Sixth Circuit District Court Holds Private Cause of Action Exists for Medicare Advantage Plans
A Sixth Circuit District court recently issued a decision in MSP Recovery Claims, Series LLC v. Nationwide Mut. Ins. Co., 2022 U.S. Dist. LEXIS 55717 (S.D. Oh. March 28, 2022), recognizing that 42 U.S. 1395y(b)(3)(A) grants Medicare Advantage Plans a private cause of action. In doing so, the court joined multiple Sixth Circuit courts as well as the Third and Eleventh Circuits. The Sixth Circuit Court of Appeal has yet to address the issue; however, given the expansive view it took in Michigan Spine & Brain Surgeons, PLLC v. State Farm Mut. Auto. Ins. Co., 758 F.3d 787 (6th Cir. 2014) (allowing medical service providers to bring claims against non-group health plans), it is likely that the court would permit Advantage Plans a private cause of action under the Medicare Secondary Payer Act.
In the present case before the Sixth Circuit District court, Plaintiff MSP Recovery filed a class action against twenty-four (24) insurance companies seeking damages under the MSPA for failing to repay medical expenses that resulted from automobile or other accidents and were paid by Medicare Advantage Plans. The case was before the court on a motion to dismiss. After finding that Medicare Advantage Plans can assert a private cause of action for double damages under the MSPA, the Court analyzed the Complaint to determine if the Plaintiff had pled sufficient facts to support its claim for damages. To do so, a plaintiff must “allege facts making it plausible that: 1) the defendant is a primary plan for a claim covered by Medicare; 2) the defendant failed to make the primary payment or appropriate reimbursement to the Medicare benefit provider; and 3) the plaintiff suffered damages.” This pleading standard has been an obstacle for Plaintiff MSP Recovery in many cases and remained so here. The Court found that the Plaintiff had sufficiently plead elements one and two, however, only against five of the twenty-four Defendants. The Plaintiff failed to specifically allege which of the remaining nineteen defendants is the responsible primary plan for each exemplar. The Court refused to allow the Plaintiff to rely on discovery to gain the information necessary to allege that the injury was caused by a specific Defendant (which is required to state a claim under Fed. R. Civ. Pro. 12(b)(6)) and dismissed, without prejudice, the claims against the nineteen Defendants not specifically linked to an exemplar.
We will continue to follow this case, along with MSP Recovery’s efforts to expand the recovery rights of Medicare Advantage plans in other jurisdictions and provide updates on all significant developments. If you have questions regarding Medicare Advantage plans, their right to recovery, or find yourself or your client facing a similar lawsuit, please do not hesitate to contact us. We are always happy to assist.