21(a)(1)). These plans are governed by Part C of the Medicare Statute. 42 U.S.C. §§1395-1395lll (Medicare Statute); 42 U.S.C. §§1395w-21-1395w-28 (Part C).

The Court also points out that Plaintiff, however, is not always required to provide primary payment for covered medical services. In 1980, Congress enacted the Medicare Secondary Payer Act as part of an effort to counteract escalating healthcare costs. Mich. Spine & Brain Surgeons, PLLC v. State Farm Mut. Auto. Ins. Co., 758 F.3d 787, 789-90 (6th Cir. 2014). Under the Medicare Secondary Payer Act, in most situations where an individual is covered by both Medicare and another payer, Medicare serves as the secondary payer rather than the primary payer. Put differently, when payment is available from a primary plan, the primary plan and not Medicare is responsible for paying the costs of the individual’s medical treatment.

The Court correctly points out that Congress incorporated the principles of this secondary payer scheme into privately-administered MA plans when it enacted Part C in 1997. 42 U.S.C. §1395w-22(a)(4); Balanced Budget Act of 1997, Pub. L. No. 105-33, §§1851-1859, 111 Stat. 251, 276-327. As set forth in the organization as secondary payer provision of Part C: Notwithstanding any other provision of law, a MAO may in the case of the provision of items and services to an individual under a MA plan under circumstances in which payment under this subchapter is made secondary pursuant to section 1395y(b)(2) of this title charge or authorize the provider of such services to charge, in accordance with the charges allowed under a law, plan, or policy described in such section– (A) the insurance carrier, employer, or other entity which under such law, plan, or policy is to pay for the provision of such services, or (B) such individual to the extent that the individual has been paid under such law, plan, or policy for such services. 42 U.S.C. §1395w-22(a)(4).

Section 1395y(b)(3)(A) provides: 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) governs the requirements of group health plans in providing medical coverage for individuals who also are eligible for Medicare, 42 U.S.C. § 1395y(b)(1), and paragraph (2)(A) establishes the Medicare as secondary payer scheme that Congress cross-referenced in the MAO secondary payer provision, §1395y(b)(2)(A); §1395w-22(a)(4).

The Sixth Circuit has interpreted the private cause of action provision of §1395y(b)(3)(A) to permit medical service providers to recover payment for medical services from a group health plan designated as a primary payer under §1395y(b), when the group health plan denied payment on behalf of an enrollee because the enrollee was eligible for Medicare. Bio-Medical Applications of Tenn., Inc. v. Cent. States Southeast & Southwest Areas Health & Welfare Fund, 656 F.3d 277, 294 (6th Cir. 2011). In so holding, the panel in Bio-Med. interpreted the phrase “in accordance with paragraphs (1) and (2)(A)” contained in §1395y(b)(3)(A) to mean that a plaintiff seeking to recover against a group health plan must show that the group health plan violated the provisions of both §1395y(b)(1) and §1395y(b)(2)(A).

The Sixth Circuit has since found §1395y(b)(3)(A) to be ambiguous with respect to the statutory obligations of primary payers that are not group health plans. Mich. Spine, 758 F.3d at 792. Therefore, the court in Michigan Spine deferred to the interpretation of the statute contained in regulations promulgated by the Centers for Medicare and Medicaid Services (CMS). Chevron U.S.A. Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 842-45, 104 S. Ct. 2778, 81 L. Ed. 2d 694 (1985) (explaining that in the face of an ambiguous statute, federal courts must afford deference to and seek guidance from agency regulations). In doing so, the court concluded that a plaintiff seeking to recover against a primary payer that is not a group health plan need only show that the primary payer failed to comply with its obligation to pay under §1395y(b)(2)(A). Thus, the court held that a medical service provider had a federal right of action to recover payment for services rendered to a person covered by an automobile insurance policy, when the automobile insurance policy made the insurance company a primary payer under §1395y(b)(2)(A).

The Sixth Circuit does not appear to have answered the question presented by this case: whether §1395y(b)(3)(A) gives an MAO, rather than a medical service provider, a right of action to recover from a primary payer when the MAO has made medical payments that should have been made by the primary payer. In Avandia, the Third Circuit answered this question in the affirmative. 685 F.3d at 367. Undertaking an extensive review of the statutory text, statutory framework, legislative history, and public policy, the court concluded that §1395y(b)(3)(A) unambiguously provides a federal right of action for an MAO to recover medical payments from a primary payer. Additionally, the court noted that CMS regulations also interpret the Medicare Statute to provide such a federal right of action. Therefore, court explained that even if §1395y(b)(3)(A) were ambiguous, the court would defer to the interpretation of CMS and find that MAOs have a private right of action under §1395y(b)(3)(A) to recover medical payments from primary payers.

The Court here finds the Third Circuit’s analysis in Avandia to be persuasive. Thus, the Court adopts the reasoning and holding of Avandia, also citing to Humana Med. Plan, Inc. v. W. Heritage Ins. Co., 2015 U.S. Dist. LEXIS 31875, at *13-14, 2015 WL 1191208, at *5 (S.D. Fla. Mar. 16, 2015) (adopting the reasoning and holding of Avandia); Collins v. Wellcare Healthcare Plans, Inc., 73 F. Supp. 3d 653, 665 (E.D. La. 2014) (same); Humana Ins. Co. v. Farmers Tex. Cnty. Mut. Ins. Co., 2014 U.S. Dist. LEXIS 166654, at *4-5, 2014 WL 8388619, at *2 (W.D. Tex. Sept. 24, 2014) (same). Accordingly, the Court concludes that plaintiff has a federal right of action in this case pursuant to §1395y(b)(3)(A).

The Court therefore concludes that viewing the allegations in the light most favorable to plaintiff, the Court finds that plaintiff has pleaded sufficient facts to support an inference that defendant violated §1395y(b)(2)(A) when it failed to pay Enrollee 1’s medical expenses as a primary payer under the Medicare Statute and thereafter refused to reimburse plaintiff for plaintiff’s payment of those expenses. Because §1395y(b)(3)(A) provides plaintiff with a federal right of action in this instance, and plaintiff has stated a plausible claim to relief, the Court allows the claim to move forward to trial.

While it was expected the Tennessee District Court would look at and rely upon decisions previously made by the Sixth Circuit Court of Appeals to decide this matter, what is surprising is the fact that the decision does not mention any of the recent decisions made by the Southern District of Florida Court finding that unless there is evidence of primary payer responsibility, such private causes of action under the Medicare Secondary Payer will not be allowed.

On April 2, 2015, the United States District Court for the Southern District of Florida published its opinion on MSP Recovery, LLC v. Progressive Select Insurance Company, finding that since Plaintiff did not allege that Defendant’s responsibility to pay had been demonstrated by settlement, judgment, award, or any other means, the court granted Defendant’s motion to dismiss, dismissing the claim without prejudice, thereby allowing Plaintiff to reassert its claim after Defendant’s responsibility to pay under Section 1395y(b)(3)(A) has been demonstrated. The court followed the findings of the 11th Circuit in Glover v. Liggett Group and Phillip Morris, USA, in which that court concluded that a primary plan has a duty to reimburse a secondary payer MAO for conditional payments only “if it is demonstrated that such primary plan has or had a responsibility to make payment.”

On July 22, 2015, the same court published its opinion on MSPA Claims 1, LLC, v. Liberty Mutual Insurance, concluding that a claim for double damages under the MSP private cause of action does not accrue until the primary payer’s responsibility to pay has been demonstrated. The court found that even where an insurance contract exists between two parties, an insurer should still be able to contest contractual liability without being exposed to double damages. The Florida PIP statute, upon which Plaintiff relied to argue that Defendant is contractually and statutorily obligated to pay, recognizes that an insurer should be able to assert that the claim was unrelated, was not medically necessary, or was unreasonable. Therefore, the court holds that a contractual primary payer, such as a no-fault/PIP insurer, should have the ability to contest payment of claims without facing MSP private cause of action double damages.

On August 28, 2015, the same court published its opinion on MSPA Claims 1, LLC v. IDS Property Casualty Insurance Company, concluding again that because Plaintiff’s allegations failed to demonstrate Defendant’s responsibility to pay through “a judgment, a payment conditioned upon the recipient’s compromise, waiver, release, or by other means,” the Amended Complaint must be dismissed without prejudice to Plaintiff to reassert its claim after Defendant’s responsibility to pay under section 1395y(b)(3)(A) has been demonstrated.

helios-logoAs always, Helios Settlement Solutions will continue to monitor MSP private cause of action legal opinions throughout the country and report on them here for you. If we can help you with this or any other Medicare Secondary Payer compliance issue or matter, please contact us at 888.672.7674, or at contactus@helioscomp.com.