Conditional Payments: When Does the Time Clock Run Out?

Conditional Payments, Medicare Advantage, MSP Litigation on October 1, 2018
Posted by Jean S. Goldstein, JD

Last week, in MSPA Claims 1 v. Kingsway Amigo Ins. Co.,  the 11th Circuit addressed the appropriate application of the statute of limitations under the Medicare Secondary Payer Act (MSPA).  At issue in the matter, was whether the Plaintiff, an assignee of a Medicare Advantage Organization
(MAO), timely pursued a claim against the Defendant, a primary payer.  The Plaintiff alleged Defendant failed to reimburse an MAO for conditional payments made. 

Facts of the Case:

This case involves an MAO, Florida Healthcare Plus (FHCP) which provides health insurance, health maintenance and third-party administration services.  FHCP assigned its recovery and reimbursement rights against all liable primary payers to a company, La Ley Recovery Systems (La Ley).  La Ley assigned all of its rights to Plaintiff, MSPA Claims 1, LLC, a well-known Plaintiff in similar MSPA actions.

Here, the claim involved a car accident between a Medicare enrollee (who was enrolled in an MAO overseen by FHCP) and an individual insured by Defendant, which occurred on April 29, 2012, and resulted in injuries.  The MAO, FHCP, made payments related to the injuries between April 29, 2012 and July 26, 2012.  The claim due to the accident was settled on March 28, 2013 [1], but payments made by FHCP for the Medicare enrollee’s Medicare covered treatment were not reimbursed to FHCP.  On December 7, 2015, Plaintiff filed suit against the Defendant claiming a right to payment under the MSPA.

The Defendant contended that Plaintiff did not make demand for repayment within the three-year claims filing period, and the claim was therefore not timely filed.  Plaintiff asserted that the applicable claims filing period does not begin to run until the MAO receives notice of the primary payer’s responsibility to make reimbursement payments, and thus the claim was timely filed.  Plaintiff further contended it was not aware of Defendant’s responsibility as a primary payer until November 20, 2015 and made a demand for reimbursement for the Medicare covered treatment provided to the enrollee, at that time. 

The instant matter before the Court specifically addressed Defendant’s Request for Judgment on the Pleadings, wherein Defendant asserted that reimbursement was not due to FHCP or the assignees.  In support of its request for judgment, Defendant asserted Plaintiff did not seek to recover conditional payments within the three-year period beginning on the date on which the treatment was furnished to the Medicare enrollee (or on April 29, 2012).

Analysis by the Court:

The Court opined that the instant matter centered on which applicable statute of limitations applies:

Defendant asserted that it was entitled to judgment on the pleadings because 42 U.S.C. § 1395y(b)(2)(B)(vi) applies, which states that,

“Notwithstanding any other time limits that may exist for filing a claim under an employer group health plan, the United States may seek to recover conditional payments … where the request for payment is submitted to the entity required or responsible under this subsection to pay with respect to the item or service…under a primary plan within the 3-year period beginning on the date on which the item or service was furnished.” MSPA Claims 1, LLC v. Kingsway Amigo Ins. Co., No. 16-20212-CIV, 2018 U.S. Dist. LEXIS 166565, at 8-9 (S.D. Fla. Sep. 26, 2018) (emphasis added).

In contrast to Plaintiff’s argument, which was based on the relevant claims filing period found at 42 U.S.C. § 1395y(b)(2)(B)(iii), and states in pertinent part that,

“In order to recover payment…an action [may be brought] against any or all entities that are or were required or responsible (directly, as an insurer or self-insurer, as a third-party administrator…) to make payment with respect  to the same item or service… under a primary plan. … An action may not be brought…under this clause with respect to payment owed unless the complaint is filed not later than 3 years after the day of the receipt of notice of a settlement, judgment, award, or other payment.  Id. at 9 (emphasis added).

The Court agreed with the claims filing period as provided by Plaintiff, finding that Plaintiff was notified of Defendant’s responsibility on November 20, 2015, and therefore had three years from that date to file suit.  The suit was filed on December 7, 2015 and was therefore not barred by the statute of limitations. In further conducting its analysis of this matter, the Court noted that the provision provided by the Plaintiff addresses “a clear mandate…pertaining to the bringing of suit to enforce obligations under the MSPA, and clearly contemplates litigation.” Id. at 12.   The Court further stated that the direct purpose of this provision is to ensure that notice of a claim is provided, and that date of notice is the appropriate benchmark by which stale claims are measured.

Takeaway and Commentary:

Practically speaking, it is possible that either of the above noted claim filing periods can apply in a case.  Therefore, defaulting to waiting for the time clock to run out for either claim filing period will not serve a party well; and a party would be better served in addressing and disputing the reimbursement obligations as soon as possible.  As this case demonstrates assuming that the statute of limitations has tolled, and a claim will be barred based upon the date on which the item or service was furnished may not be appropriate.  As the instant matter supports, it is specifically important to note when notice of a primary payer’s responsibility is provided.

Moreover, cases involving MAOs continue to create challenges, because of the lack of information surrounding Medicare beneficiaries’ enrollment in Medicare Advantage Plans (MAPs).  This is quite concerning considering the growth of enrollment in MAPs over the last five years, to over 47 million enrollees per CMS’ current statistics [2].  As a result of the lack of information surrounding MAP enrollment, we continue to see such MSP litigation and aggressive recovery efforts.  However, from a Medicare compliance standpoint, there are not many avenues to obtain information about a beneficiary’s enrollment in a MAP.   As such we continue to offer the following best proactive practices as related to conditional payments and primary payers’ MSP obligations:

  • Do not wait until settlement of a claim to identify all possible conditional payments. Medicare conditional payment investigation, and resolution should be done well in advance of settlement discussions;
  • Review all medical bills and understand all related work injury treatment;
  • Create an open dialogue with the claimant/injured work or their counsel, inquiring about all plans a Medicare beneficiary is enrolled in. The timely discovery of MAP, Part D, and/or Medicaid enrollment can benefit all settling parties; and
  • Create internal processes on how to timely handle conditional payments and MAP recoveries.

This case is yet another example of the need to ensure that conditional payments are handled properly and with established proactive processes to avoid unnecessary costs, undue delay, and litigation expenses.


[1] Defendant made a settlement payment of $6,667.00 on this date.

[2] https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MCRAdvPartDEnrolData/Monthly-Contract-and-Enrollment-Summary-Report-Items/Contract-Summary-2018-09.html?DLPage=1&DLEntries=10&DLSort=1&DLSortDir=descending.