North Carolina Industrial Commission Follows In Re Avandia; Awards MAO Reimbursement
Roy Franco
June 18, 2015

In a recently argued claim before the North Carolina Industrial Commission, Wallace v. National Vision, 2015 WL 3745634 (June 9, 2015), the parties had to resolve a Medicare Advantage (MAO) reimbursement claim in a disputed case. The injured worker was a MAO beneficiary. The MAO incurred expenses for the industrial accident because medical treatment was denied by her employer’s plan.   The issue before the Commission after finding compensability was whether the MAO payments were subject to reimbursement. In ruling that it was subject to reimbursement, the Commission relied on the In Re Avandia case brought by Humana in the Third Circuit. Humana had brought a MSP private cause of action claim for double damages in a tort settlement involving one of their beneficiaries and won. (Click here to the Avandia decision). The ruling is significant for two reasons:  1). Avandia continues to influence the law outside of the Third Circuit; and 2). The Commission’s reliance on tort decisions to develop workers’ compensation precedent.

What’s most interesting about the outcome here for the MAO was that it was NOT a party. The injured worker presented the MAO claim as part of her fight for compensability.  As a consequence, the way in which the MAO obligation is being resolved is unique. The Commission ruled that within 60 days of the decision all previously incurred medicals will be reimbursed to providers that are related to the claim based in the fee schedule. The providers then must send that money to the MAO.

If Avandia is the basis for the Commission’s decision, the Employer Plan will need to exercise caution. It is now considered a primary plan under the MSP law and under the MSP regulations in effect; therefore, the MAO is authorized to bill its full charges. It is not a well-known exception to general Medicare principles.   In light of this exception, a potential private cause of action under the MSP will still exist. To avoid this, it would make more sense to identify the entirety of the claim with the MAO and pay it or appeal the decision.  We have seen in a recent Florida decision that is now on appeal the danger for a primary plan to rely on state rulings. Click here to see our prior blog on this case.

Franco Signor Commentary:  Ever since the decision in U.S. v. Stricker, CMS through the U.S Attorney’s office has not pursued litigation in its absence. The MAO’s are actively developing this case law which ultimately inures to the benefit of Medicare and the Advantage Plans.

Currently, it is a challenge for the industry to deal with MAOs because of the inability to identify what MAOs the beneficiary has ever been enrolled in and also because the law as it applies in each jurisdiction is unsettled. Until further circuit appellate rulings come of age, navigation to avoid MSP liability will be a challenge. Western Heritage Insurance is the next big case to help guide this issue. Briefs are currently being filed, and it is possible a decision could occur this year. The MARC Coalition is also filing an amicus curiae brief in this case as the outcome will greatly affect the industry. For more information on MARC’s involvement in the Western Heritage case, click here. For more information on the MARC coalition and to support efforts to support secondary payer reform, click here.