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Posts tagged: Medicare Advantage Plans

When can Medical Providers Have Standing Under the MSP?

By , March 1, 2013 2:14 pm

A Federal District Court for the Eastern District of Michigan recently allowed a health care provider to proceed with a claim against a patient’s no-fault auto insurance carrier for the full cost of its services, as well as double damages, through a private cause of action under the MSP. When reading the Opinion and Order (click here to view the Opinion and Order), it is interesting to note that the dispute here is between a medical provider and a no-fault auto carrier. One may start to wonder: where is Medicare in this equation, and further, what is Medicare’s position in this litigation? The MSP is clearly designed to protect the Medicare Trust Fund and Medicare as a secondary payer. So how can a private health care provider use, to its benefit, the terms of the MSP Act to force a payment from an insurance carrier when Medicare is not involved in the case at all? Stated more plainly, why is the MSP now being utilized to protect a medical provider when it is designed to protect Medicare and the Trust Fund? It is baffling, but a closer look through the background information on this Order might give us a better understanding.

In Michigan Spine and Brain Surgeons, PLLC v. State Farm, Case No.12-cv-11329 (U.S. District Court for the Eastern District of Michigan, Southern Division), the Plaintiff in this case, Jean Ellen Warner (“Warner”), was in a car accident in 2010. Warner is a Medicare beneficiary who receives her benefits through a Medicare Advantage Plan, Blue Care Network. She underwent neurosurgery at Michigan Spine, and the total of her medical costs were $24,645.00. Michigan Spine sent a bill for this amount to State Farm, who was her no-fault insurance carrier at the time of the accident. State Farm denied the payment, asserting that Warner’s spinal injuries predated the October 2010 car accident and were attributable to a prior workplace injury. After State Farm denied payment, Warner sought payment from CMS. CMS made a partial payment on the amount. Michigan Spine then sued State Farm under the MSP’s private cause of action provision, 42 U.S.C. 1395y(b)(3)(A).

State Farm then filed a motion to dismiss and/or partial motion for summary judgment, alleging that Michigan Spine did not have a right to bring this lawsuit due to the fact that State Farm’s liability had not yet been determined by a court or other adjudicative body. Michigan Spine countered State Farm’s argument claiming that a prior case, Bio-Medical Applications of Tenn., Inc. v. Central States Health and Welfare Fund, 656 F.3d 277 (6th Cir. 2011), has resolved this issue and it is permitted to initiate a private cause of action under the MSP Act. Bio-Medical involved a situation where a Group Health Plan terminated dialysis coverage when its insured became a Medicare beneficiary. The Group Health Plan attempted to defend its termination of coverage, stating that its responsibility had not been evidenced by a prior settlement, judgment, or award, which would satisfy a requirement that such a payment must be “demonstrated.” However, on appeal, the Sixth Circuit determined that the “demonstrated responsibility” requirement in the MSP Act only applies in certain situations. Further, the court found that such a defense would be contrary to the intent of the MSP Act. Therefore, the Bio-Medical case found that only Medicare had to bring a claim for reimbursement for a health care provider to have responsibility under the MSP, and the health care provider need not demonstrate the insurer’s responsibility to pay before it could bring an action under the Act.

Although this case is still continuing, the fact that Michigan Spine’s argument is allowed to go forward is disturbing for several reasons. First, although this case pertains to a no-fault auto insurance policy, the decision would very likely also apply to workers’ compensation since both types of insurance plans are treated in the same manner by CMS and are often grouped together in its policies and procedures directives. This case would be persuasive authority in another case with similar facts involving a workers’ compensation insurance plan. For example, a workers’ compensation plan has denied all claims asserted by the claimant, and the claimant subsequently treats for those alleged injuries. The healthcare provider then seeks to bill the workers’ compensation plan, which subsequently denies the payment. CMS makes only a partial payment, if any payments at all, and the healthcare provider then seeks a private cause of action for double damages under the MSP in spite of the fact that the workers’ compensation carrier may have rightfully denied the claim from the start. If this happens and this case becomes persuasive authority, workers’ compensation plans may be forced to litigate every denial of coverage so as to avoid obligations under the MSP.

Secondarily, this case is disturbing in that it demonstrates an alarming trend in the broadening of the use and application of the private cause of action under the MSP. In the past, the private cause of action right was generally thought to be a right granted only to Medicare beneficiaries. However, recent case law has also granted this private cause of action right to Medicare Advantage Plans (click here to see our previous legal bulletin on this matter).  Further, due to the broad language of the private cause of action, courts are starting to apply it in an increasing number of ways. The private cause of action provision under the MSP simply states that “[t]here 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…”

Due to the ambiguous nature of the language within the MSP of this private cause of action, courts may continue to broaden its usage. This is a dubious situation since the action allows for double damages. This Order will hopefully be appealed by State Farm and the decision reversed because allowing a health care provider to have this cause of action would not be in sync with the intent behind the MSP. PMSI will continue to follow this case as it progresses.


DATE CHANGE: MSP Mid 2012 Legal Updates Webinar

By , August 30, 2012 4:30 pm

In light of a recent scheduling of a CMS Teleconference at the same date and time, PMSI has rescheduled the MSP Mid 2012 Legal Updates Webinar date to Tuesday, September 25th at 1-2 PM EST. If you have already registered for the webinar, you should have already received an updated confirmation noting the date change. If you have not yet registered for the webinar, there is still plenty of time to do so! You can register here.

For more information on our upcoming webinar, please see our previous blog post here.


MSP Mid 2012 Legal Updates Webinar

By , August 20, 2012 9:24 am

2012 has been a busy year in the area of MSP compliance and you can be sure that court, state, and CMS interpretations of this complicated law will continue to evolve.  If you want to assure you are completely up to date on this year’s new MSP case law, liability requirements and MSP trends, plan to attend PMSI’s 2012 legal update webinar!  The webinar will not only ensure you are up to date on the latest happenings in the area of MSP compliance, but will clarify and fully explain new case law and how it may impact claim settlements.  Highlights from the webinar include:

2012 MSP Case Law

  • Bruton v. Carnival Corp., wherein a Florida court found that although the settlement documents spoke to compliance with the MSP, because an MSA was not specifically mentioned, it was not required. I will discuss how settlement documents are key in ensuring MSP compliance.
  • Oregon State Bar Prof. Liability Fund v. DHHS, an attorney legal malpractice insurer sought a court’s opinion as to whether it is an RRE under the MMSEA and required to report claims information to Medicare. Will more entities seek exemption from reporting under the MMSEA from the courts in the future?

Conditional Payment Update

  • A recent Third Circuit Case as well as a recent CMS memorandum provides Medicare Advantage Plans with the same rights of recovery as traditional Medicare and also allows for a private cause of action for double damages if conditional payments are not reimbursed! I will explain how this update may affect settlements and how you can protect yourself from this private cause of action.

CMS liability updates

  • CMS attempts to formalize rules surrounding the MSP and future medicals. Will LMSAs or another form of allocation be required in the near future?

Legislative Update

  • A WCMSA bill seeks to exempt all workers’ compensation settlements under $25,000 from any compliance with the MSP. Will this bill pass?

Heather Schwartz, Esq., MSCC, CHPE, CLMP, CMSP will offer her expertise in reference to the above topics on Tuesday, September 18, 2012 from 1 PM -2 PM EDT.

This webinar is complimentary and 1 hour of CEU and CLE credit has been requested in multiple states; all attendees who successfully complete the Webinar will be provided with a Certificate of Attendance. For more information on obtaining CEU or CLE credit for this webinar and to Register, please click here:


Third Circuit Finds Medicare Advantage Plans have a Private Cause of Action Right under the MSP

By , July 17, 2012 4:11 pm

In a surprising decision, the Third Circuit of the United States Court of Appeals overturned a District Court’s opinion which found that MAPs 1 could not recover against a primary payer through a PCOA under the MSP. 2 For PMSI’s June 30, 2011 Legal Bulletin on the District Court opinion, please click here.

This case involved GlaxoSmithKline (GSK), a pharmaceutical corporation that was sued by thousands of individuals alleging that they suffered personal injury from the use of GSK’s diabetes medication, Avandia. Humana, which has several MAP plans, filed a complaint to enforce its claimed rights as a secondary payer under the MSP, specifically seeking a PCOA right for double damages pursuant to 42 U.S.C. § 1395y(b)(3)(A), for reimbursement of costs that Humana incurred to cover treatment for Avandia-related illnesses and injuries on behalf of settling MAP enrollees.

The Third Circuit took a completely different view than the District Court, finding that the plain text of the PCOA provided under the MSP sweeps broadly enough to include MAPs and even if the court found the MSP to be ambiguous on this particular point, that deference to CMS regulations would require the Court to find that MAPs have the same right to recover as the Medicare Trust Fund. The Third Circuit even went so far as to find that the PCOA was not limited to MAPs, and could be used by any private party: “[t]he plain text of the MSP private cause of action lends itself to Humana’s position that any private party may bring an action under that provision. It establishes ‘a private cause of action for damages’ and places no additional limitations on which private parties may bring suit.” (emphasis added)

GSK argued points to the contrary in defense of the District Court’s opinion, asserting that no rights to reimbursement are granted to an MAP directly under the MSP. Essentially, although an MAP may be considered a primary payer under the MSP and have the right to reimbursement of conditional payments, it must recover these payments through any contractual rights it had with the beneficiary in state court. GSK cited case law to support its position, but the Third Circuit found none of the case law to be on point and persuasive in this matter.

As further backing to their opinion, the Third Circuit dove into a discussion regarding legislative history and policy surrounding MAPs (even though it concluded the MSP to be unambiguous on this point), finding that MAPs were created by Congress to create a more efficient and less expensive system, and that by essentially allowing MAPs to “faithfully pursue and recover from liable third parties” they will have lower medical expenses and as a result will be able to provide additional benefits to their enrollees. The Court additionally noted that it would put MAPs at a competitive disadvantage if Medicare could threaten primary payers with a right to double damages but MAPs could not, and that it did not believe it was the intent of Congress to “hamstring” MAPs in this manner.

The Court also gave Chevron deference3  to CMS regulations, specifically 42 C.F.R. § 422.108, which provides that MAPs “. . . will exercise the same rights to recover from a primary plan, entity, or individual that the Secretary exercise under the MSP regulations…” A recent memorandum from CMS dated December 5, 2011 also clarified that CMS understood § 422.108 to assign MAPs the right to collect from primary payers using the same procedures available to traditional Medicare and that the same applies to Part D prescription drug plan sponsors via 42 C.F.R. § 423.462. To view this memorandum, please click here.

This decision by the Third Circuit should be carefully considered by primary payers when settling a case with a Medicare eligible individual. MAP demands should be given priority for reimbursement just as traditional Medicare conditional payment demands are given, or the primary payer may be subject to a PCOA for double damages from the MAP as happened in this case.

Additionally, primary payers may not be aware that during a March 22, 2012 teleconference call, CMS  stated that they are sharing MMSEA Sec 111 data with MAPs. Therefore, MAPs are now being armed with settlement information concerning Medicare beneficiaries in the same manner as traditional Medicare.

MAP demands are issued from the MAP directly; i.e., if the MAP is Humana, the demand will be issued on Humana letterhead. This is unlike traditional Medicare conditional payment demands which will be issued directly from CMS and are currently on letterhead from the MSPRC. Primary payers should become familiar with some of the major MAP plans on the market so they will recognize these MAP demands when they are received.

Because MAP demands are issued from the MAP plan, primary payers should be proactive in determining whether an MAP demand exists. The primary payer may want to seek MAP enrollment/benefit history from claimants/plaintiffs prior to settling cases. Once the primary payer is availed of this information, it should consider contacting the MAP for conditional payment information prior to settlement.

Beyond the affect this decision may have on MAPs, the court’s statement that any private party may pursue a PCOA under the MSP for double damages is dubious and sure to confuse primary payers even further as to which parties may pursue a PCOA under the MSP (double damages apply) if they fail to protect Medicare’s interests.

If it is any consolation to the industry, within the text of Third Circuit’s opinion, the Court refers to the MSP as “the most completely impenetrable texts within human experience.” Due to the opaque nature of the MSP, we can be certain that the courts will be called to the task of interpreting the bounds of the MSP into the infinite future until Congress reforms and clarifies this federal law.


1. [MAPs, also sometimes known as Medicare Part C, allows Medicare enrollees to obtain Medicare benefits through private insurers instead of receiving benefits from the government under Parts A and B. Many MAPs also offer Part D prescription benefits to Medicare enrollees.]

2. [In Re Avandia Marketing, 2012 U.S. App. LEXIS 13230 (June 28, 2012).]

3. [Chevron Deference is a well-known two-part test established by the Supreme Court for determining when a federal court ought to defer to the interpretation of a statute by the federal agency charged with implementing that statute.]


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