Dist. Crt. of CT (2nd Cir.) Follows 3rd and 11th Circuits: MAPs May Pursue an MSP Private Cause of Action for Double Damages Against Primary Plans
Heather Sanderson
March 16, 2018

Primary Plans Beware: The tide continues to turn across the country in favor of Medicare Advantage Plans (MAPs) having a right to sue primary plans based on the Medicare Secondary Payer (MSP) private cause of action and the ability to seek double damages for the failure to reimburse MAP conditional payments. The decision has the potential to extend the law of the Third and Eleventh Circuits to the Second Circuit (Connecticut, Vermont and New York) should this Connecticut District Court decision be appealed. One reason for such an appeal would be to put forth the excellent arguments raised by Judge Tjoflat in his dissenting opinion in the Western Heritage case published this past January explaining why MAPs are not entitled to this right. That would be appropriate as Connecticut District Court did not take into consideration any of those arguments. For our prior blog on the dissenting opinion from Western Heritage, please click here.

The facts in Aetna Life Ins. Co. v. Guerrera, 2018 U.S. Dist. LEXIS 41450, March 13, 2018 are as follows: Plaintiff (Guerrera), a Medicare beneficiary, is allegedly injured on February 20, 2015 at a Big Y Grocery store. She received medical treatment that was paid for by Aetna, a Medicare Advantage Plan. The total charges are $9,854.16. Guerrera hires the law firm of Carter Mario and Attorneys Hammil and/or Wisniowski to represent her against Big Y. Aetna informs Big Y of its lien a year in advance of any settlement discussions. Big Y settles Guerrera’s claim for $30,000 and advises her that the Aetna lien amount will be held back to be paid directly. However, for reasons that are unclear from the opinion, Big Y issues the entire amount to Guerrera and her attorneys on September 15, 2016.

Aetna filed this action in Federal District Court for reimbursement pursuant to the Medicare Secondary Payer Act, and in particular the private cause of action provisions of that law which would entitled it to double damages. The claim was brought against Big Y, Guerrera and Guerrera’s attorneys. Defendants moved to dismiss the action for failure of subject matter jurisdiction, believing that no Federal question was involved in the case. The Court dismissed Aetna’s claims against Guerrera and Guerrera’s attorneys due to its determination that the MSP private cause of applies only to primary plans or payers. The decision to do so was based on the Court’s determination that the Congressional intent was for double damages only to be applied to primary plans or payers. However, it refused to dismiss the claim against Big Y.

The MSP private cause of action was not dismissed against Big Y for the following reasons: 1) Because it was a primary plan as defined by the MSP law; 2) Primary plans are the intended defendants by Congress under this provision; and 3) There was a failure “to provide for primary payment (or appropriate reimbursement)…” 42 U.S.C. §1395y(3)(A) (emphasis added). Because Big Y knew of Aetna’s claim, and even took a step toward reimbursing it, by attempting to hold back funds, but ultimately released such funds, it was responsible for not making the “appropriate reimbursement.” This is critical, because the Court made note, quite clearly, that such obligation could not be discharged by making payment directly to Guerrera and Guerrera’s attorney.

For our more in depth legal analysis of the court’s opinion as to 1) Who May Sue Under the Private Cause of Action, 2) Who May be Sued, and 3) When Suit is Proper, please click here.

FS Commentary: Most of us in the industry have handled cases with very similar facts. It is critical to not release funds to the plaintiff Medicare beneficiary or their attorney, without making certain that both traditional Medicare and Private Medicare such as MAPs and Part D plans are promptly reimbursed. A “holdback” of funds sufficient to cover the conditional payment amount owed is a good way to accomplish this. It would allow parties to work with MAPs, like Aetna to arrive at the appropriate amount, and have the funds to pay for it when that occurs. This is a best practice, that if implemented avoids unpleasant situations such as what has arose in this case.

We will monitor this decision for appeal and further impact to the Northeast. As always, we recommend diligent monitoring of Medicare Advantage Plan status prior to settling a liability, workers’ compensation, or no-fault claim with a Medicare beneficiary in all jurisdictions, as case law remains unsettled in various jurisdictions across the country. Clearly, as this decision indicates, Courts are nearly unanimously finding in favor of MAPs having a right to a double damages private cause of action. It makes sense to be proactive.