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Court Addresses Standing Pursuant to the Private Cause of Action Provision of the MSPA

The United States District Court for the Western District of North Carolina, Charlotte Division, recently addressed the issue of standing under the private cause of action provision of the Medicare Secondary Payer Act. In Penegar v. Liberty Mut. Ins. Co., Liberty Mut. Fire Ins. Co., Verisk Analytics, Inc., 2022 U.S. Dist. LEXIS 123295, 2022 WL 2612412, Plaintiff received a formal demand from Medicare seeking reimbursement for conditional payments it made in relation to Plaintiff’s deceased husband’s workers’ compensation injury. The Plaintiff’s husband had settled his workers’ compensation claim, with the insurance carrier accepting responsibility for reimbursing any Medicare lien. Upon receipt of the demand from Medicare, the Plaintiff filed suit against the workers’ compensation insurer, seeking double damages under the private cause of action provision of the Medicare Secondary Payer Act. In response, the insurer filed a motion to dismiss, asserting that the Plaintiff did not have standing to sue because she had not suffered an “injury-in-fact.” Medicare had paid the Plaintiff’s medical expenses conditionally and the Defendant agreed to reimburse Medicare upon receiving the formal demand. The Defendant’s failure to pay Medicare had not “injured” the Plaintiff in any way. The Defendant explained that they stood ready and willing to make the agreed-upon payment to Medicare; they simply had not been aware that Medicare had issued a demand to the Plaintiff until suit was filed.

The Court found the Defendant’s argument persuasive and held that under the MSPA, a financial injury suffered by Medicare did not give standing to the Plaintiff. The Court pointed out that the terms of the workers’ compensation settlement agreement obligated the insurer to reimburse Medicare, not the Plaintiff herself; thus, she was not injured by their failure to pay. The Court also noted that a reading of the settlement agreement in its entirety defeats Plaintiff’s standing as she had released any and all claims against the Defendant “arising out of” or “growing from” the workers’ compensation claim.

As the Court opined, this case appears to be the result of poor communication among the parties and not the right opportunity for the Plaintiff to seek double damages under the MSPA. The language of the settlement agreement, in which the Plaintiff waived her right to sue for future claims, played an important role here. We are always available to assist clients with language to be included in settlement documents to address the Medicare Secondary Payer issues to ensure as much protection from future issues under the MSPA as possible.


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