Dissenting Judge in Western Heritage Case Issues Opinion Year After Case was Decided – Outlines Reasons Against Medicare Advantage Plans Having the Right to Medicare Secondary Payer Private Cause of Action
Heather Sanderson
January 31, 2018

Recall that in September 2016, the Eleventh Circuit Court of Appeals ruled that Humana Medicare Advantage may sue a primary plan for failure to reimburse conditional payments under the Medicare Secondary Payer (MSP) private cause of action for double damages. The Eleventh Circuit encompasses the jurisdictions of Florida, Alabama, and Georgia. For our original blog on the Eleventh Circuit Western Heritage decision from September 2016, click here.

Just a few days ago on January 25, 2018, Judge Tjoflat joined Judge Pryor in his dissent. This updated opinion was issued after a majority of Judges voted against a rehearing en banc.  This dissenting opinion lays out legal reasons why the Eleventh Circuit’s decision advancing and supporting In Re Avandia and the right for Medicare Advantage Plans (MAPs) to have a right to the private cause of action is wrong.

Judge Tjoflat’s dissenting opinion on why legally it makes no sense to extend the MSP Private Cause of Action to MAPs can be summarized in the following bullet points:

  • The MSP Private Cause of Action Provision was established 17 years before MAPs existed.  Clearly, Congress could not have intended it to apply.
  • MAP payments for items and services are not payments by the Secretary of Health & Human Services.  Hence, such payments are outside the statutory scope that are built into the statute.  These payments are from private plans, not from the Medicare Trust Fund.
  • MAPs under the statutory scheme set up by Congress “may charge” the primary plan, while the Government must follow the statutory debt-collection scheme.  Thus, a MAP may immediately sue to collect without regard to cumbersome timeframes that require government due process.  The subrogation claim is therefore codified, and preempts any state law prohibiting such.
  • Congress did not alter existing MAPs’ rights under state law.  MAPs could establish that recovery right in their coverage contract.  Even if no contract existed, most jurisdictions, including Florida, allows for that right to be implied (equitable subrogation).
  • The MAP has no legal relationship with the tortfeasor.  Its relationship is with its insured, the beneficiary.  No independent duty exists under subrogation (equitable or contractual) until there is a judgment or settlement.

Commentary: The dissenting opinion is carefully crafted and may be cited in the future as persuasive authority by other Circuit Courts that have yet to rule on this issue, particularly where the Circuit Court may be leaning toward opining that MAPs should not be entitled to the same private cause of action rights as Medicare.  Thus far, only the 3rd (In Re Avandia litigation) and the 11th Circuit (this case, Western Heritage) have advanced such private cause of action double damages rights for MAPs.  A handful of District Courts in other Circuits have followed suit, but this dissenting opinion could be helpful to turn that tide.

It is unquestionable that Circuit Courts will continue to have to face the issue of interpreting whether the MSP Private Cause of Action should apply to MAPs.  There are two important ways in which primary plans can get in front of this issue:

  1. Be proactive in determining whether your claims with Medicare beneficiaries also involve a MAP. Approximately 1/3 of Medicare beneficiaries are enrolled in MAPs, and that number is expected to increase over time. If the beneficiary is or has ever been enrolled in a MAP, verify, dispute (if applicable) and reimburse the MAP conditional payments, particularly in those jurisdictions where MAPs have established double damages private cause of action rights.
    • Work with an expert on how to best protect against these exposures. Franco Signor has had great success reducing MAP conditional payment demands and mitigating these liabilities.
  2. Join us in working with the Medicare Advocacy Recovery Coalition (MARC) which is currently working on legislation to establish fairness and require Medicare to provide MAP enrollment information, so that primary plans are at least aware of a MAP’s claims for recovery.

Contact Roy Franco (Roy.Franco@francosignor.com) or Heather Sanderson (Heather.Sanderson@francosignor.com) to learn more.