Sixth Circuit Court Gets It Right, and Finally Some Limitations on the Use of the MSP Double Damages Private Cause of Action
Heather Sanderson
April 19, 2018

As we have noted in numerous recent blogs, Medicare Secondary Payer (MSP) Private Cause of Action litigation has been on the rise and has grown to be incredibly rampant in the past several years. Innate to this recently popular weapon for double damages against primary plans is the unfortunately vague and ambiguous language in the MSP defining the action. The MSP simply states that “there is an established private cause of action (which shall be in an amount double the amount otherwise provided) in the case of a primary plan that fails to provide for primary payment (or appropriate reimbursement) …” See 42 USC §1395y(b)(3)(A).

As the provision is not entirely clear, we have seen a wide range of litigants and defendants involved in MSP private cause of action litigation: Medicare Advantage Plans (MAPs), providers, plaintiff attorneys, asbestos trusts, and the list continues. With each decision we see the Courts trying to grapple with determining the Congressional intent behind the MSP Private Cause of Action. In especially recent decisions, we have seen an alarming broader allowance by Courts in using the private cause of action and inflicting double damages as penalty, particularly by Medicare Advantage Plans alleging lack of repayment for conditional payments.

However, a recent decision out of the Sixth Circuit has ruled that the MSP private cause of action was not intended to be used by private individuals where the individual did not suffer financial harm, and a private individual does not have standing to pursue financial injury suffered by the federal government. In other words, the MSP is not a qui tam statute. The decision is entitled Gucwa v. Lawley, 2018 U.S. App. LEXIS 9428, U.S. Court of Appeals for the Sixth Circuit (April 16, 2018) and a copy of the opinion can be found here.

The basic facts are as follows: this Circuit Court action was an appeal from a dismissal of Mark Marusza’s and Nancy Gucwa’s complaint in which they alleged four causes of action. For the purposes of this blog, we will focus only on the Plaintiff’s (particularly Marusza’s) cause of action for double damages under the MSP.

Marusza suffered a work-related accident in Fall of 2011. Marusza alleged that defendant Accident Fund Insurance Company neglected to pay a share of his medical bills. Accident Fund initially paid for Marusza’s treatment but then subsequently terminated benefits after retaining four physicians to examine his disability. Marusza alleged that Medicare paid $15,665.00 of his treatment costs which Accident Fund refused to cover during this time period.

While simultaneously filing a complaint in the District Court for the Eastern District of Michigan, Marusza also petitioned the Michigan Workers’ Compensation Agency for assistance. In May 2016, the Workers’ Compensation Magistrate ruled that Marusza required treatment for a mild traumatic brain injury, vision problems, and injuries to his neck, shoulders, and lower back caused by the 2011 accident.

Because Marusza lost all wage earning capacity in the accident, the Magistrate ordered Accident Fund to pay Marusza workers’ compensation benefits owed from October 19, 2011, onward at the rate of $592.88 per week and for reasonable and necessary medical treatment of Marusza’s employment-related conditions. On August 12, 2016, Accident Fund paid Marusza $74,382.00.

Regarding his MSP private cause of action, the district court dismissed his claim because he had not suffered financial harm. The Circuit Court agreed with the district court’s decision. Because the MSP is not a qui tam statute, the financial injury suffered by the government does not confer standing upon other parties.  Private plaintiffs must suffer their own individual harm; for instance, a private plaintiff may allege that they were paid less by Medicare than they would have been paid by the primary payer.

But, private citizens cannot lodge the MSP private cause of action where there is no financial harm to the individual. Medicare may have made payments here conditionally that were allegedly otherwise the responsibility of Accident Fund, but that does not confer standing on Marusza as an individual.

Commentary: The Sixth Circuit Court of Appeals came to the correct decision here. As we continue seeing increased MSP private cause of action litigation and broad allowance for such actions, it is a breath of fresh air to see reasonable limits upon the use of this action.

The MSP Private Cause of Action was not intended to be used by private individuals that did not suffer harm. Further, Accident Fund had a seemingly reasonable initial basis to deny payment for Marusza’s workers’ compensation injuries, with the support of 4 doctors’ opinions which examined his disability. Medicare paid conditionally in the interim, but the MSP supports this process to ensure that the beneficiary obtains care where there may be a dispute as to compensability under the primary plan.

In conclusion, the MSP private cause of action has limits, and with a reasonable basis, Medicare may pay conditionally with the expectation of reimbursement upon settlement.