MAP Action Dismissed; Illinois Does Not Join Jurisdictions Allowing for Double Damages, Private Cause of Action…For Now

Medicare Advantage, Medicare Set-Aside Blog, MSP Litigation, MSP News on June 5, 2018
Posted by Jean S. Goldstein, JD

Over the last several years, we have blogged about MSP Recovery, LLC, a law firm, that has been championing claims nationwide on behalf of Medicare Advantage Plans (MAP).  In their pursuits, MSP Recovery, has alleged that Non-Group Health Plans (NGHPs) are failing to make payment first, and have allowed secondary payers, particularly Medicare Advantage Organizations (MAOs), to pay first.  Subsequently these claims have given rise to MSP Recovery’s lawsuits for double damages. The premise of each lawsuit is based upon an assignment that MSP Recovery alleges to have received from a Medicare Advantage Organization (MAO).  Over the last several years, MSP Recovery has created numerous liability companies for the sole purpose of crafting lawsuits to show purported assignments from MAOs, in an effort to recover any conditional payments made by the MAPs. On May 25, a decision was issued out of the Seventh Circuit, in the United States District Court for the Central District of Illinois, addressing whether MSP Recovery may utilize the private cause of action provision to bring suit under the Medicare Secondary Payer (MSP) statute. MAO-MSO Recovery II, LLC v. State Farm Mut. Auto. Ins Co., No. 1:17-cv-01541-JBM-JEH, 2018 U.S. Dist. LEXIS 88565 (C.D. Ill. May 25, 2018). In this most recent case, as with other cases we have seen, the Plaintiffs are not MAOs but rather four entities created by MSP Recovery, that have claimed they received recovery assignments from an MAO.  Like many of its predecessors and many of the related cases across the country, the litigation of this case was halted by a Motion to Dismiss, brought on the grounds that the Plaintiffs lack standing because they have failed to properly demonstrate suffering an injury in fact.

This is a noteworthy case because it is the first to be decided in the Seventh Circuit, and can be considered a win.  First, because the Court did not side with the Second, Third, or Eleventh Circuit, which have permitted an MAO to sue a primary plan that fails to reimburse an MAO for making payment first.  Secondly, the Court was not shy on scolding the Plaintiffs, and this is an Opinion that is quite entertaining to read.  With such headings as “Plaintiffs’ Amended Complaint is Misleading and Their Attempt to “Clarify” Now is Not Well-Taken” and statements as “Plaintiffs have only feigned legitimacy through empty documentation and the appearance of a sophisticated corporate scheme;” this is a case that most of us can enjoyably read. Id. at 3, 8.  Within this Opinion, the Court also stated that it did not “…believe Plaintiffs have been completely forthcoming about exactly who the alleged assignor is in this case;” particularly because the documents provided in support of Plaintiffs’ standing claims, did not show a valid assignment, and the Court noted that Plaintiffs knowingly provided an inaccurate Amended complaint. Id. at 11, 20. Here, the purported assignment as pled within an Amended Complaint was not from a MAP, but rather a Maintenance Service Organization (MSO)[1].  Once the Court addressed this issue, the Plaintiffs attempted to back-pedal and state that an additional change in their Amended Complaint would be necessary to name an entirely separate organization; which the Court refused to allow.  The Court opined that neither case law, the MSP provisions, or basic principles of corporate law as connected to the instant matter, allow an MSO to bring suit under the MSP statute because MSOs should not be treated as MAOs. Id. at 12, 18.  The fatal flaw in this case was that Plaintiffs’ were unable to show that an MAO made a valid assignment to them; thus, Plaintiffs lacked standing because they suffered no injury in fact.

Accordingly, Illinois has not joined the growing list of jurisdictions permitting MSP private causes of action by MAOs, yet.  However, this case along with the 114 other MAO recovery cases filed by MSP Recovery, LLC, should be a cause for concern.  Specifically, because we know that MSP Recovery has been on these fishing expeditions for quite some time, and these cases have and will continue to be trial and error.  It is just a matter of time before MSP Recovery gets it right, in yet another jurisdiction.  Moreover, the Court here is suggesting that had the Plaintiffs shown a proper and valid assignment, the action would have continued.  This means that the Seventh Circuit may soon be added to the list of Circuits allowing MSP private causes of actions by MAOs.  This has not happened yet, but, again it is only a matter of time.  In the meantime, we continue to recommend creating internal processes on how to timely handle conditional payments, MAP recoveries, and other liens.  We also continue to suggest the following best practice tips:

  • Ask questions of beneficiaries, to determine if in fact they have supplemental plans;
  • Ask to see Medicare cards;
  • Understand the differences between CMS and MAOs and that these entities do not operate in the same fashion; and
  • Do not assume medical treatment has terminated because you have not received bills. Ask whether beneficiaries are still treating; and
  • Respond to all correspondence from MAOs, timely and promptly.

We will continue to update our readers on further relevant MSP litigation, as there is no doubt that we will continue to see additional private causes of actions arise.

 


For assistance with conditional payments or lien resolutions, please contact our team at info@medval.com.  Our Conditional Payment and Lien Resolution Team understands the complexities of conditional payments and MAP lien issues.  Our team is comprised of an experienced group of clinical, legal, and claims professionals.  We advocate on your behalf to make sure you can settle your claim. 


[1] MSOs are management services organizations which contract with licensed health care providers to provide administrative and management service.  Id. at 17.