Humana’s MSP Private Cause of Action for Double Damages against Plaintiff Attorney Law Firm Survives Motion to Dismiss
Heather Sanderson
May 11, 2016

Medicare Advantage Plans have set their sights on a new target for the MSP Private Cause of Action: Plaintiff attorneys representing Medicare beneficiaries. We have previously only seen these causes of action against insurance companies, self-insureds and providers. In an opinion out of the U.S. District Court for the Eastern District of Virginia, Humana v. Paris Blank LLP, 2016 U.S. Dist. LEXIS 61814, Paris Blank LLP (“Defendant”), a law firm representing a Medicare beneficiary, was sued by Humana Medicare Advantage for the attorney’s failure to reimburse Humana for conditional payments.

The background of the litigation involved Paris Blank’s client (“Enrollee”) having suffered injuries in a motor vehicle accident. As a result, Plaintiff Humana (“Plaintiff”) had made conditional payments in the amount of $191,612.09 on behalf of Enrollee to cover medical expenses. As a result of the accident, Enrollee received payments from several insurance companies totaling approximately $475,600. The insurance companies issued checks for the settlement to Paris Blank, as well as to Humana and Paris Blank jointly. However, despite some of the settlement checks including Humana, the Defendant deposited these checks without Humana’s endorsement.

On January 15, 2015, Plaintiff communicated to Enrollee that Enrollee owed Plaintiff $191,612.09 in conditional payments and sought reimbursement within 60 days. The communication also included information regarding the request for a waiver or filing of an appeal. Attorney Keith Marcus (“Marcus”), on behalf of Defendant, sent a request for waiver to Plaintiff on Enrollee’s behalf. The request for waiver alleged that Enrollee did not have any obligations to Medicare Part A and Part B; however, the waiver request did not address any obligations owed to any Medicare Advantage Plan under Medicare Part C. Plaintiff denied Enrollee’s request for waiver and, as of the filing of the Complaint, had not received reimbursement for any of the conditional payments.

Because this litigation resides in the Fourth Circuit, and no case law exists which would be precedent for the maintenance of this cause of action, Plaintiff argued that the Court should follow the reasoning of In Re Avandia Marketing out of the Third Circuit. In In Re Avandia, the Third Circuit found that Medicare Advantage Plans could maintain a private right of action to recover conditional payments made on behalf of a beneficiary.

The Defendant argued that In Re Avandia was an “aberrational” decision and noted that the Third Circuit “is the only Circuit Court of Appeal decision holding that § 1395y(b)(3)(A) provides a Medicare Advantage Plan a private cause of action for reimbursement.” Although not binding precedent, the Court found persuasive the Third Circuit’s determination that a Medicare Advantage Plan may pursue recovery via the Medicare Secondary Payer (MSP) private cause of action. Furthermore, the Court found, the plain language of the MSP does not place any restriction upon who may utilize that private right of action.

The Defendant’s secondary argument was that Plaintiff may not maintain suit against Defendants as a law firm and an attorney representing Enrollee. More specifically, the Defendants argued that they are not primary payers, and therefore, fall outside the scope of recovery provided by any private right of action. The Plaintiff counter-argued that the MSP language reaches broadly enough to allow recovery from any entity-including law firms and attorneys receiving payment from a primary plan.

The Court agreed with the Plaintiff and found that the MSP law does not carve out any exceptions for attorneys and law firms. The MSP generally establishes a private cause of action “in the case of a primary plan which fails to provide for primary payment.” Therefore, the Court denied the Defendant’s Motion to Dismiss.

Commentary: While this decision is not final, the Court allowing Humana’s suit to proceed and its commentary within the opinion is certainly indicative of the Fourth Circuit’s view that Medicare Advantage Plans may lodge a private cause of action for double damages against Plaintiff attorneys that fail to reimburse conditional payments to those Plans.

Further, the final result of this litigation will be interesting once the Court does get to the merits of the case if the Court finds as a matter of law that Plaintiff attorneys are in fact primary plans. Technically, the MSP private cause of action lists only primary plans as potential parties. It will be an interesting play on whether Medicare Advantage Plans “sit in the shoes” of primary plans because they are an entity that received payment from a primary plan.  This would be a game changer.

As the private cause of action case law continues to grow and expand, it would be wise for all parties to the settlement to verify the Plaintiff’s Medicare status and additionally verify whether the Plaintiff is or has ever been enrolled in a Medicare Advantage Plan. If the Plaintiff is or has ever been enrolled in a Medicare Advantage Plan, it is incumbent upon all parties to the settlement to contact that plan and ensure that any conditional payments are addressed and reimbursed timely, or a private cause of action for double damages could be maintained by that Plan.

It is also important to remember that the Centers for Medicare and Medicaid Services (CMS) is sharing Section 111 data with Medicare Advantage Plans and expects these Plans to pursue recovery where a primary payer exists. As pressure increases by CMS upon these Plans, and as the case law continues to become stronger for Medicare Advantage Plans to broadly bring these private causes of actions, primary payers, Medicare beneficiaries, providers and Plaintiff attorneys should be wary. The best arm of defense is to hire an expert- contact us at to learn more about our Medicare Advantage resolution services.

Heather Schwartz Sanderson, Esq., MSCC, CHPE, CLMP, CMSP
Chief Legal Officer
Franco Signor LLC