Tennessee PIP/MAO Private Cause of Action Scheduled for Trial in September 2016

Liability, Medicare Advantage, Medicare Set-Aside Blog, MSP Litigation on September 24, 2015 | Posted by Jennifer Jordan, JD, MSCC

Yet another action by a Medicare Advantage Organization seeking recovery from a PIP carrier has been reported out of Tennessee. In this case, Cariten Health Plan is seeking reimbursement of $15,799 paid, out of $55,378.70 billed, on behalf of a Medicare Advantage beneficiary who had PIP coverage through Mid-Century Insurance, a Farmers subsidiary, at the time of her automobile accident despite her medical providers not indicating the same on their claims for payment. Once notified of the coverage, Cariten requested reimbursement from Mid-Century and received the stock form letter from Mid-Century’s parent company stating that the PIP coverage is “first party” coverage and therefore the MAO had no subrogation rights. The MAO is now seeking double damages under the MSP private cause of action.

When is Farmers going to give up on this first party insurance defense and stop sending those letters?  You may recall that Humana simultaneously sued Farmers in 5 different jurisdictions in 2014 after having received the same stock response letter. Since Mid-Century is not denying coverage exists, its policyholders could just as easily bring the private cause of action. If it is responsible for payment, then why the semantics? Particularly when given the opportunity to reimburse at the Medicare fee schedule rather than the original charges, saving $40,000.

Needless to say, the motion to dismiss was denied as the court unequivocally found that an MAO can bring a private cause of action under 42 U.S.C. 1395y(b)(3)(A), relying primarily upon In re Avandia but also sixth circuit precedent such as Bio-Medical Applications of Tenn. and Michigan Spine. While common law and accounting claims were dismissed, the trial will proceed on September 26, 2016. It will be interesting to see what the parties needed to move the original April trial date back to accomplish.

CARITEN HEALTH PLAN, INC., Plaintiff, v. MID-CENTURY INSURANCE COMPANY, Defendant.
No.: 3:14-CV-476-TAV-CCS
UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TENNESSEE
2015 U.S. Dist. LEXIS 126887
September 1, 2015, Filed