Expanded Recognition of MAOs Recovery Rights Under MSP

Courts continue to consider and rule on the rights of Medicare Advantage Organizations (MAOs) under the Medicare Secondary Payer Act (MSP). In the present case, Mspa v. Co. V., No. 16-20531, 2016 U.S. Dist. LEXIS 132592 (U.S Dist. S.D. Fla., September 26, 2016), a woman was injured after suffering burns in an incident which occurred at Sonic. The injured woman was enrolled in a Medicare Advantage Plan with Florida Healthcare Plus, a Medicare Advantage Organization (MAO). The MAO made payments on behalf of the woman for injuries related to her accident at Sonic. Plaintiffs, as assignee of the MAO, filed a complaint under the MSP against the Defendant, National Fire Insurance Company of Hartford, the provider of Sonic’s commercial general liability insurance. The complaint alleged a private cause of action seeking double damages under the MSP and requested a declaratory judgment as to the defendant’s obligation to reimburse Medicare benefits conditionally paid by the MAO.

In response to the Plaintiff’s amended complaint, the Defendant filed a motion to dismiss. In support of its motion, the Defendant argued in part that the MSP does not provide a private cause of action for MAOs. Further, Defendants argued that the Plaintiff’s complaint failed to provide factual allegations showing that Defendant is responsible for the medical bills in question, that Defendant had actual or constructive knowledge that Plaintiff had made payments on behalf of the member when Defendant issued funds to the member, or that Defendant failed to reimburse liens.

In considering the Defendant’s motion, the district court looked to two recent Eleventh Circuit decisions—Humana Med. Plan, Inc. v. W. Heritage Ins. Co., No. 15-11436, 2016 WL 4169120 (11th Cir. August 8, 2016) and MSP Recovery, LLC v. Allstate Ins. Co., 2016 WL 4525222 (11th Cir. August 30, 2016). Based upon these cases, the court opined that several of the issues raised by the Defendant were already resolved by the Eleventh Circuit. The court found that the cases established that (1) an MAO may assert a cause of action against a primary payer that fails to reimburse an MAO’s secondary payment under the MSP, (2) the private cause of action under the MSP is assignable and (3) a contractual obligation without more may satisfy the condition precedent to suit under the MSP that requires the demonstration of responsibility for payment.

In this particular liability case, the Court found that the demonstration of responsibility for primary payment was established through the parties’ settlement agreement, much like the Western Heritage case. Additionally, the Court found that the Plaintiff’s allegations concerning the Defendant’s knowledge of the lien was sufficient to survive the motion to dismiss. The Court looked to the United States v. Baxter Int’l, Inc., 345 F.3d 866 (11th Cir. 2003) decision which found that willful blindness, which is what the Plaintiff’s alleged in the present case, could constitute constructive knowledge. Reviewing this particular case in light of all of the recent Eleventh Circuit precedent, the Court found the Plaintiff’s complaint sufficient to survive the motion to dismiss and denied the Defendant’s motion. We will continue to monitor this case as litigation continues.