Federal District Court Applies Three Year MSP Statute of Limitations to Medicare Advantage Plans


In MSP Recovery Claims v. Farmers Ins. Exch., 2019 U.S. Dist. LEXIS 106417 (C.D. Cal. June 12, 2019), the U.S. District Court for the Central District of California addressed the application of the three year statute of limitations to Medicare Advantage Plans and Medicare Advantage Plan assignees. The case involved prior lawsuits by MSPA Claims 1, LLC and MSP Recovery Claims Series, LLC (Plaintiffs) as purported assignees of Medicare Advantage Plans against several companies in the Farmers Insurance Group of Companies (Defendants). The Plaintiffs were seeking reimbursement for Medicare Advantage Plan claims and double damages. In one action (the “No-Fault Case”), the Plaintiffs sought reimbursement of medical expenses that allegedly should have been paid under no-fault policies issued by the Defendants. In a separate action (the “Settlement Case”), the Plaintiffs sought reimbursement of medical expenses that were allegedly paid for Medicare beneficiaries in cases the Defendants had previously settled. The parties had stipulated to a limited data exchange/matching process under which the parties would provide information on beneficiaries and insureds to a third party vendor for the purpose of determining which beneficiaries were insured under no-fault policies issued by the Defendants and which beneficiaries had settled cases with the Defendants. The Plaintiffs filed a motion seeking data in the No-Fault Case for beneficiaries since March 2011 and data in the Settlement Case for beneficiaries since April 2011.

The MSP statute provides a three year statute of limitations for the United States to file a lawsuit “after the date of the receipt of notice of a settlement, judgment, award, or other payment made” through Section 111 reporting. 42 U.S.C. Section 1395y(b)(2)(B)(iii). In support of their motion, the Plaintiffs argued that the Medicare Advantage Plans would have to have been on notice that the Defendants were primary payers in order for the statute of limitations to apply. The Plaintiffs also argued that case law supports a six year statute of limitations. The Defendants argued that the MSP statute only requires insurers to notify CMS of information through Section 111, not Medicare Advantage Plans, and that once an insurer has reported information under Section 111, Medicare Advantage Plans may coordinate with Medicare to receive the reported information and identify primary payers. Further, the Defendants argued that they have no ability to identify Medicare Advantage Plans. Based on the three year statute of limitations in the MSP statute, the Defendants argued that they should only be required to provide data for claims where ORM was first reported within three years of the date the lawsuit was filed in the No-Fault Case and claims where TPOC was reported within three years of the date the lawsuit was filed in the Settlement Case.

In addressing the parties’ arguments, the court noted that the Plaintiffs had not provided any authority for their position that the Defendants were required to notify any entity other than CMS about their primary payer status. The court found that the Plaintiffs had not shown that the Defendants had to notify the Medicare Advantage Plans separately of their primary payer status in addition to notifying CMS. The court applied the three year statute of limitations in the MSP statute and looked at the Section 111 reporting dates as the starting point for the statute of limitations. The court rejected the Plaintiffs’ argument that the statute of limitations did not run until the Medicare Advantage Plans had notice of the Defendants’ primary payer status and held that the Plaintiffs as assignees of the Medicare Advantage Plans were bound by the same statute of limitations period as the Medicare Advantage Plans. As such, the court held that the Defendants were only required to provide information for claims going back three years from the date of filing of each case.

The court’s decision is significant in that it applies the three year statute of limitations to Medicare Advantage Plans based on the date that claims were reported under Section 111. Previously, the U.S. District Court for the Eastern District of Louisiana had applied a three year statute of limitations to Medicare Advantage Plans in Collins v. Wellcare Healthcare Plans, Inc., 73 F. Supp. 3d 653 (E.D. La. 2014). However, the court in Collins v. Wellcare did not address the Section 111 reporting issues raised in MSP Recovery v. Farmers – specifically, that the MSP statute provides that the statute of limitations starts running on the date CMS receives notice through Section 111, that the MSP statute does not specifically require primary payers to separately notify Medicare Advantage Plans of their primary payer status, and that Medicare Advantage Plans are able to receive certain information from CMS allowing them to identify primary payers.

The court’s decision is also significant because it applied the three year statute of limitations to cases in which recovery is sought based on ORM. Although the prior CRC contractor seemed to consistently recognize the application of the three year statute of limitations to cases in which CMS seeks recovery based on ORM, the current CRC contractor has not done so. This is an appropriate issue to raise in appeals and we always recommend disputing claims based on the three year statute of limitations whenever applicable.


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