U.S. District Court Again Relies on Eleventh Circuit Decisions And Allows Medicare Advantage Organiz
In the recent case, Mspa v. Century Sur. Co., No. 16-20752, 2017 U.S. Dist. LEXIS 37040 (U.S. Dist. S.D. Fla., March 15, 2017), the United States District Court for the Southern District of Florida once again considered the rights of Medicare Advantage Organizations (MAOs) to seek reimbursement of medical expenses under the Medicare Secondary Payer Act (MSP). In this case, the enrollee of Florida Healthcare Plus, a Medicare Advantage Organization (MAO), was injured on property insured by Defendant, Century Surety Company. The Defendant, aware of its primary payer responsibility under the MSP, failed to reimburse the MAO, which had made payments on behalf of the enrollee for medically necessary procedures and services related to the accident.
Because the Defendant failed to pay for the medical services or reimburse the MAO, the Plaintiff, as assignee of the MAO, filed a complaint against the Defendant to recover payments and damages. Along with a private cause of action for double damages under the MSP, Plaintiff also alleged four other counts seeking recovery directly from the primary payer. Defendant filed a motion to dismiss the complaint arguing that (1) the Plaintiff failed to establish the Defendant’s primary payer responsibility, (2) MAOs do not have a private cause of action under the MSP, (3) MAOs do not have a right of subrogation under CMS regulations, and (4) the Plaintiff cannot allege a third-party beneficiary breach of contract claim because the Plaintiff is not an intended third party beneficiary to the contract between the Defendant and the insured. Importantly, Plaintiff’s suit was brought as a putative class action.
In examining the first three issues, the court once again relied on two recent Eleventh Circuit decisions. In MSP Recovery, LLC v. Allstate Ins. Co., 2016 WL 4525222 (11th Cir. August 30, 2016), the Eleventh circuit held that “a contractual obligation may serve as sufficient demonstration of responsibility for payment to satisfy the condition precedent to suit under the MSP.” As such, to satisfy the condition precedent to suit under the MSP, the plaintiff must merely allege that the Defendant’s valid insurance contract renders the defendant primarily responsible for payment of the enrollee’s medical expenses. In addition, in Humana Med. Plan, Inc. v. W. Heritage Ins. Co., No. 15-11436, 2016 WL 4169120 (11th Cir. August 8, 2016), the Eleventh circuit held that an MAO may pursue a private cause of action against a primary payer when the primary plan fails to pay for an enrollee’s medical expenses or reimburse the MAO for payments rendered.
Consequently, the court denied Defendant’s motion to dismiss as to these first three issues. In its discussion, the court noted that the Plaintiff pled facts sufficient to establish that the Defendant maintained a valid, current insurance contract with a Med-Pay benefits provision, that the Med-Pay provision covered the medical benefits provided to the enrollee, and the policy was the primary insurance coverage for the enrollee. The court also reiterated that, under the decision of the Humana court, MAOs do have a private cause of action under the MSP and, therefore, also maintain subrogation rights.
In examining the fourth issue, the court found that Plaintiff failed to allege that it is an intended thirty party beneficiary of the allegedly breached contract between Defendant and its insured. As a result, Defendant’s motion to dismiss the third party beneficiary claim was granted with leave to amend.
Regarding the possible class action status, Defendant’s motion to dismiss argued that Plaintiff’s claims were not appropriate for class action treatment. Although the court noted that Defendant’s motion raised several potentially problematic areas for Plaintiff in establishing class certification, the court ultimately decided that it did not have enough information to determine whether or not the prerequisites for a class action had been satisfied. As a result, Defendant’s motion to dismiss the class allegations was denied.
We expect to see more of this case in the coming months and will continue to keep you apprised of any new developments.