Eleventh Circuit Extends the Scope: Who Else is Entitled to Double Damages Under the MSP?

Medicare Advantage, Medicare Set-Aside Blog, MSP Litigation on September 15, 2020
Posted by Jean S. Goldstein, JD, CMSP

A recent decision out of the U.S. Circuit Court of Appeals for the Eleventh Circuit has extended the scope of who may bring a private cause of action under the Medicare Secondary Payer Act [1] and may therefore be entitled to double damages.  The case is MSP Recovery Claims, Series LLC v. Ace American Insurance Company, et. al. [2], and involved several claims allegedly assigned to MSP Recovery Claims, Series LLC (“MSP Recovery”) from downstream entities. 

Downstream entities are described in the case as smaller organizations, such as independent physician associations, that have closer connections to local healthcare providers.  The Court also noted the important role these downstream entities play stating that in order “[t]o operate more nimbly and to better compete with Medicare, some MAOs contract with smaller organizations…These smaller organizations, or “downstream” actors, are also a part of the Medicare Advantage system and are [subsequently] central to the present case.” Id. at 4.

Over the last several years, we have closely watched Medicare Advantage Organizations (MAOs) and/or the purported assignees of MAOs champion claims across the nation against primary payers.  These primary payers include workers’ compensation, liability, and no-fault insurers, carriers, and plans.  One thing always remains consistent in each case, and that is the goal to obtain double damages, under the Medicare Secondary Payer Act’s private cause of action provision on allegations that a primary payer has failed to provide for primary payment or appropriate reimbursement.  These cases have been widely interpreted in various jurisdictions.  However, despite these numerous cases, the case law did not specifically address whether downstream actors/entities, as described in this case- those that contract with MAOs and make conditional payments according to those contracts- can seek double damages under the MSP private cause of action.  That it is until this case.

Facts of the current case:

  • MSP Recovery was the alleged assignee of several downstream entities and subsequently alleged that several primary payers failed to reimburse conditional payments made by downstream actors/entities.   
  • MSP Recovery brought several cases before the United States District Court for the Southern District of Florida to recover double damages utilizing the MSP private cause of action provision.
  • The cases were all dismissed either on pre-suit requirements or generally the notion that the contractual nature of the assignment to MSP Recovery was based on a contractual MAO- downstream actor relationship. 
  • The District Court held that the downstream-actor assignors did not have standing to access the MSP’s private cause of action provision that allows MAOs (or an assignee of an MAO) to bring suit and seek double damages.
  • In appealing the District Court decisions, MSP Recovery presented the following arguments:
    • That their downstream-actor assignor status allowed for access to the private cause of action provision and subsequently provided MSP Recovery with recovery rights;
    • That the district court erred in dismissing its claims based on an alleged assignment from an MAO with prejudice because dismissals based on defects in an assignment are not decisions on the merits and must be entered without prejudice;
    • That all of its assignments were valid.

The Court Held that Downstream Entities Can Seek Double Damages from Primary Payers

The central issue before the Court was whether actors downstream from MAOs, who directly make conditional payments or fully reimburse MAOs for their conditional payments, may themselves seek double damages from primary payers under 42 U.S.C § 1395y(b)(3)(A).  In its analysis, the Court noted that the language of § 1395y(b)(3)(A), which has been interpreted to apply to plaintiffs with a connection to a conditional payment, is easily read to cover downstream actors who have borne the cost of a conditional payment.  Id. at 20. Moreover, the court opined that allowing downstream actors who have directly paid beneficiaries’ medical bills or reimbursed an MAO to recoup damages from a primary payer would benefit the Medicare Advantage system because downstream actors would avoid costs that under the Medicare Secondary Payer Act, should be borne by primary payers.  Lastly, the Court stated allowing downstream actors to recoup damages in these cases, will further enable these entities to continue to present attractive contracts to MAOs, allowing MAOs to compete with Medicare.

Moreover, the Court also invited the Department of Health and Human Services (HHS) to respond to the scope of §1395y(b)(3)(A).  HHS asserted that any downstream actor that has “actually suffered an injury because it provided or paid for care from its own coffers and was harmed by a primary plan’s failure to provide reimbursement” should be able to access the private right of action.  Id. at 22.

Ultimately, the Court determined that no persuasive rationale for limiting downstream actors’ access to §1395y(b)(3)(A)’s private right of action was presented.

Key Takeaways and Commentary:

Very simply this case stands for the premise that the list of those who may sue primary payers for double damages has been extended.  Primary payers and any entity/individual with some sort of a nexus to a claim should not assume that they are insulated from the private cause of action provision under the MSP depending upon the entity pursuing reimbursement.  Essentially when a conditional payment has been made, entities are entitled to seek reimbursement from a primary payer who those who have received settlement proceeds.  Therefore, in consideration of this most recent case, we offer the following tips:

  • Do not wait until the settlement of a claim to identify all possible conditional payments.  Medicare conditional payment/lien investigation and resolution should be done well in advance of settlement discussions;
  • Review all medical bills and understand all injury-related treatment;
  • Do not assume that medical treatment has terminated because bills have not been received;
  • Understand the current MSP landscape, particularly within your jurisdiction, and the challenges primary payers have been facing.  It remains to be seen whether other jurisdictions will follow the 11th Circuit’s decision in this case; however, being aware of case law within your jurisdiction is vitally important; and lastly
  • Create internal processes on how to timely handle conditional payments, MAP recoveries, and other liens to mitigate exposure down the line.

Overall, establishing and implementing best proactive practices has never been more important, particularly as the list of those entitled to bring suit and seek double damages is expanded.


[1] 42 U.S.C. § 1395y(b)(3)(A)

[2] Msp Recovery Claims v. Ace Am. Ins. Co, Nos. 18-12139, 18-12149, 18-13049, 18-13312, 2020 U.S. App. LEXIS 28610 (11th Cir. Sep. 4, 2020)