Humana Alleges Retailer’s Reliance and Lack of Follow-up to Ensure Medicare Beneficiary Plaintiff Reimburses Medicare Part C for Conditional Payments is Actionable for Double Damages under the MSP
Heather Sanderson
August 28, 2018

Humana is continuing on its mission to establish precedent across the country regarding Medicare Advantage Plans’ (MAPs) ability to pursue a Medicare Secondary Payer (MSP) double damages private cause of action against primary plans that fail to reimburse conditional payments. Just filed is an action by Humana against Bi-Lo, LLC, a grocery retailer, in the U.S. District Court for the District of South Carolina for declaratory relief and monetary damages to recover amounts allegedly due and owing to Humana MAP for payments made on behalf of Enrollee (the Medicare beneficiary’s name is not disclosed in the complaint and shall be referred to as Enrollee), a Medicare beneficiary who elected Medicare Advantage coverage from Humana Insurance Company. The Complaint can be found here.

On or about August 29, 2013, Enrollee slipped and fell at a Bi-Lo grocery store. At the time of the accident, Enrollee had elected Medicare Part C coverage through Humana. Humana alleged that it expended at least $25,449.88 in conditional payments on Medicare claims submitted on behalf of Enrollee for medical services rendered as a result of the slip and fall. Sometime around May 2016, Bi-Lo entered into a settlement with Enrollee, and around August 2016, Bi-Lo paid Enrollee $80,000 to extinguish all claims, including her claims for personal injury and associated medical expenses. However, once procurement costs pursuant to 42 CFR 411.37 were calculated and applied, the resulting conditional payment amount alleged that was due and owing to Humana was $16,377.01.

Humana acknowledged that although Enrollee was primarily responsible for reimbursing the conditional payments to Humana, pursuant to 42 CFR 411.24(i)(1), by failing to make advance arrangements to see that this occurred), Bi-Lo assumed the risk of being responsible to ensure that Humana was paid in the event that Enrollee breached its obligations. Since the Enrollee did not comply with her repayment obligations, according to Humana, Bi-Lo is responsible for reimbursing Humana, even though it had already paid Enrollee.

On October 27, 2017, Humana’s counsel sent Bi-Lo a letter providing written notice of Humana’s right of recovery under the MSP law and demanding reimbursement. Neither Bi-Lo nor its counsel responded to that letter, nor had Humana received any reimbursement to date for the conditional payments it made on behalf of Enrollee.

Bi-Lo as a result in this Complaint seeks a Declaratory Judgment as to the Defendant’s obligation to reimburse Medicare conditional payments as well as double damages under the MSP private cause of action in the amount of $32,754.02.

Franco Signor Commentary: While this litigation is at the beginning stages, it is indicative of Humana and other MAPs’ continuous plight to establish their right to double damages for unreimbursed conditional payments in various jurisdictions. As MAPs currently have a right to double damages for unreimbursed conditional payments in both the 3rd and 11th Circuit, more District courts are continuing to look to the 3rd and 11th Circuit decisions as persuasive, and are siding with MAPs’ ability to have the same recovery rights as traditional Medicare. Further, this is just one of the few actions we have seen pursued against a self-insured entity, as most of these types of actions are pursued against primary plans.

Another important take-away from this Complaint is that it is not advisable to rely upon a Medicare beneficiary to reimburse either traditional Medicare or Medicare Advantage Plans. Pursuant to 42 CFR 411.24, as Humana has alleged here, Medicare may still seek recovery and double damages reimbursement from any party to the settlement should Medicare not be reimbursed- this includes primary plans, providers and plaintiff attorneys. We will continue to monitor this litigation. In the meantime, we continue to recommend that primary payers drive the conditional payment resolution process both with traditional Medicare as well as Medicare Advantage Plan so as to avoid an action for double damages.