Magistrate’s Recommendation Rejected in Humana Case
Roy Franco
September 29, 2014

This past March we wrote about the Magistrate’s recommendation to the Judge handling the Humana Insurance Co. v. Farmers Texas County Mutual Insurance Co. Cause No. 13-CV-611-LY to dismiss the claim. Our analysis of that recommendation can be found here. In brief, we compared the decision process to a boxing match that would inevitably end up in the appellate courts. Since most Magistrate recommendations are accepted, we had thought Humana would be the likely candidate to appeal. However, it appears that Farmers will now need to take the lead if they wish to challenge the decision. See Order, Rejecting in part, the Report and Recommendation as it pertained to the Medicare Secondary Payer (MSP) private cause of action, thereby allowing Humana to bring such an action against Farmers.

At stake is the issue of whether a Medicare Part C, or for that fact, a Part D plan, may file for reimbursement rights under the MSP private cause of action – 42 U.S.C. Section 1395y(b)(3)(A) – in the Fifth Circuit. The Magistrate held it was not so authorized and recommended a dismissal of the claim. The Magistrate did not find persuasive the Third Circuit Court of Appeals decision In re Avandia. Holding instead that Congress did not intend to include Medicare Advantage Plans as part of the private cause of action, because of the underlying difference in language within the Medicare Advantage part of the statute. The presiding Judge disagreed and found the holding by the Third Circuit Court of Appeals applicable, which allows the case to move forward.

It would be a surprise if Farmers does not challenge the ruling. However, it should be noted that in recent weeks a rash of decisions surrounding the MSP private cause of action, particularly in the Sixth Circuit, should be of concern in moving a challenge forward. These recent cases have affirmed a private cause of action for a workers’ compensation claimant’s estate (Estate of MacDonald v. Industrial Indemnity) and chiropractor (Michigan Spine et. al v. State Farm). These appellate decisions appear to shift momentum for allowing such a claim.

Notwithstanding, the case is still in the formative stages. We will continue to monitor this matter as it proceeds and report. In regards to our commentary on the topic, whether such issues are covered by MSP law or not, Medicare Advantage Plans at least have a lien. When an insurer or self-insurer knows about such liens, it is important to specifically reference them in a Release, and manage how they will be resolved. Proactive measures like this will likely serve to avoid litigation.