District Court Affirms Medicare Advantage Organization’s Right to Sue Primary Plans Pursuant to the MSP’s Private Cause of Action
April 6, 2018
A U.S. District Court followed the trend of permitting a Medicare Advantage Organization (“MAO”) to sue pursuant to the Medicare Secondary Payer Act’s (“MSPA”) Private Cause of Action (“PCOA”) provision.
In Aetna Life Ins. Co. v. Guerrera, Aetna, a MAO, paid medical expenses on behalf of a Medicare beneficiary after he sustained personal injuries at a grocery store. After Aetna notified the defendant-grocery store of its lien, the grocery store settled and issued payment to the beneficiary and his attorneys without reimbursing Aetna.
Pursuant to the PCOA, Aetna brought suit against the grocery store, the beneficiary and the beneficiary’s attorneys, seeking reimbursement. The defendants moved to dismiss Aetna’s claims, arguing that Aetna could not bring suit against the each defendant under the MSPA.
The court held that MAOs may sue under the MSPA’s PCOA; however, the main issue was whether the PCOA permits suit against the beneficiary, his attorneys, and a tortfeasor. Although the PCOA does not specify who may be sued, the court stated that, at a minimum, primary plans may be sued.
Aetna argued that they should be accorded the same recovery rights as the government, which would permit recovery from a beneficiary and their attorneys. In response, the court distinguished the PCOA from the government’s recovery right under the MSPA by noting that, although the government can seek recovery from a beneficiary or their attorney, double damages are only available against primary plans. Because the PCOA only permits suit for double damages, permitting MAOs to sue beneficiaries or their attorneys would give MAOs a greater recovery right than the government. Additionally, the court held that the settlement proceeds itself do not constitute a primary plan under the MSPA. Thus, the court dismissed Aetna’s claim against the beneficiary and his attorneys.
In contrast, the court found that the grocery store, as a tortfeasor, is a primary plan because it is a business that carries its own risk. By settling and issuing payment to the beneficiary, the grocery store established responsibility as a primary plan under the MSPA. As a primary plan, Aetna was permitted to sue the grocery store under the PCOA.
Although the grocery store is a subject to suit as a primary plan, the court noted that it was arguable that the grocery satisfied its obligations to Aetna by paying settlement proceeds to the beneficiary. Under the PCOA, a primary plan is subject to suit when it fails to provide for “appropriate reimbursement.” Thus, the issue is whether the payment of settlement proceeds to the beneficiary appropriately reimbursed Aetna. Following the 11th Circuit, the court held that payment to a beneficiary does not constitute appropriate reimbursement where the primary plan was notified that a secondary payer issued payments on behalf of the beneficiary. Therefore, because the grocery store is a primary plan for purposes of the PCOA and they failed to provide appropriate reimbursement, Aetna’s claim against the grocery store could proceed.