Ask Jen – 42 USC 1395y(b)(3)(A) Private Right of Action

Medicare Set-Aside Blog on December 1, 2010
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Hi Jen
Q:  First, I want to thank you for your wonderful blog that helps everyone in the MSP Compliance community.  I’m a special needs settlement attorney and I had a plaintiff’s attorney call me today with a question that has me stumped.  His Medicare eligible client fell at a neighbor’s house while helping the neighbor move a freezer.  Medicare made several thousand of conditional payments. The liability carrier refuses to acknowledge the accident, even though the premises were covered by a no fault policy.
Somehow, the plaintiff’s attorney came upon the cite above, entitled “Enforcement” and “Private cause of action.”  Honestly, in my MSP work, I never encountered this provision.  So he asks me how to use the double damages enforcement remedy against the carrier.  Have you ever run across this interesting provision and how it is used?  P’s attorney also researched the statute and said he found several Court of Appeals cases that seemed to deny such a remedy.  What do you think?
Thanks again for your efforts.  Please keep up the good work.

A: The situation you described is actually one of the few times when the private cause of action would work, if in fact it is a pure no-fault situation and the carrier is without other grounds for denying the claim. It is true that the majority of the available case law dismissed such claims, but that attorney should look closely that those cases as they were not brought by the injured party to recover related medical expenses already made by Medicare. The MSP is not a qui tam statute, and therefore the only person with standing is the injured Medicare beneficiary, and the recovery only applies to expenses already incurred by Medicare. The case that attorney wants to look at is O’Connor v. Mayor and City Council of Baltimore [494 F. Supp. 2d 372 (D.Md. 2007)].

Things that the MSP private cause of action will not do:

• Recover without an actual injury for which Medicare has paid for treatment
• Recover on behalf of Medicare because suspect/know that Medicare is paying when it shouldn’t
• Recover for lack of an MSA provided at settlement (Medicare only has a claim to expenses already made – no claim for future unknown meds under MSP)
• Recover as a tax payer (injury too generalized and too attenuated to constitute an actual injury warranting any merit)
• Recover against a GHP who refused to make payment for Medicare entitled individual (Medicare had not made any payments for the treatment in question, therefore no MSP recovery rights triggered)

Not only does this appear to be a perfect case to bring the MSP private cause of action, the claim would also be entitled to double damages under 42 UCS 1395y(b)(3)(A). Leggette [2006 US Dist. LEXIS 98297] and Manning [254 F3d 387] provide some decent analysis, although neither case turned on this point, of actual Medicare payments made being a condition precedent to maintaining a private cause of action. Again, Medicare is only entitled to recover what it actually paid out, therefore the remainder goes to the plaintiff as incentive to bring the claim on behalf of the federal government.

Hope that answers your question.  If he needs more information, the subject is covered in Chapter 3.03[8] and Part D of the Case Summaries section of  The Complete Guide to the Medicare Secondary Payer Compliance , published by LEXIS/NEXIS.