MAO Recovery & Courts: Aggressively Pursuing Liens

CMS, Medicare Set-Aside Blog, Medicare Set-Asides, MSP Litigation, MSP News on March 17, 2017
Posted by Jean S. Goldstein, JD, CMSP

law-1063249_1920On Wednesday, in the second decision of its kind this month, the United States District Court, Southern District of Florida denied in part and granted in part a Motion to Dismiss in a Medicare Advantage Organization (MAO) Medicare Secondary Payer Act (MSPA) recovery claim. MSPA Claims 1, LLC, et al. v. Century Surety Company, No. 1:16-CV-20752-DPG, (S.D. Fla. Mar. 15, 2017).  In this specific case, Plaintiff, MSPA Claims I, LLC, is the assignee of a Medicare Advantage (Part C) plan, Florida Healthcare Plus (FHCP).  Defendant, Century Surety Company, is an insurance company that issues commercial general liability insurance policies that contain Med-Pay benefits provisions.  Med-Pay is no-fault insurance that pays medical expenses for injuries sustained on an insured’s property or premises.  Defendant filed a motion to dismiss on the basis that Plaintiff failed to state a cause of action for which relief could be granted, hoping to have the MSPA recovery action dismissed.

Under the MSPA, Defendant is considered to be a primary payer for any medical treatment related to an injury which occurred on a property or premises insured by Defendant.  Thus, the FHCP plan would be the secondary payer for an injury in such a case.  In this case, an enrolled member of the FHCP Medicare Advantage Plan was injured in an accident on a property insured by Defendant.  The injured individual received medical treatment as related to the accident, which was determined to be medically necessary, and paid by FHCP.  Defendant was and should have been the primary payer under the MSPA, as well as the med-pay provision of Defendant’s policy, and Florida law.  The Court asserted Defendant was aware of its obligations as the primary payer, but failed to pay for the medical treatment or to reimburse the secondary payer, FHCP.

As we have seen in similar cases, if a primary payer does not pay medical expenses for which it is responsible, or if a primary payer fails to reimburse CMS for any payments made on behalf of a beneficiary, CMS has a cause of action against the primary payer plan.  In the instant matter, the argument asserted by Plaintiff, as FHCP’s assignee, was that Plaintiff has the same rights as CMS to recover from a primary payer.  Plaintiff also asserted a right to recover payments from a primary payer under the theories of legal and equitable subrogation and as a third party beneficiary.  Plaintiff brought five causes of action against Defendant, specifically:

  • a private cause of action for double damages under 42 U.S.C. § 1395y(b)(3)(A);
  • breach of contract for failure to pay Med-Pay benefits;
  • breach of contract for failure to pay Med-Pay benefits based on conventional subrogation;
  • breach of contract for failure to pay Med-Pay benefits based on equitable subrogation; and
  • breach of contract for failure to pay Med-Pay benefits based on conventional subrogation arising from third-party beneficiary rights.

The Court found that Plaintiff had standing to bring this action.  In doing so, the Court cited to an 11th Circuit decision from 2016, which held that a valid insurance contract is sufficient to demonstrate responsibility for payment to bring a cause of action under the MSPA.  MSP Recovery, LLC v. Allstate Insurance Co., 835 F.3d 1351, 1361 (11th Cir. 2016).  The court further relied on Humana Medical Plan, Inc. v. Western Heritage Insurance Co., 832 F.3d 1229 (11th Cir. 2016) where the court held that “an MAO may avail itself of the MSP[A] private cause of action when a primary plan fails to make primary payment or to reimburse the MAO’s secondary payment.” (Humana, 832 F.3d at 1237); therefore, reasoning that Plaintiff and Plaintiff’s assignee were entitled to bring a private cause of action under the MSPA against the Defendant.  With respect to the additional claims, the court held that Plaintiff properly alleged the subrogation claims, but dismissed the last cause of action, allowing Plaintiff to amend the complaint to show that Plaintiff was an intended third party beneficiary of the contract between the Defendant and its insured.  The second layer to this action is that the claim was brought as a class action, meaning there are nearly 40 entities claiming to be entitled to relief based upon Defendant’s failure to reimburse the class members.  Under the MSPA, entities are entitled to recover double damages, and with so many entities joining this action, the recovery could be huge.  The court noted some possible issues with the class certification, but at this stage of the claim, those issues have yet to be addressed.  Since Defendant’s Motion to Dismiss failed, this case will move forward.

This decision also comes on the heels of a similar MSPA recovery case still being litigated, before the same court, MSPA Claims 1, LLC v. Infinity Auto Insurance Co., No. 1:15-CV-21504-JLK, (S.D. Fla. Mar. 9, 2017).  The judge in the Infinity Auto case also found Defendant’s Motion to Dismiss on the same argument unpersuasive, reasoning that Plaintiff’s allegations provided enough factual support to allege a cause of action under the MSPA.  On March 9, the judge issued a Report and Recommendations in response to the recently filed Motion to Dismiss, requesting that the parties to the action file written objections by March 23.

With these two cases still pending, these are timely warnings of how far courts are willing to take MSPA recovery matters.  As we have seen, Medicare Advantage Plans, Medicaid, Military/Governmental Healthcare Providers, and Private Insurers are aggressively pursuing their liens with a priority right approach to recovery.  Healthcare liens can be challenging, given the investigation, consultation and need for a thorough working knowledge and understanding of a variety of recovery processes.  For this reason, it is imperative that liens be handled properly to avoid any unnecessary costs, litigation expenses, and undue delay in the resolution of a claim.

For more information about our lien resolution services, please contact  Our lien resolution team is comprised of an experienced team of clinical, legal, and claims professionals.  We advocate on your behalf to make sure you can settle your claim.