The Wild Wild West of Medicare Advantage Organizations (MAOs) filing litigation nationwide against primary plans (workers’ compensation, liability or no-fault carriers/plans) to establish the right to a Medicare Secondary Payer (MSP) private cause of action for failure to reimburse the MAO for unreimbursed conditional payments continues. As of our last update, both the 3rd Circuit (encompassing New Jersey, Delaware and Pennsylvania) and 11th Circuit (encompassing Alabama, Georgia and Florida) Courts of Appeal had confirmed that MAOs have this right under the MSP, but all other Circuits had been silent on this issue to date.

Just last week, in a preliminary decision on a Motion to Dismiss and Motion to Strike, the District Court located within in the First Circuit indicated clearly that it finds the Third Circuit’s reasoning from the In Re Avandia litigation persuasive. See MSP Recovery Claims v. Plymouth Rock Assur. Corp., 2019 U.S. Dist. LEXIS 119499 (July 18, 2019). The Opinion can be found here.

More specifically, the Court noted that such an interpretation is not only consistent with the Medicare Act as a whole, but also that this interpretation is consistent with Congress’s intention to place MAOs on the same footing as traditional Medicare. Within the text of the Opinion, the Court explicitly states: “The Court concludes that an MAO may maintain an action under § 1395y(b)(3)(A)” (referring to the section within the MSP allowing for the private cause of action).

While this Opinion was issued on a Motion to Strike/Motion to Dismiss and the litigation is still ongoing, the District Court’s stance on this issue is telling as for the plausibility of future similar MAO MSP Private Cause of Action litigation under the First Circuit. The First Circuit Court of Appeal encompasses the following jurisdictions: Maine, Massachusetts, New Hampshire, Puerto Rico, and Rhode Island. Therefore, extra caution and care to ensure any known MAO conditional payments are reimbursed in these states (in addition to the 3rd and 11th Circuit court states) are recommended.

Additionally, the MSP Recovery v. Plymouth Rock Opinion discusses a few other interesting noteworthy points as it pertains to required notice by an MAO, MSP Statute of Limitations, and Viability of Class Actions for MAO MSP private causes of action:

  • Notice Requirements– In this litigation, the Defendant Plymouth, an auto-insurer, asserts that the claim should be dismissed because Plaintiff MSP Recovery as an assignor of claims from MAO Fallon Community Health Plan failed to demonstrate that Plymouth was on notice that the MAO Fallon had a claim for reimbursement. Plymouth argued that the Complaint does not assert that the MAO Fallon had ever sent a “recovery demand letter” and even now no clear amount payable has been alleged. The Court found that at this stage of the litigation such proof was not required; however, following discovery Plaintiff MSP Recovery will be required to support its allegation that Plymouth had, or should have had, the necessary information to reimburse the MAO Fallon for the expenses at issues. This is an interesting point that Defendant Plymouth has asserted, as MSP Recovery has historically taken the position in its litigation that the MAOs were not required to provide notice and various methodologies are available to primary payers to ascertain a Medicare beneficiary’s MAO enrollment status. As we have repeatedly stated, there is no centralized method for primary plans to become aware of MAO claims for conditional payment recovery unless the MAO provides notice, which is why we support The PAID Act so that MAO and Medicare Part D exposures can be known at the time of settlement.
  • Statute of Limitations- The parties were at odds as to when the Statute of Limitations began to run for the representative beneficiary asserted. The Court assumed that for purposes of the Motion to Dismiss that the statute of limitations began to run no earlier than the date Plymouth settled the representative beneficiary’s claims, because the settlement is integral to demonstrating Plymouth’s liability. While this statute of limitations matter was left as an unknown for the Court to ultimately determine later, the Court seemingly was on the wrong track with that line of thinking. Per the Strengthening Medicare & Repaying Taxpayers (SMART) Act of 2012, the three-year limitation period commences from the submission date to Medicare of the Section 111 reporting record.  The date of the settlement is irrelevant.  Should this matter proceed further, we would expect the Parties to note commence period start date in line with the Medicare Secondary Payer Act law.
  • Motion to Strike Class Claim- Defendant Plymouth filed a Motion to Strike the Class Claim, as Plaintiff MSP Recovery was seeking to establish a class of all MAOs similarly situated in which the Defendant Plymouth did not reimburse the MAOs for conditional payments. The key question before the Court on the Class claim is whether common issues of law and fact will predominate, with the commission issue of whether Plymouth “failed to make required payments under the MSP provisions and failed to reimburse Class Members.” But the Court found that this would demand an individualized and fact-specific answer, not merely for each putative class member, but for each of every purported class member’s allegedly unreimbursed claims. Liability for such claims would turn on issues such as the following: whether a tortfeasor’s claim settled, whether Plymouth received the relevant information concerning medical costs (whether notice was received), or whether the plaintiff was actually assigned the claim for which liability is alleged. Therefore, the class allegations were struck from the Complaint. The Court’s reasoning here that a Class is not a proper avenue to recoup MAO conditional payments where each claim is unique and has to be assessed for various requirements before a repayment obligation is established may hinder MSP Recovery’s nationwide class action efforts going forward.

We will continue to monitor this ongoing litigation as well as all similar MSP Private Cause of Action litigation. For questions, please contact Heather.Sanderson@francosignor.com.


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