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Fourth Circuit Federal District Court: Medicare Advantage Organization Has Private Cause of Action U

In Humana Ins. Co. v. Paris Blank LLP, No. 3:16CV79-HEH, 2016 U.S. Dist. Ct. LEXIS 61814 (E.D. Va., May 10, 2016), Humana Insurance Company, a Medicare Advantage Organization, made payments totaling $191,612.09 on behalf of an enrollee who was injured in a motor vehicle accident. The enrollee filed suit following the accident and was represented by Keith Marcus, an attorney at the law firm of Paris Blank LLP. The enrollee settled with several insurance carriers involved in the litigation and received approximately $475,600.00 in settlement funds. The parties were aware of Humana’s lien and several of the insurance companies issued settlement checks jointly to Humana and Paris Blank LLP. Despite this, Mr. Marcus deposited the checks without the endorsement of Humana. Humana later communicated to enrollee that reimbursement in the amount of $191,612.09 was owed for the payments made for the accident-related treatment and noted that enrollee had sixty (60) days to pay the lien, appeal the charges, or request a waiver. Mr. Marcus requested a waiver on behalf of the enrollee; however, this request was denied. Despite this denial, reimbursement was never issued for the payments made by Humana and a complaint was filed against Mr. Marcus and Paris Blank LLP (“Defendants”) to recover the lien under the Medicare Secondary Payer Act’s private cause of action provision.

The Defendants filed a motion to dismiss Humana’s complaint for failure to state a claim, arguing that the Medicare Secondary Payer Act (MSPA) does not create a private cause of action for Medicare Advantage Organizations (MAOs) such as Humana. Humana argued that since there is no Fourth Circuit precedent on this question, the Court should follow the reasoning of the Third Circuit in In re Avandia Marketing, Sales Practices, & Products Liability Litigation (“In re Avandia”), 685 F.3d 353 (3d Cir. 2012). In that case, the Third Circuit held that an MAO could maintain a private right of action to recover conditional payments made on behalf of an enrollee. The Court reviewed the plain language of the statute as well as the regulations issued by CMS concerning the rights of MAOs. By doing so, the Court agreed with the Avandia court, finding that the language contained in §1395y(b)(3)(A) is plain and unambiguously establishes a private cause of action for the recovery of double damages where a primary plan fails to pay with no restriction provided on who may utilize the private right of action. Further, they noted that even if the language were ambiguous, the regulations promulgated by CMS clarify that MAOs have the same right of recovery as traditional Medicare under the MSPA. The Defendants also argued that a suit could not be maintained against them in their capacity as a law firm and as an attorney representing the enrollee. The Court rejected this argument, finding that no such limitation is noted in the statute and federal regulations actually hold that attorneys are an entity from which recovery may be sought under the MSPA. Although not surprising that the Court held that an action could be maintained against enrollee’s attorney and his firm since they received payment from a primary plan, it is of note that Humana chose to bring the action against these entities as the majority of similar cases filed by MAOs have named the insurance companies and/or enrollees as defendants.

This case adds the Fourth Circuit to the list of jurisdictions (which includes the Third, Fifth, Sixth, and Eleventh Circuits) that have agreed that MAOs have a private cause of action for double damages under the MSPA. We will continue to follow this and similar cases and keep you posted on any new developments.

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