Prioritizing Payments

8.29.2018 Blog

In yet another ruling concerning Medicare Advantage Organizations’ rights to pursue the private cause of action under the Medicare Secondary Payer Act, a U.S. District Court in Illinois held that assignee-organizations may pursue rights of recovery on behalf of assignor-MAOs with valid assignment agreements. MAO-MSP Recovery II, LLC. v. State Farm Mut. Auto. Ins. Co., 2018 U.S. Dist. LEXIS 117356.

Medicare Advantage Organizations (“MAOs”) allow Medicare beneficiaries to obtain Medicare benefits through private insurers. Under the MSP Act, MAOs may pursue double damages under the private cause of action provision. See Humana Med. Plan, Inc. v. W. Heritage Ins. Co., 832 F.3d 1229 (11th Cir. 2016); In re Avandia Mktg., Sales Prac. Ins. Co., 2018 U.S. Dist. LEXIS 3905. Plaintiffs in this case were not MAOs, rather, they were assigned rights of recovery under the MSP Act by several MAOs. Several beneficiaries insured under Defendants’ automobile insurance plans were involved in accidents requiring medical services. The assignor-MAOs were alleged to have made conditional payments, giving rise to liability under the MSP Act.

Defendants challenged Plaintiff’s second amended complaint, arguing a lack of standing to pursue the recovery rights. First, Defendants argued Plaintiff did not hold a valid assignment from the assignor-MAOs. In this case, the assignor-MAO first assigned their rights to recovery to an intermediary organization, which subsequently assigned the rights to Plaintiff. The Court rejected that argument and held the Recovery Agreement sufficiently demonstrated intent to transfer an identifiable recovery interest to an assignee. The Agreement included language stating the assignor-MAO assigned all rights it pertained to the rights pursuant to any State or Federal statute for any of its plan participants or members. The Court further pointed to a provision in the first assignment stating any subsequent assignment must be acknowledged and accepted by the assignor-MAO, as was the case here.

Defendants further argued that even if there was a valid assignment of recovery rights, Plaintiff did not suffer an injury required for jurisdictional standing requirements. Plaintiff used the exemplar beneficiary who was insured under Defendant’s insurance plan and injured in an accident. Defendant alleged in the case of the exemplar beneficiary that they notified CMS there had been an accident in which the beneficiary had sustained an injury, and that Defendant paid a series of medical bills relating to that injury which exhausted the policy limits. The MAO paid the same bills. Defendant argued since the MSP Act only allows recovery up to the statutory policy limits, the exhaustion of the policy here called into question the subject matter jurisdiction of the Court to hear this case. The Court noted that the ultimate question here was whether Defendant as a primary payer failed to reimburse the assignor-MAO for conditional payments made, regardless if it already made payments under the policy to the beneficiary. Since the assignor-MAO made payments for the beneficiary’s medical bills, it was entitled to reimbursement by Defendant. The Court viewed it immaterial that Defendant had already made payments up to the policy limit for the beneficiary’s medical bills.

The MSP Act states that “the primary plan must reimburse Medicare even though it has already reimbursed the beneficiary or other party”. See Glover v. Liggett Group, Inc., 459 F.3d 1304 (11th Cir. 2006). This case demonstrates another generously-construed judicial interpretation of the rights Medicare and MAOs have in recovery conditional payments, and the notion that reimbursement for conditional payments should remain a priority. Our MSA team of attorneys are available to assist in compliance with the MSP Act’s conditional payment recovery issues.

This case underscores the need to prioritize conditional payment reimbursement over other policy disbursements. Our MSA team of attorneys are available to assist in compliance with the MSP Act’s conditional payment recovery issues.


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