Another Win for Medicare Advantage in the Eleventh Circuit Court of Appeals
Heather Sanderson
September 16, 2016

In a 2-1 final decision out of the Eleventh Circuit Court of Appeals, Humana Medical Plan, Inc. v. Western Heritage Insurance Company, Humana prevailed in recovering double damages under the Medicare Secondary Payer (MSP) private cause of action due to Western Heritage’s failure to reimburse Medicare conditional payments. Recall that last year the District Court of Appeals had also found in favor of Humana, to which Western Heritage appealed that decision to the Eleventh Circuit. Oral arguments were heard in the Eleventh Circuit earlier this year, and the industry has been eagerly waiting the Eleventh Circuit’s decision. For our prior blog on the District court decision, please click here.

Background/Recap of the Facts: In January 2009, Mary Reale, a Humana Medicare Advantage Plan beneficiary, was injured at Hamptons West Condominiums. Ms. Reale treated for her injuries and Humana paid for the treatment, totaling $19, 155.41. In June 2009, Ms. Reale and her husband sued the condominium in Florida state court for her injury. In March 2010, while her litigation was pending, Humana issued to Ms. Reale an Organization Determination in the amount of $19, 155.41. Although an administrative appeal process was available, no party appealed Humana’s Organization Determination. On April 20, 2010, in return for $115,000 from the condominium and its liability insurer, Western Heritage, the Reales released the condominium and Western Heritage. The Reales represented in the settlement agreement that there was no Medicare or other lien or right to subrogation. The Reales also agreed to indemnify the condominium and Western Heritage against any Medicare lien or right to subrogation.

On May 7, 2010, Humana sued the Reales and their attorney in the Southern District of Florida seeking reimbursement. The Reales sought dismissal, to which the court agreed, holding that a Medicare Advantage Plan (MAP) does not have a private cause of action to recover reimbursement from a beneficiary under the MSP. Likely in response to Humana’s suit, the condominium and Western Heritage attempted to make Humana a payee on the settlement draft to the Reales. The Reales then sought sanctions against Western Heritage for failure to comply with the settlement agreement. At that point, the parties agreed instead that the Reales’ attorney would hold $19, 155.41 in trust out of the $115,000 settlement amount pending resolution of the Reales’ litigation, and Western Heritage then tendered the $115,000 settlement to the Reales.

At this point the Reales sued Humana seeking a declaration as to what they owed Humana, however the court ultimately ruled that it lacked jurisdiction to adjudicate the dispute between Humana and Ms. Reale as to her MAP benefits. Subsequently, on January 11, 2011, Humana sued Western Heritage in the action upon which this appeal proceeded. Humana’s initial counts in its complaint were: 1) Double damages under the MSP private cause of action, 42 U.S.C. § 1395y(b)(3)(A); 2) Declaratory relief under the Medicare statutory and regulatory scheme; 3) Damages under several state law theories including unjust enrichment and a contract implied by law.

Eleventh Circuit Decision: Through analysis of the MSP and CMS regulations, the Eleventh Circuit found that MAPs have a right to a private cause of action for double damages against a primary plan where reimbursement has not occurred. Specifically, the Eleventh Circuit found the following persuasive: 1) CMS Regulations– A MAP “will exercise the same rights to recover from a primary plan, entity, or individual that the Secretary exercises under the MSP regulations in subparts B through D of part 411 of this chapter.” 42 C.F.R. § 422.108(f); 2) Statutory Basis- The MSP private cause of action, located at 42 U.S.C. § 1395y(b)(3)(A) is unambiguous and broadly permits any party with standing (including a MAP) to sue a primary plan. The Third Circuit in the In Re Avandia case also held that MAPs are included within the purview of parties who may bring a private cause of action.

Western Heritage countered that the MSP does not govern MAPs at all and that the MAP right-to-charge provision instead governs when and whether a MAP is a secondary payer. However, the court rejected this argument finding that the right to charge provision reveals that MAP payments are made secondary to primary payments under the MSP.

Franco Signor Commentary: The outcome of this case directly affects how claims with Medicare beneficiaries should be handled in the Eleventh Circuit, which encompasses Alabama, Florida, and Georgia. For workers’ compensation, liability or no-fault claims with a Medicare beneficiary in these states, we recommend proactive identification of any MAPs that may have paid for treatment, so as to avoid an MSP private cause of action for double damages.

Ignorance of a beneficiary’s enrollment in a MAP is no longer an excuse according to the Eleventh Circuit. While the Centers for Medicare and Medicaid Services (CMS) does not provide MAP enrollment data, primary plans must determine a claimant’s health insurance coverage. Interestingly in this decision, the Court found that Western Heritage could not plead ignorance of Humana’ status as a MAP, finding that as a settling party in the litigation, Western Heritage had the ability to discern the precise nature of Ms. Reale’s health insurance coverage. The Court further noted that Western Heritage could have pursued discovery to determine Ms. Reale’s health insurance.  In other words, Western Heritage knew that Ms. Reale was on Humana, but had a duty to determine if it was a MAP.

What is also interesting about this decision is the Court’s thoughts on timing on when reimbursement to the MAP must be made. Western Heritage had attempted to include Humana on the settlement check and even after that was rejected, sought to have the reimbursement amount held in trust pending resolution of the matter. The Eleventh Circuit looked to guidance from CMS regulations to determine what constitutes “appropriate reimbursement.” Looking to 42 C.F.R. § 411.24(i)(L), the court noted that if a beneficiary or other party fails to reimburse Medicare within 60 days of receiving a primary payment, the primary plan must reimburse Medicare even though it has already reimbursed the beneficiary or other party. The court found this applies equally to a MAP, pursuant to 42 CFR §422.108(f). Therefore, because no party had reimbursed Humana, Western Heritage became obligated to reimburse Humana within 60 days of tendering the settlement to the Reales. In summary, primary plans are obligated to reimburse MAPs for unreimbursed conditional payments within 60 days of tendering settlement.

What’s also interesting and a new finding in this decision is that double damages are not only allowed under the MSP private cause of action, but they are required by the statute. Because the plain language of the MSP private cause of action uses the word “shall” to describe the damages amount, rather than “may” with regard to double damages, the district court correctly ordered Western Heritage to reimburse Humana $38, 310.82, which is the double amount to which Humana was otherwise entitled.

As for Western Heritage’s further recourse in this matter, because the settlement agreement provided that the Reales would indemnify Western Heritage against any Medicare lien, theoretically Western Heritage could now enforce the indemnity clause and pursue recovery from the Reales and the attorney. However, Western Heritage should only be able to recover the actual lien amount- the $19, 155.41, and not the double damages amount. Also, Western Heritage may try to appeal this matter to the United States Supreme Court. However, as the U.S. Supreme Court declined to hear the In Re Avandia matter which involved the same issue, it will likely to decline to hear this case as well.

This Eleventh Circuit decision sets new precedent for MAPs and their ability to bring an MSP private cause of action for double damages. With the Third Circuit previously coming to the same conclusion in the In Re Avandia case, proactive identification of MAPs is now recommended in the following states: New Jersey, Delaware and Pennsylvania (Third Circuit) as well as Alabama, Florida, and Georgia (Eleventh Circuit).

For inquiries on this case or our MAP conditional payment solutions, please contact us at

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