Humana’s Suit Against Farmers in Texas — UPDATE
Roy Franco
January 23, 2014

We previously blogged about lawsuits brought by Humana against Farmers Insurance in four jurisdictions across the country.  We have been informed that Humana voluntarily dismissed three of the complaints (Tennessee, Missouri and Kansas), however the case brought in Texas is moving forward.

Recently, Farmers moved to dismiss Human’s Texas litigation.  That motion is being rigorously opposed by Humana in the attached 31 page filed opposition.  Humana strongly urges adoption by the Court of the Third Circuit’s Court of Appeal decision in Avandia that grants a Medicare Advantage Plan the right to a private cause of action against an applicable plan which is subject to double damages.  Humana explains away decisions from other Circuits that reject the existence of any Medicare Secondary Payer private cause of action for Group Health Plans.  Humana leverages historical changes in the MSP law as evidence of Congressional intent to secure this right.  Whether they will prevail will turn on statutory interpretation that has the ear markings of an appeal to the 5th Circuit.  Even then, each side is expected to ask for writ of certiorari to the U.S. Supreme Court as the issue has long term policy considerations.  Bottom-line, should a private health insurer have essentially the same rights as the U.S. Government?  This question may take years to conclude and until then Parties involved with a Medicare Advantage Plan or Part D Plan will be tip toeing through a landscape of egg shells to secure finality.

Franco Signor Commentary: We will continue to follow this issue closely.  There is definitely a split between the Third and Sixth Circuit, with the Ninth Circuit passing on the issue in the Parra v. Pacificare decision.   The Fifth could be the tipping point that raises the interest of the U.S. Supreme Court to step in and clarify.   This issue boils down to cost shifting.  The Medicare Advantage Plan, as well as the Part D Pharmaceutical Plan – both privately insured, contract each year with Medicare.  The idea here is to reduce cost, and the MSP law is a tool that simplifies subrogation for Medicare, and Humana’s position that simplifying that role for private insurance reduces cost.  Considering CMS’ interest in promoting these plans (more than 19M enrollees in 2013 and growing); CMS has come down on the side of Medicare Advantage.  Whether Congressional intent and the U.S. Supreme Court agree is another matter.  However, the costs associated to these plans continue to escalate and so does premium.  To the extent it can be reined in one would expect this to be a ripe area.  We suspect it will be no different of an argument once the Affordable Health Care Plans mature and begin to exercise their subrogation rights.  We know at least for such Plans, the U.S. Supreme Court is strong in supporting them.  Over time, it this author’s opinion casualty programs will be primary to all health care insurance – Medicare, Private Medicare and Affordable Health Care.  We will continue to monitor and inform you over the coming years on this developing area of the law.  In the interim, if faced with a recovery claim, please call us – we have tools to help resolve those issues short of litigation.