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  • Melisa Zwilling

ALERT: Eleventh Circuit Holds That Medicare Advantage Organization Entitled to Double Damages Under


A number of federal district courts have followed the ruling of the Third Circuit in In re Avandia Sales Practices, and Products Liability Litigation, 685 F.3d (3rd Cir. 2012), finding that Medicare Advantage Organizations (MAOs) have a private cause of action to recover double damages under the Medicare Secondary Payer Act (MSP). In the present case, Humana Med. Plan v. W. Heritage Ins. Co., (2016 U.S. App. LEXIS 14509), the United States Court of Appeals for the Eleventh Circuit was asked to review the finding of one of those district court decisions. The Eleventh Circuit considered the Defendant’s (Western Heritage Insurance Company) appeal of the U.S. District Court decision holding that Plaintiff (Humana) was entitled to reimbursement from Defendant for payments made on behalf of Defendant’s insured and should receive double damages for the same under the MSP.

We previously wrote about this case in March 2015 when the U.S. District Court considering Humana’s Motion for Summary Judgment held that Western was liable for the charges paid on insured’s behalf and Humana was entitled to double damages under the MSP. As you may recall, the insured agreed to be responsible for the Medicare liens as part of the settlement agreement and Western had even attempted to list Humana as a payee on the settlement check. We noted that similar to the reimbursement rights of Medicare, the reimbursement rights of an MAO will not be bound by the terms of a settlement agreement. Western appealed the decision of the District Court to the Eleventh Circuit.

In deciding whether the MSP private cause of action permits an MAO to sue a primary payer that refuses to reimburse the MAO for a secondary payment, the Eleventh Circuit followed the direction of the Third Circuit's decision in In re Avandia and upheld Humana’s Motion for Summary Judgment. The Court found that Humana has a private cause of action under the MSP and is entitled to recover double damages as a result of Western Heritage Insurance Company’s (“Western”) failure to reimburse Humana for medical expenses it advanced on behalf of its insured. In reaching its decision, the Eleventh Circuit considered Defendant’s two-part argument that (1) it lacked constructive knowledge that Medicare made a payment and (2) it attempted to make Humana a payee on the settlement check but was ordered instead to pay the amount of the lien into a trust held by the insured’s attorney. Western argued that it was unaware that Humana was an MAO in this case. The Court rejected this argument, stating that Western was aware that insured had coverage through Humana and could have easily discovered the nature of that coverage. Likewise, the Court rejected Western’s argument that the funds placed into the trust account were appropriate reimbursement looking directly to CMS regulations, which state that if a beneficiary failed to reimburse Medicare within sixty (60) days of receiving a primary payment, the primary plan “must reimburse Medicare even though it has already reimbursed the beneficiary…”

This case specifically highlights the fact that an insurer can still be found responsible for reimbursing an MAO even if there is a contrary agreement of the parties regarding the responsibility for the repayment of liens and even if some efforts were taken towards ensuring that an insured repays liens. As more courts uphold the rights of MAOs under the MSP, the importance of researching and resolving potential liens is growing. We are happy to answer any questions you may have regarding MAOs and help you address and resolve these liens.

#Humana #MSP #MAO

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