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Determining Rights of Medicare Advantage Plans: State Lacks Jurisdiction

In the most recent decision in a series of cases involving a 2009 incident at a condominium, a Florida Court of Appeal finds that the lower court erred in finding subject matter jurisdiction when determining the recovery rights of a Medicare Advantage Plan.

Ms. Reale, the plaintiff in the present case, was injured in 2009 at a condominium insured by Western Heritage. Humana, a Medicare Advantage Plan, paid for treatment related to that injury. Humana originally pursued recovery for treatment paid from Ms. Reale, but after their initial claim was dismissed, Humana changed tactics and began pursing recovery from Western Heritage, the insurer.

In March 2015, the US District Court found that Humana could maintain a private cause of action for double damages against Western Heritage (Humana Med. Plan v. W. Heritage Ins. Co., (2015 U.S. Dist. LEXIS 31875). That decision has been appealed and the suit is ongoing. While that case has been playing out, Mrs. Reale sought a declaratory judgment against Humana in state court, challenging its recovery rights under the Florida subrogation and collateral source statutes. In response, Humana moved for summary judgment on three separate grounds: 1) Ms. Reale did not exhaust the mandatory administrative remedies, 2) federal law preempts Florida’s collateral source statute, and 3) the collateral source statute does not apply to Medicare claims. The Florida circuit court ordered summary judgment on October 30, 2012, finding that it did, in-fact, have subject matter jurisdiction pursuant to state law and reduced Humana’s recovery to $3,685.03. Humana appealed the circuit court’s decision and on December 2, 2015, the Court Appeal of Florida vacated the circuit court opinion and remanded the case to be dismissed for lack of subject matter jurisdiction.

The Court found that the Social Security Act, certain provisions of which are applicable to the Medicare Act through 42 U.S.C. § 1395ii, creates “an exclusive review process for all claims arising under the Medicare Act, including claims brought in the context of the Medicare Advantage program.” Furthermore, the court determined that because Ms. Reale did not exhaust her administrative remedies and did not obtain a final decision from the Secretary, as required by the Social Security Act, judicial review was not available in this case. The court further explained that even if her dispute was subject to judicial review, such review would lie exclusively within the jurisdiction of the federal, not state, courts.

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