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U.S. District Court Dismisses Action by MAO Assignee Due to Lack of Standing

In Humana, Inc. v. St. Jude Med., LLC, 2019 U.S. Dist. LEXIS 223313, the United States District Court for the Southern District of Florida addressed whether Plaintiff, Humana, through its Medicare Advantage operating subsidiaries, had standing to pursue a claim under the Medicare Secondary Payer Act against Defendant, St. Jude Medical. Defendant, a manufacturer of cardiac-defibrillator devices, issued a nationwide recall of defective cardiac devices due to battery defects. The recall required thousands of patients to undergo device replacement surgeries, the cost of which was allegedly covered by Plaintiff’s operating subsidiaries. To help with the out of pocket expenses associated with the device replacement surgeries, Defendant offered to compensate affected patients up to $2,500. Defendants also offered free replacement devices to affected individuals.

Plaintiff filed an action under the Private Cause of Action provision of the Medicare Secondary Payer Act on the basis that the Defendant is a primary payer that failed to reimburse Plaintiff for payments made for the device replacement surgeries. Plaintiff asserted that Defendant’s primary payment responsibility was evidenced by the reimbursement for out of pocket expenses provided to the injured individuals who were enrolled in the Plaintiff’s Medicare Advantage Organization (MAO). Plaintiff also asserted that it is a secondary payer with standing to bring this action because of the conditional payments made on behalf of its MAO enrollees for which Defendant was primarily responsible for and for which Plaintiff was not reimbursed. Defendants grounds for dismissal of the claim centered around their belief that they are not a primary plan and are not responsible to pay for an item or service as outlined in the MSPA.

Before the Court could consider Defendant’s motion to dismiss, however, standing had to first be established. The Court discussed that in order to establish standing, the Plaintiff must show that the MAO suffered an injury in fact (i.e. were not reimbursed when they were entitled to be), and that the MAOs assigned their reimbursement rights to Plaintiff. Ultimately, the Court found that the Plaintiff failed to plead facts sufficient to establish standing. According to the Court, the Plaintiff failed to allege a single fact to show which operating subsidiary is an MAO, which MAO operating subsidiaries assigned which claims representing which patients, or whether Plaintiff has a single assignment from all its MAO operating subsidiaries or multiple assignments from individual MAO operating subsidiaries. Without that information, standing could not be established. The Court went on to note that even if the Plaintiff did have a valid assignment, they still failed to provide the identity of any of the assignor’s enrollees or any evidence of which entities paid the enrollee’s claims. Therefore, Plaintiff failed to show that it suffered an injury in fact and the case was dismissed due to lack of standing.

Despite the dismissal, it is likely that Defendants will see this case again, given the Medicare Secondary Payer implications associated with reimbursing the beneficiaries for their out of pocket costs. The influx of claims asserted by Medicare Advantage Organizations and their assignees appears to only be growing. If you have any questions about your obligation to reimburse, or are contacted by any of these Medicare Advantage Organization/any of their assignees, reach out to us and we will be happy to guide you through the lien resolution process.

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