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LLC v. Bayfront Hma Medical Center, LLC

United States District Court, S.D. Florida

March 20, 2018

MSPA CLAIMS 1, LLC, Plaintiff,



         THIS CAUSE comes before the Court upon Defendant's Motion to Dismiss Complaint [ECF No. 10]. The Court has carefully reviewed the Motion, the record, and the applicable law and is otherwise fully advised. For the reasons discussed below, the Motion is granted in part.


         This action is one of many brought by Plaintiff MSPA Claims 1, LLC (“Plaintiff”) against different insurance companies and/or healthcare providers seeking reimbursement for conditional payments made on behalf of Medicare Part C enrollees in accordance with the Medicare Secondary Payer Act (“MSP”). Since 2015, Plaintiff and its related companies have filed dozens of actions in state and federal courts in Florida. The legal landscape of the Medicare Act-best described as a statutory maze[1]-has evolved with each new round of Plaintiff's filings. The bulk of these actions seek recovery against a primary insurer, typically an automobile or commercial liability insurer, for damages under the MSP and/or state subrogation laws. In this case, however, Plaintiff brings claims under the MSP against a healthcare provider, an unworn path to recovery under the Act.

         I. Intersection of Acronyms - Where the MSP and MAOs Meet

         Much of the MSP litigation in this district-including this action-is centered on the extent to which Medicare Advantage Organizations (“MAOs”) may utilize the private action provisions of the MSP. As a result, the Court finds that a brief history of the Medicare Act's provisions establishing the MSP and MAOs will help frame the issues.

         A. The MSP

         In 1980, in an effort to reduce health care costs to the federal government, Congress enacted the MSP. See Humana Med. Plan, Inc. v. W. Heritage Ins., 832 F.3d 1229, 1234 (2016). Whereas Medicare had been the primary payer for its enrollees' medical treatment, the MSP “inverted that system [; making] private insurers covering the same treatment the ‘primary' payers and Medicare the ‘secondary' payer.” Id.

         The MSP is codified at 42 U.S.C. § 1395y(b) and contains nine paragraphs. Paragraphs (2), establishing Medicare as a secondary payer, and (3), establishing a private cause of action, are of import to this action. While the text of the Act is undoubtedly convoluted, its proscription against Medicare as a primary payer is clear. Under subparagraph (2)(A), the Secretary of Health and Human Services may not pay for items or services for its enrollees if a primary plan[2]has paid or can reasonably be expected to pay, except as set forth in subparagraph (2)(B). Subparagraph (2)(B) permits the Secretary to make payments for covered services, even if there is a primary plan covering the enrollee. However, “[s]uch payment is conditioned on Medicare's right to reimbursement if a primary plan later pays or is found to be responsible for payment of the item or service.” Glover v. Liggett Grp., Inc., 459 F.3d 1304, 1306 (11th Cir. 2006) (quoting Cochran v. U.S. Health Care Fin. Admin., 291 F.3d 775, 777 (11th Cir. 2002)). This conditional payment provision requires both “a primary plan [] and an entity that receives payment from a primary plan” to reimburse the Secretary for any conditional payments made by the Secretary if the primary plan has or had responsibility to make the primary payment. See 42 U.S.C. § 1395y(b)(2)(B)(ii).

         The MSP's conditional payment provision permits the United States to bring an action for double damages against “all entities that are or were required or responsible . . . to make payment . . . under a primary plan. . . . [or] any entity that has received payment from a primary plan or from the proceeds of a primary plan's payment to any entity.” Id. § 1395y(b)(2)(B)(iii). Accordingly, the Government may file an action against a primary insurer or an entity that received a payment from a primary insurer to collect double damages when the insurer or recipient of funds fails to reimburse Medicare for conditional payments made on behalf of an enrollee. As detailed in the Centers for Medicare and Medicaid Services (“CMS”) implementing regulations, a recipient could include the Medicare beneficiary, a medical provider, or a law firm receiving settlement proceeds. See 42 C.F.R. § 411. 24(g) (“CMS has a right of action to recover its payments from any entity, including a beneficiary, provider, supplier, physician, attorney, State agency or private insurer that has received a primary payment.”)[3]

         While subparagraph (2)(B)(iii) details the Government's right to bring an action for double damages, subparagraph (3)(A) provides for “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). “The MSP private cause of action is not a qui tam statute but is available to a Medicare beneficiary whose primary plan has not paid Medicare or the beneficiary's healthcare provider.” Humana, 832 F.3d at 1235.

         B. MAOs

         In 1997, Congress created the Medicare Advantage program, wherein private insurance companies, operating as MAOs, contract with CMS to administer Medicare benefits to individuals enrolled in a Medicare Advantage program under Medicare Part C. See id. Part C, found at 42 U.S.C. § 1395w-22(a)(4), designates MAOs, like the Secretary, as secondary payers.

Notwithstanding any other provision of law, a Medicareਚ≱ organization may (in the case of the provision of items and services to an individual under a Medicareਚ≱ plan under circumstances in which payment under this subchapter is made secondary pursuant to section 1395y(b)(2) of this title) charge or authorize the provider of such services to charge, in accordance with the charges allowed under a law, plan, or policy described in such section-
(A) the insurance carrier, employer, or other entity which under such law, plan, or policy is to pay for the provision of such services, or
(B) such individual to the extent that the individual has been paid under such law, plan, or policy for such services.

42 U.S.C. § 1395w-22.

         Perhaps because Part C was enacted years after the MSP and/or because the Act is so complicated, there has been extensive litigation over whether MAO's may utilize the MSP's private action provision to assert claims against primary plans. The Eleventh Circuit answered this question in Humana, holding that “an MAO may avail itself of the MSP private cause of action when a primary plan fails to make primary payment or to reimburse the MAO's secondary payment.” Humana, 832 F.3d at 1238.[4] The Court, after finding that “Congress empowered (and perhaps obligated) MAOs to make secondary payments under the same circumstances as the Secretary, ” saw “no basis to exclude MAOs from a broadly worded provision that enables a plaintiff to vindicate harm caused by a primary plan's failure to meet its MSP primary payment or reimbursement obligations.” Id. at 1238.

         In this action, the Court is faced with a new question-whether an MAO also has a private cause of action against the recipient of a primary payment.

         II. The Events Giving ...

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