MSP vs PIP – Part 2
In April we saw our first MSP case involving a PIP carrier denying reimbursement responsibilities for medical benefits related to a covered auto accident that were paid by Medicare. [MSP RECOVERY, LLC v. PROGRESSIVE SELECT INSURANCE CO., 2015 U.S. Dist. LEXIS 47784 (Apr. 1, 2015)]. In that case, court found that plaintiff did “not allege that Defendant’s responsibility to pay had been demonstrated by any means,” and therefore ruled that the claim must be dismissed. What further evidence of payment responsibility do you need other than the existence of no-fault PIP coverage and an auto accident involving an insured? On May 19, 2015, the Court of Appeals of Michigan rendered a decision in a similar situation and went the other way (some would call it the right way).
The plaintiff in this case was injured when her vehicle was rear-ended by the defendant who carried only $50,000 in auto limits. Plaintiff carried $500,000 in underinsured motorist coverage with the defendant, Farm Bureau. Plaintiff received over $70,000 in medical care related to the accident, all paid for by Medicare and her AARP Supplemental Insurance. Farm Bureau paid none of her expenses and refused her demands for it to reimburse Medicare. Plaintiff sued claiming, among other things, breach of contract, asserting that her medical expenses were allowable PIP benefits that Farm Bureau was obligated to pay under the Michigan No-Fault Insurance Act, MCL 500.3101 et seq.
For those unaware, Michigan requires that everyone carry unlimited PIP coverage. Section MCL 500.3109a of the no-fault act allows individuals with existing health care coverage the option of choosing between coordinated and uncoordinated insurance. Those with an existing health plan in place can chose coordinated insurance, resulting in reduced premiums and making their health plan primary. If uncoordinated coverage is elected, the premiums are higher but the no-fault carrier is primary. With uncoordinated benefits and a health plan, the insured could obtain a double recovery because PIP would still be obligated to pay even though the health plan already did. Plaintiff in this case had uncoordinated insurance so regardless of the fact that her health plan was Medicare, the PIP coverage should have still paid. However, given that her health coverage was in fact Medicare, the Medicare Secondary Payer Act prohibits Medicare from paying when coverage is also provided by a primary payer, such as no-fault insurance. Therefore regardless of whether there was coordinated or uncoordinated coverage, Medicare would never be able to be considered a valid health plan for purposes of a rate reduction.
In the case at hand, the trial court found that plaintiff’s medical coverage under her insurance policy was coordinated and therefore not primary, meaning that plaintiff could not look to defendant for payment of medical expenses which had already been covered by Medicare. The trial court also reasoned that, even if defendant had been primary over Medicare, it was up to Medicare, not plaintiff, to seek reimbursement for medical expenses paid on plaintiff’s behalf. Plaintiff appealed. The appellate court found that defendant’s claims that benefits were coordinated because the policy had an “x” where a dollar amount should have been was contradictory to the rest of the policy. Additionally, the court found that plaintiff did in fact have a private cause of action under the MSP to seek recovery of the Medicare overpayments made on her behalf. Accordingly, it reversed the trial court’s findings that plaintiff’s insurance policy with defendant was coordinated and that she did not have a private cause of action under the MSP, and it remanded to allow her to add a claim for a private action under the MSP.
Unfortunately this opinion was not published and therefore not precedentially binding under the rules of stare decisis. However it is still important evidence of the evolution of understanding of the private cause of action under section 1395y(b)(3)(A) of the MSP. Even in contractual situation where PIP can be placed in a secondary payer position, Medicare is never going to be primary.
INSURANCE COMPANY, Defendant-Appellee, and JEREMY FLECHSIG, Defendant. No. 320723 COURT OF APPEALS OF MICHIGAN 2015 Mich. App. LEXIS 1031 May 19, 2015, Decided