Eleventh Circuit Holds That Private Cause of Action Only Applies to Primary Plans

In MSPA Claims 1, LLC v. Tenet Fla., Inc., No. 18-11816, 2019 U.S. App. LEXIS 7833 (11th Cir. March 18, 2019), the Eleventh Circuit addressed whether MSPA Claims 1, LLC, a Medicare Advantage Plan assignee, could assert a private cause of action against a hospital and its parent hospital group.

MSPA Claims 1 had filed a private cause of action lawsuit on the basis that the hospital billed the Medicare Advantage Plan and no-fault insurer for the same treatment and did not reimburse the Medicare Advantage Plan until seven months later. The court held that MSPA Claims 1 had standing because it had a valid assignment and the Medicare Advantage Plan had suffered an injury-in-fact due to the delay in reimbursement. After finding that MSPA Claims 1 had standing, the court addressed the applicability of the private cause of action, which provides: “There is established a private cause of action for damages (which shall be in an amount double the amount otherwise provided) in the case of a primary plan which fails to provide for primary payment (or appropriate reimbursement) in accordance with paragraphs (1) and (2)(A).” 42 U.S.C. § 1395y(b)(3)(A). Because the private cause of action applies “in the case of a primary plan,” the court held that a private cause of action can only be asserted against primary plans, not other entities. Because the defendants were not primary plans, the court held that the case should be dismissed.

In reaching its decision, the court noted that the Medicare Secondary Payer Act provides the government with much broader recovery rights and allows the government to sue “any entity that has received payment from a primary plan.” 42 U.S.C. § 1395y(b)(2)(B)(iii). Although a regulation issued by CMS, 42 C.F.R. § 422.108(f), provides that Medicare Advantage Plans have the same right to recover as the Secretary of the Department of Health and Human Services, the court held that it did not have to defer to the regulation because the text of the statute clearly limits the applicability of the private cause of action to primary plans. As the Eleventh Circuit noted, courts will not defer to regulations when the statutory text is clear.

The Eleventh Circuit’s holding that the private cause of action only applies to primary plans is consistent with the decision of the Ninth Circuit in Parra v. Pacificare of Ariz., Inc., 715 F.3d 1146 (9th Cir. 2013) and with the decision of the U.S. District Court for the District of Connecticut (in the Second Circuit) in Aetna Life Ins. Co. v. Guerrera, 300 F. Supp. 3d 367 (D. Conn. 2018). However, it is inconsistent with the decision of the U.S. District Court for the Eastern District of Virginia (in the Fourth Circuit) in Humana Ins. Co. v. Paris Blank LLP, 187 F. Supp. 3d 676 (E.D. Va. 2016) (holding that a Medicare Advantage Plan could assert a private cause of action against a plaintiff’s attorney and his law firm).

Although the Eleventh Circuit held that the private cause of action only applies to primary plans, it is worth noting there is some disagreement among courts on whether a private cause of action can be asserted against a Medicare beneficiary who receives a settlement under the theory that the settlement itself constitutes a primary plan. In Collins v. Wellcare Healthcare Plans, Inc., 73 F. Supp. 3d 653 (E.D. La. 2014), the U.S. District Court for the Eastern District of Louisiana (in the Fifth Circuit) held that a Medicare Advantage Plan could assert a private cause of action against a Medicare beneficiary because the beneficiary’s settlement itself constituted a primary plan. In Aetna Life Ins. Co. v. Guerrera (cited above), however, the U.S. District Court for the District of Connecticut rejected the court’s reasoning in Collins v. Wellcare Healthcare Plans, Inc. and held that a private cause of action could not be asserted against a Medicare beneficiary who received a settlement because the settlement was not a primary plan. The Eleventh Circuit’s decision does not address that issue.